You are using an older browser version. Please use a supported version for the best MSN experience.

Steel & Tube cuts full-year guidance

NZ NewswireNZ Newswire 17/05/2016 Jonathan Underhill

Steel products distributor Steel & Tube Holdings has cut its full-year guidance saying underlying earnings may fall up to 15 per cent.

The updated guidance is a downgrade from the forecast it gave in February for underlying net profit to be unchanged from last year's $21.4 million but doesn't include a $6m gain on the sale of its Bowden Road property.

"While global raw material and finished steel prices remain volatile, they have increased dramatically in many parts of the world from the 13-year lows in late 2015," the company said.

"Conversely, New Zealand steel distribution prices have continued to decline since January, due to intense competition as some competitors vie for market share, impacting margins."

The Lower Hutt-based steel products company said it expects some uplift in New Zealand steel prices in the early part of the new financial year.

"Recent issues around product quality, and in particular seismic mesh have also impacted short term earnings," it said.

It is under scrutiny after selling seismic steel mesh that wasn't independently tested.

Last month it agreed to sell only mesh which had passed tests, after the Commerce Commission signed court enforceable undertakings with the company.

The commission is conducting a wider investigation into the industry, focused on possible misrepresentations on the mesh's performance characteristics which would breach the Fair Trading Act.

Steel & Tube shares last traded at $2.25 and have dropped 23 per cent so far this year.

image beaconimage beaconimage beacon