Vulcan Steel (VSL) H2 2024 earnings summary

Executive summary

• Revenue declined 14.5% year-over-year to NZ$1,064m, with adjusted EBITDA down 32.6% to NZ$148m and adjusted NPAT down 57.9% to NZ$40m, reflecting lower volumes and selling prices.

• Sales volume fell 9.1% to 228,515 tonnes, with both Australia and New Zealand experiencing declines.

• Operating cash flow increased 16% to NZ$169m, supported by reduced inventory and lower material costs, and net debt reduced by NZ$64m to NZ$276m.

• Geographic and market segment diversification reduced reliance on large clients, with top 20 clients now representing 9% of sales, down from 13%.

• Ongoing growth strategy includes targeting new clients, expanding into new geographies, and pursuing further consolidation opportunities.

Financial highlights

• Adjusted EBITDA was NZ$148m, down 33% year-over-year, and adjusted NPAT was NZ$40m, down 58% year-over-year.

• Operating cash flow increased 16% to NZ$169m.

• Return on capital employed pre-IFRS was 20%; adjusted return was 13.4%.

• EBIT declined 33% year-over-year; net profit after tax declined 55% year-over-year.

• Final dividend of 12.0 NZ cents per share, total dividend for the year 24.0 NZ cents per share.

Outlook and guidance

• Trading activity in early FY25 expected to remain at low levels, similar to 2H FY24, with improvement anticipated in 2025 as economic conditions recover.

• No earnings guidance provided for FY25 due to ongoing market uncertainty; trading update to be given at the AGM in November 2024.

• Inflation remains embedded in costs, with particular pressure from rent adjustments; ongoing focus on cost reduction, productivity, and customer engagement.