Vulcan Steel Faces Integration Risks After NZ$88m Roofing Industries Buy
Vulcan Steel Limited reported a 10.9% revenue decline in FY25 alongside a 24.1% drop in adjusted EBITDA, while announcing a fully underwritten NZ$96 million equity raise to fund the acquisition of Roofing Industries Limited. The deal marks Vulcan’s strategic entry into the New Zealand steel roofing and cladding market with expected earnings accretion and no change to its dividend policy.
- FY25 revenue down 10.9%, adjusted EBITDA down 24.1%
- Fully underwritten 1-for-9 entitlement offer to raise NZ$96 million
- Acquisition of Roofing Industries Limited for NZ$88 million
- Acquisition expected to be earnings accretive with no dividend policy change
- Acquisition completion subject to customary conditions, expected Q2 FY26
FY25 Financial Performance Amid Challenging Conditions
Vulcan Steel Limited has released its FY25 financial results, revealing a 10.9% decline in revenue to NZ$948.1 million and a 24.1% drop in adjusted EBITDA to NZ$112.1 million. The company faced headwinds from subdued market demand and pricing pressures across its steel and metals segments in Australia and New Zealand. Despite these challenges, Vulcan maintained disciplined cost management and reduced net debt by 16% to NZ$232 million.
Strategic Acquisition to Expand Product Offering
In a significant strategic move, Vulcan announced a fully underwritten accelerated renounceable entitlement offer (AREO) to raise approximately NZ$96 million. The proceeds will fund the acquisition of Roofing Industries Limited and associated businesses for NZ$88 million. Roofing Industries is a leading New Zealand manufacturer and supplier of steel roofing and cladding products, operating a nationwide network of 15 locations and employing over 250 people.
This acquisition marks Vulcan’s entry into a new vertical, expanding its product portfolio and enhancing its service offering. The purchase price reflects a disciplined valuation at a 4.5x multiple of Roofing Industries’ average annual pre-lease EBITDA from 2020 to March 2025.
Earnings Accretion and Dividend Policy Maintained
Vulcan expects the acquisition to be earnings per share accretive, even after accounting for the equity raise and transaction costs. The company plans to integrate Roofing Industries’ operations while leveraging cross-selling opportunities across its existing network. Importantly, Vulcan confirmed no anticipated changes to its dividend payout policy, which targets a 40% to 80% payout ratio.
Completion Timeline and Conditions
The acquisition remains subject to customary conditions, including restructuring steps within Roofing Industries, regulatory approvals, and no material adverse changes to the business. Completion is anticipated in the second quarter of FY26. Vulcan has highlighted risks related to due diligence limitations, integration challenges, and market volatility, cautioning investors about potential impacts on future financial performance.
Outlook and Market Context
Looking ahead, Vulcan is positioning itself to capitalise on an expected economic recovery in New Zealand’s construction sector, despite a slow start to FY26. The company continues to focus on customer service excellence, operational efficiency, and growth initiatives, including further hybrid site implementations. Vulcan’s banking syndicate remains supportive, with covenant relaxations extended through June 2026, providing financial flexibility to support the acquisition and future growth.
Bottom Line?
Vulcan’s acquisition of Roofing Industries signals a strategic pivot into new markets, but successful integration and market recovery will be critical to sustaining earnings growth.
Questions in the middle?
- How will Vulcan manage integration risks and retain key personnel from Roofing Industries?
- What synergies and cross-selling opportunities can Vulcan realistically achieve post-acquisition?
- How might ongoing economic and geopolitical uncertainties impact Vulcan’s recovery and growth trajectory?
