Vulcan Steel (VSL) H1 2025 earnings summary

Executive summary

• Operating cash flow reached NZ$81 million in 1H FY25, with NZ$34.3 million used to reduce net debt, and a 10% return on capital employed achieved despite challenging economic conditions.

• Revenue declined 12.6% year-over-year to NZ$493 million, with EBITDA down 30.5% to NZ$56.9 million and NPAT down 64.8% to NZ$9.2 million.

• Interim dividend declared at 2.5 NZ cents per share, fully franked/imputed, reflecting lower earnings.

• Active trading accounts and broad customer base maintained, with expansion into aluminum and new geographies and five new hybrid sites implemented.

• Challenging trading conditions persisted in both Australia and New Zealand, with New Zealand in recession and Australia below trend growth.

Financial highlights

• Revenue: NZ$493 million, down 12.6% YoY; sales volume: 109,217 tonnes, down 8.3% YoY; gross margin: 35.2%, slightly down YoY.

• EBITDA: NZ$56.9 million, down 30.5% YoY; EBIT: NZ$32 million, down 46% YoY; NPAT: NZ$9.2 million, down 64.8% YoY; EPS: 7.0c, down from 19.9c.

• Operating cash flow: NZ$80.7 million, down 23.4% YoY; adjusted cash conversion: 60%.

• Net bank debt reduced by NZ$34.3 million to NZ$241.5 million since June 2024.

• Capex steady at NZ$14 million for the half; annual guidance at NZ$25–30 million.

Outlook and guidance

• New Zealand market expected to recover from Q2 or Q3 2025, with lower interest rates boosting confidence.

• Australian Metals segment to remain steady; Queensland and Western Australia to outperform Victoria, where steel faces ongoing challenges.

• Second half of FY25 expected to be seasonally weaker due to fewer trading days.

• Dividend payout policy revised to 40–80% of NPAT, targeting 40–60% for FY25.

• Commercial construction recovery expected in the second half; rural and export segments already improving.