Address by Steel & Tube CEO, Dave Taylor
Thank you Sir John, and good afternoon ladies and gentlemen…
The past year has been a significant one for Steel & Tube on a number of levels and I’m delighted to be able to share with you today some of our successes:
- Our April 2014 acquisition of the company now trading as S&T Stainless positions us as New Zealand’s leading stainless and engineering steels business, adding an additional eight facilities and several thousand more customers to those already with Steel & Tube
- This puts us on track to becoming a company with a 500-million-dollar revenue in 2015
- Our One Company operating model has assured our participation in some of the country’s key infrastructure initiatives, providing innovative and specialist solutions to projects that help grow, sustain and revitalise our cities, towns and communities
- Our $30m investment programme has kicked off with new buildings, new machinery, new digital hardware, to be followed by a new business process system, all of which will deliver value by enhancing the customer experience
- Our group net profit is up, with earnings per share rising to 20.4 cents
- We have also celebrated 60 years in business – growing, innovating and competing to create a company stronger in every way
In reflecting on our 60 years it has been pleasing to be able to look back at the many milestones that have led us to this point.
For any business to be successful it needs to adapt over a long period and I believe Steel & Tube is an effective example of this.
It is testament to the quality of our business partnerships, our ability to adapt to changing market needs and our commitment to delivering quality and service.
This year, that quality and service has been further enhanced by our acquisition of S&T Stainless, formerly a division of Tata Steel International – one of the world’s largest steel producers.
The acquisition was a natural coupling for Steel & Tube:
- Both businesses are seen as highly complementary on a number of fronts. Both enjoy extensive geographic coverage, Stainless leads in plate, sheet and coil offerings, Steel & Tube in long products and fittings.
- Stainless also brings with it some unique products – ComFlor is one – supported by specialist expertise.
As a result, our new entity offers opportunity for both companies to grow faster together, with an ability to create value through new and innovative customer solutions.
A bigger organisation – we now have around 800 staff – also offers more opportunities for our people, and the ability to grow a culture that recognises, promotes and rewards high performers, positioning Steel & Tube as an employer of choice in New Zealand.
All of this underlines the ongoing need for Steel & Tube to remain agile, flexible, and open to new opportunities and new ways of working.
To underpin this, our wide-ranging change agenda, which began with our One Company reinvigoration, continues.
Part of this includes an extensive integration programme, building on the best of both organisations as we bring our two companies together in ways that will benefit our people, our business and our customers.
Across New Zealand, our One Company model continues to yield tangible results for our business.
From roading, to historical, cultural and sporting facilities, this year Steel & Tube has continued to provide inventive and specialist solutions to projects that help develop, sustain and re-invigorate our cities, towns and communities.
In Wellington our focus has included the National War Memorial Park, part of the Government’s cornerstone project to acknowledge the centenary of the First World War.
We’re very proud to be a part of this important cultural and historical upgrade – supplying 2000 tonnes of reinforcing steel to line the floor, walls and roof of the recently opened Arras Tunnel.
In Auckland, work continues on the revolutionary Waterview Connect project – part of New Zealand’s largest and most complex infrastructure developments – creating a ring road around our biggest city.
Our specialists identified and located a purpose-built fusion-welding machine, which has helped manufacture 3,500 tonnes of steel into 120,000 straight and radial reinforcing cages for the tunnel’s 24,000 concrete segments.
In Hamilton, the challenging double-curved roof on the $28.5m Avantidrome required a complex design solution to meet weatherproofing and internal moisture requirements.
Our technical team led a custom-made solution for the nearly 7000 square meters of roofing and cladding on the building, using our trade-marked and patented ST963 metal roofing and cladding profile.
And in Christchurch, following the devastation caused by the earthquakes of 2010 and 2011, we have participated in one of its most iconic building projects, delivering several product lines into the city’s Transitional Cathedral
Elsewhere, One Company has created opportunities for us to contribute across a number of regional projects.
The Len Lye centre in New Plymouth, Waikato milking systems, and the recently opened Waiarohia Stream Bridge in Whangarei provide evidence of the One Company value-add, offering greater certainty and an assurance that, through Steel & Tube, our customers have access to the highest-quality solutions the market has to offer.
As part of our $30 million reinvestment programme two new purpose-built facilities are underway in Auckland.
These will enhance our processing capability and efficiency, and better service the expanding North Island building and construction requirements.
In October, our purpose built facility in Palmerston North opened, co-housing our Processing, Distribution and Stainless operations and providing our customers with easy access to our products all under one roof.
The way in which organisations connect with their customers and the services they provide are becoming more sophisticated every day.
We continue to take advantage of this ongoing shift in expectations by providing our customers with the products and services they want, where and when they want them.
Technology is a key enabler to this. Back in the ‘90s, Steel & Tube was one of the first companies to introduce the online JDE business process system, commonly referred to as Enterprise Resource Planning or ERP.
Today, new digital hardware across all our sites is strengthening our communications capabilities, so we can have faster, easier interaction with our customers. And we are developing a new business management system that will provide us with a 360-degree view of customer buying habits, making life easier for them to do business with us.
As always, the health and safety of our people underpins everything we do and remains fundamental to the way we operate.
In the past year we have continued to strengthen health and safety engagement among our teams and motivated participation in targeted initiatives, promoting robust root-cause analysis and safer operating procedures for those involved in transporting our product.
The success of these initiatives is reflected in the key indicators we use to measure our safety performance.
- This year our near-miss incident reporting has doubled
- Medical Time Incidents have reduced
- Lost Time Incident frequency rate – at 1.5 – remains well below the World Steel Association average.
Moving on to the trading environment…
From a wider, industry perspective, we have seen economic activity – and consequently volumes – improve across most sectors, although volatility remained, given the project nature of some of our key sectors.
- Construction activity remains robust, especially residential construction, led by Christchurch and Auckland
- Non-residential construction continues at a slower pace – with Christchurch and to a lesser degree Auckland – off-setting benign activity elsewhere. Infrastructure work remains strong and the reinforcing business in particular is experiencing strong volumes
- Manufacturing continues to be volatile, with those who export struggling against an over-valued dollar. The dollar depreciation of recent times should help and it is pleasing to see the recent improvement in this sector
- In the rural sector, the reduction in global dairy commodity prices has seen some investment cancelled, although investments in additional processing capacity, for the longer term, continue
- Oil and Gas activity has reduced considerably and, although this had commenced in the latter stages of the previous financial year, it is not likely to improve until the 2015 calendar year.
Over-capacity in steel manufacturing is a continuing issue. Despite some older mills closing, and domestic demand across Asia softening, China continues to increase its output. The result is that we have seen both raw material and finished steel prices softening throughout the period.
And with competition intense across many key products and market sectors, margins remain restrained.
Stainless volumes remain solid and, with nickel prices up 9 per cent this calendar year, coupled with the lower dollar, prices have firmed
And, as we look forward…
We had expected the month-on-month growth experienced last year to continue into this current financial year. However, in recent months, the pace of growth has eased.
Although the cause of the moderation is unclear, it is probably a combination of the uncertainty created by the September election, the declining commodity prices and the impact of the increase in interest rates, all taking effect.
With the industry remaining very competitive, and against a global backdrop of softening raw material and finished steel prices, pricing has remained subdued.
However, the recent dollar depreciation does mean that overseas product is now more expensive to import which will need to be recovered in the coming months, therefore increasing steel prices in the domestic market.
Pleasingly the stainless market remains strong and S&T Stainless continues to perform in line with expectations.
As a consequence, we expect the first half results to reflect the six months trading of S&T Stainless and a more buoyant market than the comparable period last year.
As a team we remain focused on continual improvement, and over the coming year we will identify ways to advance our systems, process effectiveness and, ultimately, our profitability.
Behind every successful team lies a group of specialist, skilled and highly professional people. As part of our 60th anniversary this year we have developed a customer-centric video that highlights the ways in which our people and our One Company ethos continue to deliver results, both internally and externally.
We’ll play it for you at the end of our proceedings today, just before we break for refreshments. It offers an excellent window into our world and the many great things our company is doing, as we go from strength to strength.
Thank you.
[Ends]
Note this speech was made in conjunction with the AGM PPT presentation. You can view the presentation by clicking on this link