Vulcan Steel Reports 12.6% Revenue Drop and 65% NPAT Decline in FY25 Interim

Challenging Market Conditions

Vulcan Steel Limited (ASX: VSL, NZX: VSL) has released its interim results for the six months ended 31 December 2024, revealing a tough trading environment marked by subdued economic growth in both New Zealand and Australia. The company’s revenue fell 12.6% year-on-year to NZ$493 million, reflecting a combination of lower sales volumes and reduced sales value per tonne amid ongoing recessionary pressures in New Zealand and sluggish GDP growth in Australia.

Despite these headwinds, Vulcan managed to sustain a 10% return on capital employed (ROCE), underscoring operational resilience and disciplined capital management. However, profitability metrics were notably impacted, with EBITDA dropping 30.5% to NZ$56.9 million and net profit after tax (NPAT) plunging 64.8% to NZ$9.2 million.

Segment Performance and Cost Management

The Steel segment experienced a sharper decline, with revenue down 16.8% to NZ$209.9 million and sales volume falling 8.8% to 77,060 tonnes. Gross profit per tonne in steel dropped approximately 15%, reflecting weaker demand particularly in New Zealand and the Australian state of Victoria. The Metals segment fared slightly better, with revenue down 9.2% to NZ$283.1 million and a more modest 7.2% volume decline.

Operating expenditure was tightly controlled, decreasing marginally by 1.2% to NZ$116.5 million despite inflationary pressures. However, the cost per tonne rose 8% due to lower volumes and product mix effects. Vulcan also increased its workforce by 24 employees to 1,307, aiming to maintain high service levels and support future growth.

Cash Flow and Balance Sheet Strength

Operating cash flow remained positive at NZ$80.7 million, though down 23.4% from the prior year. The company used these cash flows to fund capital expenditure of NZ$14.1 million, pay dividends totaling NZ$15.8 million, and reduce net bank debt by NZ$34.3 million to NZ$241.5 million. The refinancing of a NZ$250 million debt tranche extended maturities through to 2028, easing refinancing risk.

Working capital optimisation contributed to a NZ$49 million reduction in net working capital, driven by lower trade receivables and inventory levels. The balance sheet remains robust with net tangible assets per share steady at NZ$1.19.

Dividend and Outlook

Reflecting the subdued earnings, Vulcan declared a significantly reduced interim dividend of 2.5 NZ cents per share, down from 12.0 cents in the prior corresponding period. The dividend will be fully franked or imputed depending on shareholder residency.

Looking ahead, Vulcan anticipates a gradual recovery in trading volumes, particularly in New Zealand from mid-2025, supported by easing interest rates and improving market confidence. The Metals segment expects steady performance with benefits from newly commissioned hybrid sites, while the Steel segment faces ongoing challenges, especially in Victoria.

Cultural and ESG Commitments

Vulcan continues to emphasize its culture of teamwork, safety, and continuous improvement, alongside advancing its environmental, social, and governance (ESG) initiatives. The company has published its first climate-related disclosure report and is preparing to meet evolving Australian reporting requirements.

Chairman Russell Chenu and CEO Rhys Jones highlighted the company’s focus on operational discipline and positioning Vulcan to capitalise on future economic recovery opportunities, while maintaining a strong commitment to employee wellbeing and community support.