Steel & Tube Reports 13.9% Revenue Growth and NZD 61.2m Net Loss in FY26

Revenue Growth Masks Deeper Challenges

Steel & Tube Holdings Limited (NZX:STU) posted a mixed FY26 performance, with revenue climbing 13.9% to NZD 438.9 million and volumes up nearly 16%, signaling a tentative market recovery. Yet beneath the topline growth, the company’s statutory net loss deepened sharply to NZD 61.2 million, driven largely by a hefty NZD 51.9 million non-cash asset impairment.

The company’s normalised earnings, which exclude these impairments and other non-trading items, tell a more encouraging story: normalised EBITDA soared 376% to NZD 9.9 million, while normalised EBIT losses narrowed by 22.7% to NZD -16.5 million, reflecting operational leverage kicking in as volumes improved.

Portfolio Reset Targets Loss-Making Units

Amid ongoing market volatility exacerbated by geopolitical tensions and pre-election caution, Steel & Tube launched a comprehensive portfolio review in Q4 FY26. The review identified underperforming segments, notably the Reinforcing & Wire and Plate Processing businesses, both operating in highly competitive, low-margin markets. The company plans to exit these operations subject to employee consultation, aiming to unlock NZD 11-12 million in asset and inventory value through sales, including a conditional offer from Euro Corporation for the Reinforcing & Wire assets.

Alongside business exits, Steel & Tube is streamlining its footprint by exiting seven smaller leased sites and considering the closure of two larger ones over the next 12 months. These moves are expected to yield annualised cash savings of approximately NZD 2 million by FY28, improving return on capital and lowering operating costs.

Galvanizing Business Outperforms

The galvanizing segment, bolstered by the 2025 acquisition of Perry Metal Protection, continues to outperform expectations, delivering margin expansion and revenue growth ahead of plan. Perry’s has integrated smoothly into the group, leveraging cross-sell opportunities and contributing to margin improvement despite the challenging market backdrop. This division’s resilience is a bright spot amid Steel & Tube’s broader reset efforts.

Financial Discipline and Balance Sheet Focus

Steel & Tube’s net debt rose to NZD 48 million, reflecting the cash portion of the Perry’s acquisition and ongoing working capital management. The company has paused M&A activity, imposed capital expenditure restrictions, and placed dividends on hold to rebuild balance sheet capacity. Banking facilities with ANZ have been extended to September 2027, providing financial stability as the company navigates uncertain market conditions.

Inventory management remains disciplined, with year-end stock reduced slightly to NZD 111 million and a strategic shift towards higher-value, higher-demand products. The company’s third wave cost out programme commenced in 1H26 is expected to deliver NZD 6 million in annualised savings, with NZD 3.5 million realised in FY26.

Outlook Hinges on Market Recovery Timing

CEO Mark Malpass acknowledged the uneven recovery, noting positive momentum through the first three quarters of FY26 was disrupted by external shocks in Q4. The company remains cautiously optimistic about gradual improvement across sectors such as export and manufacturing but emphasises the uncertainty around timing and pace.

Steel & Tube enters FY27 as a leaner, more focused business, with a clear strategy to strengthen core operations and grow high-value products and services. The immediate priorities include continuing balance sheet strengthening, capturing value from portfolio actions, and maintaining disciplined pricing and cost control.

As the company pursues these initiatives, investors will be watching how effectively Steel & Tube can convert operational improvements into sustainable profitability amid a still-challenging economic landscape.