Steel & Tube Drops as First-Half Earnings Slump on Weak Demand

Feb. 11 (Bloomberg) -- Steel & Tube Holdings Ltd., a New Zealand distributor of roofing iron and reinforcing steel, fell to a two-month low in Wellington trading after first-half profit slumped 85 percent.

Net income dropped to NZ$3.2 million ($2.2 million) in the six months ended Dec. 31 from NZ$20.8 million a year earlier, the Wellington-based company said in a statement. The stock declined 2.2 percent to the lowest since Dec. 10.

First-half sales fell 30 percent as the construction industry recovered slowly from New Zealand’s worst recession in three decades, crimping demand, Steel & Tube said. Home-building slumped to an eight-year low in the third quarter and commercial construction also contracted, according to government figures.

“There are early signs that conditions may be slowing improving, but the key issue is the uncertainty around the extent and timing of the recovery,” the company said. “The impact of any recovery is likely to have a limited or minimal effect on the company this financial year.”

Steel & Tube shares fell 6 cents to NZ$2.70 at 2:50 p.m. in Wellington. They were at NZ$2.80 ahead of today’s report.

Demand for steel and wire from the commercial construction industry, manufacturers and farmers was subdued, other than from the dairy industry, the company said. Home-building approvals are increasing from a low base, it said.

Second-half results are expected to be ahead of the first half, the company said, without providing details. Analysts expect full-year profit of NZ$13.2 million, according to the average of five forecasts collated by Bloomberg.