Steel & Tube Holdings 1H25 Interim Results and Strategic Acquisition
Steel & Tube Holdings Limited has released its 1H25 interim financial results, showing the resilience of its operations despite ongoing economic challenges. The company has demonstrated its commitment to cost management, customer service, and operational efficiency during a time of reduced demand in the steel industry. The results reveal significant efforts in managing operations effectively, while focusing on growth and acquisitions in anticipation of market recovery.
1H25 Financial Performance:
• Revenue: The company recorded $196.0 million in revenue for 1H25, a decline from $217.4 million in 2H24 and $261.8 million in 1H24. This drop reflects weaker customer demand across multiple sectors and products, along with pricing pressures from competitors impacting margins.
• Volume: Steel & Tube's volume for the first half of 2025 was 48.7 thousand metric tons, down from 53.0 thousand metric tons in 2H24 and 62.6 thousand metric tons in 1H24, reflecting the reduced demand from customers during the weak economic environment.
• EBITDA: The company posted an EBITDA of $0.6 million in 1H25, a significant decrease from $10.2 million in 2H24 and $21.2 million in 1H24. Normalized EBITDA, adjusted for non-trading items, stood at $2.0 million for 1H25.
• EBIT: Steel & Tube reported an EBIT loss of $10.9 million for 1H25, a sharp decline from $3.2 million in 2H24 and a positive EBIT of $10.2 million in 1H24. The company’s normalized EBIT, excluding non-trading adjustments, was a loss of $9.5 million.
• NPAT: The company experienced a net loss after tax (NPAT) of $10.4 million, compared to a loss of $2.7 million in 2H24 and a profit of $5.3 million in 1H24, reflecting the ongoing challenges in the market.
• Operating Cash Flow: Despite the financial losses, Steel & Tube generated net operating cash flow of $23.1 million, demonstrating its ability to maintain strong cash collections and operational efficiency.
• Dividends: No dividend was declared for 1H25, following a reduction from 4.0 cents per share in 1H24 to 2.0 cents per share in 2H24. The company did not issue any further dividend payments for this period, prioritizing cash flow management.
Operational Focus and Strategy:
• High-Value Products and Cost Management: Steel & Tube has placed a heavy focus on higher-value products and cost control as part of its strategy to improve its operating leverage. The company’s efforts to focus on cross-selling, pricing discipline, and customer value add will help expand earnings growth once market conditions improve.
• Reduced Inventory and Cash Reserves: The company successfully reduced its inventory to $109.6 million (from $121.3 million in June 2024). Steel & Tube’s disciplined cash flow management has improved its net cash position to $17.5 million, along with an undrawn $100 million bank facility, offering the company flexibility to invest in growth.
• Acquisition Strategy: Steel & Tube has signed a conditional agreement to acquire Perry Metal Protection, Perry Grating, and Waikato Sand Blasting, which is expected to complete by May 2025. This acquisition aligns with the company’s ongoing strategy to expand its capabilities and add value to customers.
Outlook:
Despite the challenging market conditions in 1H25, Steel & Tube's CEO Mark Malpass expressed optimism, stating that the market cycle has bottomed out. The company has started seeing increased customer inquiries and tenders, signaling a recovery in business confidence. Steel & Tube anticipates that market activity will begin to gain momentum by mid-2025 (1H26), and the company is well-positioned to capitalize on the eventual growth, with a substantial pipeline of work ahead.
The company’s strategic investments in high-value products, its strong balance sheet, and its efforts in mergers and acquisitions (M&A) place Steel & Tube in a strong position for growth when economic conditions improve.
Key Takeaways:
• Revenue: Steel & Tube reported $196.0 million in 1H25 revenue, reflecting a decline from $217.4 million in 2H24 and $261.8 million in 1H24 due to weaker customer demand.
• Volume: The company’s volume for 1H25 was 48.7 thousand metric tons, down from 53.0 thousand metric tons in 2H24 and 62.6 thousand metric tons in 1H24.
• EBITDA: EBITDA for 1H25 was $0.6 million, a significant decrease from $10.2 million in 2H24 and $21.2 million in 1H24. Normalized EBITDA stood at $2.0 million.
• EBIT: Steel & Tube posted an EBIT loss of $10.9 million in 1H25, compared to $3.2 million in 2H24 and $10.2 million in 1H24.
• NPAT: The company reported a net loss after tax of $10.4 million in 1H25, compared to a loss of $2.7 million in 2H24 and a profit of $5.3 million in 1H24.
• Operating Cash Flow: Net operating cash flow for 1H25 was $23.1 million, demonstrating strong cash collections despite the downturn.
• Dividend: No dividend was declared for 1H25, following a reduction from 4.0 cents per share in 1H24 to 2.0 cents per share in 2H24.
• Acquisitions: The company has signed a conditional agreement to acquire Perry Metal Protection, Perry Grating, and Waikato Sand Blasting, expected to complete by May 2025.
• Financial Resilience: Steel & Tube ended 1H25 with $17.5 million in cash and no bank debt, supported by a $100 million undrawn bank facility for growth.
• Market Recovery Outlook: Steel & Tube anticipates market activity to pick up momentum from mid-2025 (1H26), with a strong pipeline of work ahead and growth opportunities on the horizon.
