Steel & Tube (STU) investor relations material

Executive summary

• Sales revenue increased 8.1% year-over-year to $211.9m, with volumes up 11.3% to 54,213 tonnes, but the first half of FY2026 was challenging due to slow economic recovery and weather disruptions impacting volumes.

• Perry's Galvanizing (Metal Protection) acquisition outperformed expectations, providing high-value, consistent earnings and offsetting margin pressure in the base business.

• Net loss after tax for the six-month period widened to $12.4m from $10.4m in the prior year, with normalized EBITDA at $2.8m, slightly up year-over-year.

• Cost reductions and efficiency programs removed NZD 12 million in costs over two years, with an additional NZD 6 million annualized savings initiated in H1 FY2026.

• No dividend declared as capital discipline and balance sheet rebuilding are prioritized.

Financial highlights

• Revenue uplift was primarily driven by Perry's acquisition, offsetting historic lows in base business volumes and revenues.

• Normalised EBITDA rose to $2.8m from $2.0m in 1H25; normalised EBIT was -$10.3m versus -$9.5m in 1H25.

• Net operating cash was $5.6m for the period, down from $23.1m in 1H25; inventory reduced to $115.9m, with expectations to rise as demand recovers.

• Net debt increased to $43.0m, mainly due to the Perry acquisition.

• Product margin improved to 31.1% from 28.7% year-over-year.

Outlook and guidance

• Economic recovery is expected to be gradual and uneven through 2026, with manufacturing and planned residential construction showing early signs of improvement.

• No formal guidance provided, but management expects EBIT to improve in the second half, aiming for breakeven in coming months.

• Management expects to meet revised banking covenants in the upcoming financial year, with forecasts assuming earnings will return to 2021–2023 levels.

• Medium-term plans include reducing debt, resuming dividends, and continuing M&A as conditions allow.

• Focus remains on cost discipline, margin growth, and capturing synergies from acquisitions.