New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Steel and Tube (STU) reported an even softer FY25 result than we had been expecting.</li><li>Whilst volumes were more robust than we had anticipated through 2H25, this was more than offset by a -29% decline in gross profit dollar per tonne (GP$/t).</li><li>While we once again push out our cyclical recovery assumptions and make significant cuts to our forecasts, the 2H25 volume improvement suggests activity is improving.</li></ul>

Steel and Tube (STU) reported an even softer FY25 result than we had been expecting.Whilst volumes were more robust than we had anticipated through 2H25, this was more than offset by a -29% decline in gross profit dollar per tonne (GP$/t).While we once again push out our cyclical recovery assumptions and make significant cuts to our forecasts, the 2H25 volume improvement suggests activity is improving.

Steel & Tube Holdings FY25 Result—Annus Horribilis

<ul><li>Steel and Tube (STU) reported a 1H25 loss of -NZ$10m, with steel demand at levels not seen since the 1990s.</li><li>While STU is controlling its controllables, taking cost out of the business, releasing working capital, and managing bad debts well, it has not been enough to offset the deep cyclical trough.</li><li>STU announced the conditional acquisition of Perry Metals Protection (PMC), a market leader in hot dip galvanising. </li></ul>

Steel and Tube (STU) reported a 1H25 loss of -NZ$10m, with steel demand at levels not seen since the 1990s.While STU is controlling its controllables, taking cost out of the business, releasing working capital, and managing bad debts well, it has not been enough to offset the deep cyclical trough.STU announced the conditional acquisition of Perry Metals Protection (PMC), a market leader in hot dip galvanising. 

Steel & Tube Holdings - 1H25 Result—Taking a Dip

<ul><li>Steel and Tube's (STU) ASM and trading update highlighted worsening conditions, which it had described as ‘even worse than the GFC’ during its FY24 result.</li><li>Market volume declines are being compounded by competitive pressure on prices, while high operating leverage has resulted in STU being loss making.</li><li>Losses are likely to continue in the near term. We forecast a FY25 loss of -NZ$11m, assuming some modest improvement in 2H25, but the current demand environment and timing of improvement in volumes remains uncertain. </li></ul>

Steel and Tube's (STU) ASM and trading update highlighted worsening conditions, which it had described as ‘even worse than the GFC’ during its FY24 result.Market volume declines are being compounded by competitive pressure on prices, while high operating leverage has resulted in STU being loss making.Losses are likely to continue in the near term. We forecast a FY25 loss of -NZ$11m, assuming some modest improvement in 2H25, but the current demand environment and timing of improvement in volumes remains uncertain. 

Steel & Tube Holdings - FY25 Down the Tubes

<div><div><div><div><ul><li>As expected (given recent guidance), Steel and Tube's (STU) FY24 result was soft.</li><li>Volume and margin stepped lower in 2H24, reflecting underlying demand which STU believes is around GFC levels.</li><li>STU was broadly breakeven in 2H24 after adjusting out one-offs. </li></ul></div></div></div></div>

As expected (given recent guidance), Steel and Tube's (STU) FY24 result was soft.Volume and margin stepped lower in 2H24, reflecting underlying demand which STU believes is around GFC levels.STU was broadly breakeven in 2H24 after adjusting out one-offs. 

Steel & Tube Holdings - FY24 Result — Second Half Blues

<ul><li>Steel and Tube (STU) FY24 guidance highlighted continued degradation of the NZ operating environment over the second half of the year.</li><li>STU believes steel demand is now below GFC levels, but near-term forward indicators remain weak and the timing of an eventual recovery remains uncertain.</li><li>STU is well positioned for both a continuation of soft activity as well as any rebound in demand, with further cost-out initiatives, inventory now largely normalised, and net cash on its balance sheet. </li></ul>

Steel and Tube (STU) FY24 guidance highlighted continued degradation of the NZ operating environment over the second half of the year.STU believes steel demand is now below GFC levels, but near-term forward indicators remain weak and the timing of an eventual recovery remains uncertain.STU is well positioned for both a continuation of soft activity as well as any rebound in demand, with further cost-out initiatives, inventory now largely normalised, and net cash on its balance sheet. 

Steel & Tube Holdings - It's Tough Out There

New Zealand

Steel & Tube Holdings Limited produces and distributes steel throughout New Zealand and its products include steel fasteners, nuts, bolts and screws.  The Company's other activities include steel reinforcing.

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Steel & Tube Holdings (STU NZ)

Steel & Tube Holdings FY25 Result—Annus Horribilis

Whilst volumes were more robust than we had anticipated through 2H25, this was more than offset by a -29% decline in gross profit dollar per tonne...

Forsyth Barr

Steel & Tube Holdings - 1H25 Result—Taking a Dip

Looking through cyclically low near-term earnings, STU is trading on a two-year forward PE of 10.2x, in line with its long-run average. NEUTRAL.

Forsyth Barr

Steel & Tube Holdings - FY25 Down the Tubes

Steel and Tube's (STU) ASM and trading update highlighted worsening conditions, which it had described as ‘even worse than the GFC’ during its FY24...

Forsyth Barr

Steel & Tube Holdings - FY24 Result — Second Half Blues

Volume and margin stepped lower in 2H24, reflecting underlying demand which STU believes is around GFC levels. STU was broadly breakeven in 2H24...

Forsyth Barr

Steel & Tube Holdings - It's Tough Out There

While STU is trading on an elevated PE, we believe this is fair given earnings are at, or close to, the cyclical trough. NEUTRAL.

Forsyth Barr

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