Juicy dividend in today...
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Juicy dividend in today...
We should go together for lap dance... mermaid??
Acquired a fleet of trucks and trailers and taken on the drivers
Earnings accretive they say …that’s good
http://nzx-prod-s7fsd7f98s.s3-websit...311/417594.pdf
Hi all. I published an additional column this morning on my Substack, Just the Business, looking at Steel & Tube's latest acquisition with the headline: Steel & Tube's trucking purchase is all about “the last mile”
You can find it here: https://substack.com/@justthebusinessjennyruth
From Stats Nz - In the March 2024 quarter, the actual volume of ready-mixed concrete produced was down 12 percent compared with the March 2023 quarter…….been double decline for 4 quarters in a row now
Market remains subdued and challenging in STUspeak
Mark said last update there will be some easing of macro trends supporting increased activity from Q4 FY24….(that being this June Qtr )
Doubt whether that’s going to happen
Note: OK steel often goes where concrete doesn’t but there’s a strong correlation between ST sales and concrete production ….and STU often quote quote such economic indicators
Fletchers profit downgrade today noted weaker revenues and gross margin pressure in Steel, where end markets have been particularly soft.
Not surprising
STU must be due to come out with some guidance. Financial nearly over so must have a good feel for how much they going to make.
No guidance and Mark won’t be able to come out and say ‘upper end of guidance’ when the result is printed.
Last indication was that they were looking forward to “increased activity from Q4 FY24”
So here’s hoping
https://www.nzx.com/announcements/432783
Steel & Tube Holdings Limited (NZX: STU) has today provided earnings guidance for the financial year ending 30 June 2024 (FY24) and an update on trading for the eleven months of the year to date.
The company is performing well relative to a challenging market, which has seen demand for steel at even lower levels than during the Global Financial Crisis. Despite this, Steel & Tube has continued to grow margins and maintain market share, strengthen customer relationships and significantly improve operating leverage to position itself for New Zealand’s economic recovery.
Steel & Tube is forecasting FY24 Normalised EBIT(*1) of $14m to $15m and Normalised EBITDA of $35m to $36m.
Net cash on hand is expected to be between $7m and $10m at year end.
The Board remains committed to delivering value for shareholders and expects to declare a final dividend for FY24.
Controlling the controllables, positioned well when growth returns
Steel & Tube CEO, Mark Malpass, said: “Whilst the trading environment is challenging, we have controlled the controllables and we are positioned for demand growth once the New Zealand economy improves.
Steel & Tube continues to deliver margin growth, cost reductions which have offset inflation and resilient operating profit. Our investment strategy into high value products and services is delivering results and we have built a robust balance sheet which is capable of enabling further growth, both organically and through acquisition.
“While the timing and pace of an economic recovery remains unclear, our expectation from our customer mix is that we are near the bottom of the cycle and should start to see demand improve in the 2025 calendar year.
Steel & Tube is positioned for demand growth, when it returns, with quality inventory on hand, strong customer relationships and significant operating leverage.”For the eleven months to 31 May 2024
• Average selling prices have remained elevated due to international product costs and a weaker New Zealand dollar, despite market contraction and increased competition
• Gross margin dollars/tonne has improved as a result of pricing disciplines, cost control, improved product mix and customer value add
• The $5m cost out programme has been successfully completed with FY24 operating costs well below prior year.
A new cost out programme has commenced targeting a further $5m in savings• Steel & Tube’s net cash balance remains positive, with a relentless focus on working capital discipline
[For additional historical trend information - see the graphs in the attached document](*1) Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments of c.$3.5m relating to Software as a Service costs and Project Strong.
ENDS
I was just about to post must be an announcement on way after spike in STU share price yesterday
A bit of a leaky ship somewhere - huh ? :)
but looking at this:
Quote:
our expectation from our customer mix is that we are near the bottom of the cycle and should start to see demand improve
Is this what others crystal balls are saying ? .. some severe pain being experienced in other sectors & in the suburbs and likely to linger longer IMO
What happens when STU's ability to focus the microscope on it's inner bits & workings sees savings & margin improvements start to wane a bit ?
then there is economic fall out from credit losses & business failures, lower construction & infrastructure activity coming round to meet STU in the eye ..
Many will applaud STU's optimism, however be well alert to looking at the overall goldfish bowl from a higher elevation to see if the picture looks different :)
A few months ago they said Q424 (this quarter) would see ‘increased activity’ …..hasn’t happened …like you won’t happen for a while
But Mark remains a bit gung-ho …when he reports FY EBIT of $14.7m he will be able to say ‘top end of guidance’ so that’s good
But it seems H2 could be a LOSS but dividend still likely so no worries
STU share price up to 99 cents …was 92 he other day
Guidance seen as an upgrade
EBIT about 15m bit short of Forbars forecast of 24m
But that was only Forbars view so shouldn't matter
86 pesos .. that looks grim .. must still be fear of things falling from the top beam :)
https://www.nzx.com/announcements/436783
STEEL & TUBE FY24 RESULTS FOR YEAR ENDED 30 JUNE 2024
CONTROLLING THE CONTROLLABLES - WELL POSITIONED WHEN ACTIVITY RETURNS
Steel & Tube Holdings Limited (NZX: STU) has reported its audited results for the 12 months ended 30 June 2024, delivering a solid performance for a recessionary environment, while positioning itself well for when activity returns.
CEO of Steel & Tube, Mark Malpass, commented: “In what has been a year of significant economic slowdown across New Zealand, we have delivered a solid financial result. Our focus through this downturn has been on controlling the controllables by strengthening customer relationships, maintaining market share and growing higher value products and services, managing costs and expanding our cross-sell opportunities. These strategies have not only enhanced our customer proposition but also improved the business’s operating leverage, which will drive profitability as the economy recovers. We have also built a robust balance sheet which provides optionality to further expand our growth, both organically and through acquisition.”
Key messages
• Economic conditions have impacted industry demand across all sectors
• Steel & Tube’s margins supported by new higher value products and services; further cross sell opportunities are being implemented
• Strengthened core business model – significant inherent operating leverage enables strong earnings growth as the economy improves and volumes return
• Through-cycle cost management – $5m in cost reductions have more than offset inflation. A new cost out programme has commenced, targeting a further $5m in savings
• Net cash balance sheet (no borrowings) and a large facility in place positions Steel & Tube well to fund through cycle growth
• Long-term economic drivers support long-term growth
FY24 Performance and Results
$m / FY24 / FY23 / Change
Revenue / 479.1/ 589.1/ -18.7%
Volume (Ktonnes) / 115.5 /146.4 / -21.1%
GM$/tonne / 901 / 850 / 6.0%
EBITDA / 31.4 / 51.9 / -39.5%
Normalised EBITDA* / 35.8 / 52.9 / -32.3%
EBIT / 9.6 / 31 / -69.0%
Normalised EBIT* / 14.5 / 32.1 / -54.8%
NPAT / 2.6 / 17 / -84.7%
Net cash / 8.7 / 6.5 / 33.8%
Net operating cashflow / 42.2 / 98.3 / -57.1%
Full Year gross dividend (cents per share) / 8.3 / 11.1 / -25.2%
Full Year gross dividend yield** (%) / 9.7% / 9.9% / -2.0%
* Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments of $4.4m and $4.9m respectively. Reconciliation included in appendix to the FY24 Results Presentation
** Based on share price of $0.86 as at 30 June 2024
The significant decline in activity across a range of sectors as a result of economic conditions, drove a 21% reduction in volumes, with revenue down 19% to $479.1m (FY23: $589.1m). Despite challenging economic conditions, Steel & Tube has focused on maintaining market share and improving customer value, reinforcing its market position with customers for when activity returns.
Gross margin dollars per tonne^, although down on the half year, continued to improve to $901 per tonne (FY23: $850) as the company increased product share of wallet with customers, through its strategic focus on higher value products and services, and pricing disciplines.
Further inroads have been made to streamline the business, with $5m taken out of the cost base in FY24. These cost reductions have more than offset inflation with normalised operating expenses# down $3.8m or 5.2% year on year. A new cost out programme has commenced, targeting a further $5m in savings. The focus on costs through the current cycle will further expand operating leverage and the profitability of the company as activity returns.
Normalised earnings were in line with revised June 2024 guidance with Normalised EBITDA of $35.8m (down from FY23: $52.9m) and Normalised EBIT of $14.5m (down from FY23: $32.1m). The company reported a net profit after tax of $2.6m which includes one-off and non-trading costs.
Inventory levels have been reduced in line with activity and were down $17.9m, or 13%, year on year. Inventory has been carefully managed to ensure customer availability while shifting product mix towards higher value products. Operating cashflows remained strong and net cash was $8.7m at year end, with no borrowings.
Reflecting market conditions, the board has declared a final dividend of 2.0 cents per share, fully imputed. This takes full year dividends to 6.0 cents per share, representing a gross yield of 9.7%. The payout is above Steel & Tube’s policy of 60% to 80% of Adjusted NPAT and reflects the board’s continuing confidence in the company’s future. The board has established a dividend reinvestment programme which will be in effect for the FY24 final dividend.
^ Gross Margin includes freight, direct and sub-contract labour
# Normalised operating expenses exclude costs relating to Project Strong, restructuring and SaaS, and excludes D&A
Outlook
Mark said: ”While the timing and pace of an economic recovery remains unclear, our expectation is that conditions should start to improve in the 2025 calendar year. We are navigating a challenging trading environment, but we are well positioned for demand growth when it returns. Our market share is strong, we have a loyal customer base and we have quality inventory, meaning we can provide the products and solutions we know our customers will need when their projects start up again.”
In May 2024, the Government budget allocated $68b to infrastructure work over the next five years and is in the process of approving fast track consent legislation, which will improve Infrastructure activity in the medium term. Other areas of growth include health, water and climate resilience. Over the long-term, economic drivers for the business remain positive, indicating strong demand for steel products and solutions into the future.
Chair of Steel & Tube, Susan Paterson, said: “With good cash reserves and no borrowings, our strong balance sheet provides resilience in difficult times, the ability to continue to pay dividends to shareholders and the opportunity to grow through organic and M&A investments. Our strategy is delivering tangible results and the company is poised to maximise demand growth and deliver for customers as the economy recovers.”
not bad considering the environment. looks like doing all the right things to manage the situation.
In May 2024, the Government budget allocated $68b to infrastructure work over the next five years and is in the process of approving fast track consent legislation, which will improve Infrastructure activity in the medium term. Other areas of growth include health, water and climate resilience. Over the long-term, economic drivers for the business remain positive, indicating strong demand for steel products and solutions into the future.
rising
This snapshot report reflects the Pipeline at 30June 2024, which included $147.6 billion of activeand planned projects from central government
https://media.umbraco.io/te-waihanga...2024-final.pdf
maybe some % of this will flow too STU
Good thing takes time....
Don't forget...the current government is cleaning up the benefishery generation, courtesy of aunty Arden and uncle rob..lol