Steel

Steel’s operating earnings increased slightly to $43 million from $42 million in the prior corresponding period.

Most businesses benefited from the increase in activity levels with the exception of the long steel business which was negatively impacted by low volumes and low margins.

Revenues were 6 percent higher than the prior year driven by higher volumes and marginally higher pricing.

The long steel businesses had a disappointing first half, and earnings declined by 50 percent to $8 million. At Pacific Steel overall revenue was down 4 percent driven by volumes being flat compared with the prior year and pricing 4 percent lower than the prior year. This together with higher scrap prices significantly reduced margins. Global pricing remains very competitive due to low levels of construction activity in Europe and the US. Imports of reinforcing product into the New Zealand market at discounted prices increased during the period which had a significant impact on pricing locally.

The roll-forming and coatings business performed strongly, increasing operating earnings by 26 percent to $29 million for the half year. Volumes were flat as house building activity increased modestly in New Zealand and Australia whereas commercial construction activity continued to be subdued. Margins were higher due to improved pricing and the strengthened Australian and New Zealand currencies which kept input prices stable.

The distribution and services businesses recorded strong growth in operating earnings, which increased by 86 percent. Easysteel’s volumes were up 16 percent on the prior year. The prior year’s result was also adversely impacted by inventories acquired at higher prices which had contracted margins.