Photo: RNZ / Cole Eastham-Farrelly
Tougher economic times have driven steel products company Vulcan Steel to post a big drop in full-year profit.
Key numbers for the 12 months ended June compared with a year ago:
- Net profit $88m vs $124m
- Revenue $1.24b vs $973m
- Underlying earnings $219m vs $243m
- Final dividend 30.5 cents per share vs 37.5 cps
Chief executive Rhys Jones said 2023 was a more challenging year for the company, following last year's record result.
"Economic conditions, especially in New Zealand, progressively softened during FY23. As previous indirect boost from Covid-19 policy responses abated, customers reduced stock holdings," Jones said.
"Further, significantly higher interest rates impacted on business activity and investment appetite. High inflation added to the pressure on business costs."
However, Jones said despite the difficult economic environment, its overall operational performance remained strong.
Its net debt also decreased further to $328 million at the end of July, compared to $340m the month earlier.
Jones warned market conditions remained uncertain and may potentially weaken further in the near term.
"However, we are encouraged by the progress we have made in our business improvement programme including for our aluminium unit, which positions us well to capitalise on the opportunities in the market and an uplift in the cycle," he said.
Looking ahead, Vulcan said economic uncertainty and inflation pressure would most likely remain a feature throughout the financial year ending June 2024.
It also added the weak outlook for the New Zealand dairy sector could weigh on spending in the rural economy.
Vulcan did not provide guidance for the full year, but said it would provide a trading update at its annual shareholders meeting in November.