Steel & Tube Holdings (NZX:STU) keen to chart new territories in 2021

Steel & Tube Holdings Limited (NZX: STU) reported positive performance showing increased market demand led by busy residential and infrastructure sectors which have given some balance effect to moderating non-residential construction sector.

The Group has a focus on customer service optimisation and on helping to make more savings in structural costs. Revenue for the first 5 months of FY21 ended November 2020 was tracking lower than the same period in 2019 but revenue in November was aligned with the previous year.

Source: Shutterstock

The Group held cash of about $24 million with 0 debt at the end of November 2020 on the backdrop of improved earnings and ongoing working capital discipline.

Mark Malpass, CEO of Steel & Tube expressed his satisfaction on company’s success in the year amid COVID-19. He stated that STU has witnessed encouraging signs of economic growth with variety of new ventures and longer-term contracts obtained.

More settled 2021

Steel & Tube looks forward to a positive 2021 as it secured several new projects and long-term contracts during the year.

Here’s a look at the expectations of the Group for FY21-

  • The Group expects to post a normalised EBIT in the range of $6.5 to $7.5 million, up from $5.7 million in 2019, for half year ended 31 December 2020.
  • About 3000 customers were registered on webstores and the numbers are likely to grow in the remainder of FY21.
  • In December, some working capital effect is likely to encourage seasonal inventory holdings, but the Company expects to record a solid cash position for the half year ended on 31 December 2020.
  • Steel & Tube is now negotiating the disposal of its residual land as part of the property
  • divestment plan.

Source: Shutterstock

Although the Board remains sceptical about the 2H21 forecast, Steel & Tube has achieved a stable project work pipeline and is well placed to maintain its current performance trends.

ALSO READ: Steel & Tube Holdings reported robust Trading update for the last 5 months

The Group has not been severely affected by the existing supply chain and port congestion problems to date, but a continued emphasis is being laid on the same.

Sale and leaseback of property and New Director

On 22 December, the Group also inked an unconditional deal to sell its property at 26 – 32 Hautonga St, Petone, Lower Hutt for $7 million on a sale and lease back basis. The sale is likely to be concluded on 22 March 2021.

Steel & Tube will maintain to lease the property for a term of 2 years with 2 further rights of renewal of 1 year each.

The Group also hired Karen Jordan as an Independent Director, effective from 10 December 2020.

On 7 January, Steel & Tube traded at $0.91, down by 2.15% from the previous close.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)


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