18 Feb 2019

Steel and Tube resumes shareholder payouts as profit lifts

11:53 am on 18 February 2019

Cost-cutting and higher sales have lifted Steel and Tube's half year profit and allowed it to resume shareholder payouts.

Steel mesh, concrete

Photo: 123RF

The company's net profit for the six months ended December was $5.6 million compared with the previous year's $3.8m.

Steel and Tube has been through a significant restructuring after it posted hefty losses from writedowns of a business and stock, associated with the construction sector.

It sold a plastics business, buildings, and raised $81m through a share issue to beef up its finances and reduce debt.

Chief executive Mark Malpass said the company is making good progress.

"Customer experience, stock availability and delivery performance have been a big focus and have resulted in sales improvements."

The company reported higher sales and volumes, but Mr Malpass said the market remained a competitive one.

"While a combination of competitive pressures and product mix has impacted gross margins in the half year period, we are now seeing a turnaround in our business performance."

Revenue for the six months, excluding the plastics group, rose to $258.2 million, from $249.3 million in the last six months of 2017.

The company said it will resume dividends which were suspended as it needed to save money during the restructuring.

A $1.9 million fine imposed on Steel and Tube by the courts in October for breaches of the Fair Trading Act for making false and misleading claims about its steel mesh product is not factored into the results, with the case the subject of an appeal by both Steel and Tube and the Commerce Commission.

Get the RNZ app

for ad-free news and current affairs