Beleagured Steel & Tube - grappling with global steel prices at 13-year lows - managed to beat its downgraded profit guidance, given in May.
Its underlying profit for the year ended June fell from $21.4 million last year to $19.4 million.
Steel & Tube's shares have begun recovering from a 15-year low, and after the announcement yesterday were up about 5% at $2.20.
While the $32 million acquisition of Manufacturing Suppliers Ltd (MSL) contributed $30.1 million to revenues, that acquisition and a surprise increased dividend payout saw debt increase 40% on a year ago, to $95.6 million.
It was revealed in March that Steel & Tube's certification for its seismic mesh had for the previous four years incorrectly included the logo of an accredited, independent testing lab, while its actual mesh testing programme had been run in-house.
At that stage the Commerce Commission was already investigating the sector in general, and, shortly after, Steel & Tube's Chinese-sourced pile casings for the Huntly bypass bridge were found to be weaker than specified.
While the costs associated with those issues were not broken down by Steel & Tube, a spokesperson said collectively it was a $2.7 million cost, at the earnings before interest and tax level.
Steel & Tube yesterday booked a record full-year revenue of $516 million, net operating cash flow increased from a year ago to $25.1 million and after-tax profit was up 20.5% to $25.8 million, albeit boosted by a $6.4 million tax-affected gain on the sale of an Auckland property.
Excluding that sale, underlying profit was $19.4 million and higher than the range given in the downgraded May guidance, chief executive Dave Taylor said yesterday in a statement.
Steel & Tube had downgraded its full-year profit expectations by between 10% and 15%.
Craigs Investment Partners broker Peter McIntyre said revenue had increased 3% to $515.9 million, assisted by the acquisition of MSL, completed in early August last year, which contributed $30.1 million in revenue.
``Excluding the MSL acquisition, revenue for the group was down 3.2% on last year,'' he said.
Against Craigs' expectations of a dividend cut, Steel & Tube declared a final dividend of 13.5c per share, taking the full-year dividend to 22.5c, up 18% on last year.
``We had anticipated Steel & Tube to pay its dividend based on underlying earnings and historical payout, and use the proceeds from the sale of property to reduce debt,'' Mr McIntyre said.
However, having elected to increase its dividend, Steel & Tube's net debt now sat at $95.6 million, an increase of more than 40% on a year ago; and including the $32 million acquisition of MSL.
Mr Taylor noted the second-half results included a one-off cost impact in relation to product quality issues.
``This was achieved in a particularly challenging environment with global steel prices at 13-year lows at the year's midpoint, ongoing price volatility and intense competition in the domestic steel market,'' Mr Taylor said.
Company strategy had positioned Steel & Tube well, despite low global steel prices and quality problems, he said.
