Steel & Tube has detailed a large half-year loss, in line with estimates, due to write downs in the value of its assets during H1 2020 ended December 31, 2019. The steelmaker finished H1 2020 with a loss of NZD$36.9mn ($23.4mn), compared to a net profit of $5.6mn in the same six months one year prior.
However, the New Zealand-based steel manufacturing company is optimistic about supplying several major projects in its home country to help it produce a better H2 result. Its order book includes supplying steel for construction of a sports facility, a new wharf at a local Port, a bridge rebuild and a rail project.
In H1 2020, The company’s sales declined by 10pc to $231.9mn, due to weak market conditions and because of high rise construction work and a reduction in the stainless-steel market. In January, the company projected and advised of the write downs with $4mn additional expected in restructuring costs and debt write-offs.
Excluding certain items, earnings before interest and tax were $5.7mn, down from $9.8mn in H1 2019.
Citing declined activity across the steel and tubular industry throughout 2019 for its performance, the company said it was now focusing on making progress with underlying operating costs, increasing margins, and improving working capital. Despite the loss, Steel & Tube’s cash flow remained healthy and the company was able to reduce net debt during this period.
Steel & Tube has done what it can to position the business for recovery, including reducing headcount from 1,100 to less than 1,000, and reducing and combining four operational sites from 48 to 31 since Jan 2018, according to the company’s chief executive.
In the past six months, Steel & Tube said it maintained market share and its margins remained solid at around 22pc, despite the drop in sales. Australia-based BlueScope Steel which also announced its earnings on Monday is a shareholder in Steel & Tube.
($1 = NZD 1.58)