Australian Steel News
NEW ZEALAND NEWS - AUGUST
(Continuation……)
….and probably had some way to run.
General economic data released last week will also have an indirect impact upon the steel industry. The information included the seasonally adjusted unemployment rate rising to 3.6% for the June 2023 quarter, compared with 3.4% in the previous quarter. Nevertheless, in the year to the June 2023 quarter, the labour force participation rate reached 72.4%, which is its highest level since the Household Labour Force Survey (HLFS) began in 1986. Stats NZ also reports that wage cost inflation, as measured by the labour cost index (LCI), remained steady at 4.3% in the year to the June 2023 quarter. However, higher wages will be of little comfort to many households given that the cost of living for the average household increased by 7.2% in the 12 months to June 2023, according to Stats NZ. Food prices increased by 12.7% for the average household.
Of course, statistics are one thing and reality can be another. In mid-July, Steel & Tube Holdings provided updated earnings guidance for the financial year ending 30 June 2023 (FY23). It said the company had continued to perform well in tight economic conditions and expects the full year financial results to be at the top end of the guidance previously provided in May. Steel & Tube said it had ended the financial year with no bank debt and a positive cash balance of $6.5m. The company had also achieved a significant reduction in its inventory balance.
“We have focussed on providing high levels of service to our customers while also strengthening the core business and maintaining a disciplined growth focus. Our new strategic initiatives now account for more than 10% of the Distribution Division’s EBIT as we grow higher value products and services,” said Mark Malpass, CEO of Steel & Tube. “Gross margin dollars per tonne were slightly ahead of prior year although as previously advised operating conditions were softer which resulted in volumes being 12% less than FY22. Revenues remained strong due to elevated pricing from steel mills,” he added.
Mr Malpass said good progress had been made on the comprehensive cost out program targeting $5m of operating costs which should offset continued inflation pressure expected over the coming year. The company´s balance sheet continues to strengthen, he added, reflecting the company´s focus on managing shareholder funds. Steel & Tube expects to release its full year FY23 results in August.
This edition of New Zealand News was authored inhouse by ASN.