Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — HY2016 Earnings Presentation
20 slides from Steel & Tube's earnings presentation, February 2016
Slide 1: 2016 HY Update
2016 HY Update Dave Taylor, CEO Janie Elrick, CFO February 2016 1
Slide 2: Disclaimer
Disclaimer This presentation, February 2016, provides additional comment on Steel & Tube’s financial results announcement for the period ending 31 December 2015. It should be read in conjunction with the documents attached to that announcement, which highlight future outlook expectations of earnings
Slide 3: Financial Highlights
Financial Highlights Revenue: $265.7m – up $7.51m or 3% After-tax profit: Headline $15.9m – up $5.1m or 47% Underlying $9.9m – down $0.9m or 8% EBIT: $22m – up $5.21m or 31% Net operating cash flow: $9.4m – down $0.7m or 7% Net tangible assets / share $1.59 – up 1 cent Dividend / share 9
Slide 4: Highlights
Highlights Sales at $266m are a new half year high for S&T Despite the ongoing fall in global steel prices, underlying profit was still 92% of a comparable strong 2015 first half Facility consolidations and upgrades are progressing inline with plans. Bowden Rd sale helped improve headline resu
Slide 5: Global markets: Steel production
Global markets Steel production • 2015 global steel production reduced by 2.8% compared to 2014 • This included most countries, with China reducing 2.3% (more than the entire UK output) • The key exception was India which is now the third largest producer after China and Japan • However Chinese dome
Slide 6: Global markets: Raw material and finished steel prices
Global markets Raw material and finished steel prices • Raw material prices are now at their lowest level since 2005 • Investments have created significant excess capacity with more due online in 2016/17 • At a time when global demand and Chinese demand is easing • Sector likely to see industry rati
Slide 7: Global markets: Stainless steel prices and production
Global markets Stainless steel prices and production • Following 5 years of growth since the GFC, 2015 production was flat • Like carbon steel, China is now the major producer, consumer and exporter • Prices correlate closely to nickel prices which remain volatile but trending down • Current nickel
Slide 8: Global markets: Exchange rates
Global markets Exchange rates • Significant NZD depreciation to the USD over 2015 • Helped to off-set the decline in global finished steel prices domestically • Remains elevated against the AUD impacting manufacturing exports 8 Source: ANZ Bank
Slide 9: New Zealand markets: Steel volumes
New Zealand markets Steel volumes • After 5 years of recovery, steel demand is moderating in line with the overall economy • However construction aligned products continue to grow • Stainless has been impacted by the downturn in dairy investments • Fastenings has also eased a little Source: Stats NZ
Slide 10: New Zealand markets: Building consents
New Zealand markets Building consents • Year to Dec. 2015 Non Residential building consent floor area increased by 6% • Driven by a 20% increase in Canterbury and a 5% increase in Auckland • Although the current $ values are higher, floor areas are still 5% below the 2007 levels • Key categories inc
Slide 11: New Zealand markets: Actual building work
New Zealand markets Actual building work ($m quarterly) • Non Residential work volumes increased by 5% to the year ending September 2015 • Driven by a 18% increase in Canterbury • Residential work volumes also increased by 6% to the year ending September 2015 • Driven by a 7% increase in Canterbury
Slide 12: New Zealand markets: Rural
New Zealand markets Rural • International dairy prices continue to decline, pay-out for the 2015-16 season was reduced by 45 cents to $4.15 excluding dividend • The drop in prices have been attributed to poor demand from oil producing regions, uncertainties in emerging markets, slow recovery in Chin
Slide 13: New Zealand markets: Manufacturing
New Zealand markets Manufacturing ($m) • Generally volatile, but solid growth from non food sectors • Equipment and machinery manufacturers remain resilient • Metal (steel and aluminium) producers are impacted by the commodity slump • ‘All manufacturing except meat and dairy’ upswing led by petroleu
Slide 14: Business performance – revenue and profit
Steel & Tube Business performance – revenue and profit 14 Source: S&T financial reports
Slide 15: Business performance – key profit contributors
Steel & Tube Business performance – key profit contributors Note: Depreciation & amortisation for the six months to Dec. 2015 is $2.92m (Dec. 2014 $2.47m) 15
Slide 16: Business performance – operating cash
Steel & Tube Business performance – operating cash 16 Source: S&T financial reports
Slide 17: Business performance – balance sheet and gearing
Steel & Tube Business performance – balance sheet and gearing 17 Source: S&T financial reports
Slide 18: Key milestones
Steel & Tube Key milestones Facility consolidations and upgrading • Reinforcing & Wire Processing, Auckland Is a state of the art processing facility for Auckland and the North Island. Officially opened in August 2015 by the Prime Minister • Coil & Purlins Processing, Auckland Is a state of the art
Slide 19: Outlook
Steel & Tube Outlook • The New Zealand’s economy has moderated from the 2014 peak, nevertheless appears reasonably resilient • Sectors important to S&T have mixed outlooks: Construction is expected to continue to underpin performance while the lack of investment in the rural sector will continue to
Slide 20: Thank you
Thank you 20