STU - Steel & Tube Holdings

[Crackity]

Heavens forbid ......they even more hepless ......would need to extend my forecast for any recovery out to 2032 or beyond if that happened .

Hepless - I like that new word - sorta a cross between hapless and helpless 👍

[winner (n)]

Hepless - I like that new word - sorta a cross between hapless and helpless 👍

Picked that up from BlackPeter ..he's a genius with words

[winner (n)]

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

[winner (n)]

Way things are looking FY24 sales could be less than $500m ...a bit lower than last years $587m

If sales are about $500m that's about the same as they were achieving pre-covid

Marketscreener as F24 forecast sales at $523m ...think they dreaming.

[BlackPeter]

Way things are looking FY24 sales could be less than $500m ...a bit lower than last years $587m

If sales are about $500m that's about the same as they were achieving pre-covid

Marketscreener as F24 forecast sales at $523m ...think they dreaming.

Analysts are always optimistic - but anyway, while I have no knowledge how STU is doing, I do know that at least one of their competitors is currently pretty busy (I have family working there - they still do overtime), which might be bad for STU if the overall market is really that much down.

[winner (n)]

Analysts are always optimistic - but anyway, while I have no knowledge how STU is doing, I do know that at least one of their competitors is currently pretty busy (I have family working there - they still do overtime), which might be bad for STU if the overall market is really that much down.

A contractor I know is 2 staff down (not replacing them until biz picks up) and the others have to a bit of overtime at times to keep tons schedule

[winner (n)]

Fletcher profit downgrade this morning noted -

 A combination of weaker revenues and gross margin pressure in certain Building Products businesses, notably Iplex NZ and Steel, where end markets have been particularly soft.

[winner (n)]

Outlook still pretty gloomy according to this item about a report from BDO

Construction and Real Estate Sector leader says -

So there's concern in terms of that forward work space with higher interest rates and many projects not being really financially viable. So there seems to be a real concern amongst the construction leaders in the report about what happens either the end of this year, or certainly going into 2025, and I think 2025 is going to be the tricky year more so than 2024."


https://newsroom.co.nz/2024/05/16/building-firms-uncertain-about-work-pipeline-after-post-covid-highs/?utm_source=Newsroom&utm_campaign=127b146b32-Daily_Briefing+17.05.2024&utm_medium=email&utm_term=0_71de5c4b35-127b146b32-97970805&mc_cid=127b146b32&mc_eid=f260d735f1

[winner (n)]

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

[LoungeLizard]

"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

Positive update, considering where the industry is at the moment and relative to FBU's struggles. Wonder if they will be able to maintain the 4c final divy? Probably not would be my guess - 3c perhaps?

[winner (n)]

Full year earnings about 4 cents per share ...lucky might get to 5 cents

Interim divie 4 cents ..... full year?

[winner (n)]

STU put this chart in their announcement today

Presumably  to reinforce that things are actually as bad as they were in the GFC

But to me reminded me how STU have performed over the years. The red line is revenues ...not that good and reinforces what I've posted before in that STU are only any good in what they themselves describe as 'super cycles' times ...take 22 and 23 out and hmmmm. And the profit line is just as unimpressive

Never mind ...the future is bright so no worries



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[Cod]

Chart Agrees.

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[winner (n)]

EBIT guidance about 15m is bit short of Forbars forecast of 24m

But that was only Forbars view so shouldn't matter

[Shareguy]

Not good at all, but not surprising given the state of the economy.  Surprised at the share price given the level forecast from STU against consensus.

May result in a 2H loss. Craig's fcast was $22m ebit. Fbar $20.3m