28 Aug 2020

Steel & Tube posts $60m loss, more staff to lose jobs before Christmas

12:29 pm on 28 August 2020

Steel and Tube has reported a $60 million loss for the year after revenue took a massive hit because of Covid-19 and costs worn for writedowns, bad debts and restructuring.

Steel Framing of a New Commercial Building.

Photo: 123RF

The loss compares to a $10.4m profit last year.

Chief executive Mark Malpass said the company had warned this year's result would be bleak, with lockdown restrictions severely impacting sales in the second half.

"Revenue for the 12 months was $417.9m (down 16 percent), reflecting the impact of Covid-19 in the second half of the year and following the first half year impacts of reduced vertical construction activity, a softening stainless steel market and competitive pricing pressures.

"The level four lockdown and progressive return to business occurred during a traditionally high earning period for the business, with a significant impact in April and May."

The company received $5.5m from the government wage subsidy scheme, while the board, chief executive and other executives took voluntary pay cuts of 20 to 30 percent.

It closed branches and consolidated others, resulting in 93 jobs losses, with about the same amount still to be disestablished by Christmas.

Malpass said despite the challenges the company's balance sheet was strong with net cash at $7.4m and borrowings reduced to $10m.

"While our headline result was not as we would have liked due to softening market conditions exacerbated by the impact of Covid-19 as well as non-cash goodwill and business restructuring related impairments, we are pleased at how our company and our people have come through this challenging period."

He said trading during the initial stages of the 2021 financial year had been stronger than anticipated but it would continue to keep the business as lean as possible, taking a cautious approach in an uncertain economic environment.

No guidance for 2021 was given, and a final dividend was not paid.

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