Fully Year 2026 Steel & Tube Holdings Ltd Earnings Call

August 25, 2026

Speaker #2: Thank you for standing by, and welcome to the Steel & Tube Holdings Limited FY26 results call. All participants are in listen-only mode. There will be a presentation, followed by a question-and-answer session.

Operator 2: Thank you for standing by, and welcome to the Steel & Tube Holdings Limited FY26 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and hit Submit. I would now like to hand the conference over to Mark Malpass, CEO. Please go ahead.

Operator: Thank you for standing by, and welcome to the Steel & Tube Holdings Limited FY 2026 Results Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and hit Submit. I would now like to hand the conference over to Mark Malpass, CEO. Please go ahead.

Speaker #2: If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and hit submit.

Speaker #2: I would now like to hand the conference over to Mark Malpass, CEO. Please go ahead.

Speaker #3: Thank you, and welcome to everyone on the call. Here with me today is Richard Smyth, Steel & Tube's CFO. We'll discuss our full year 2026 results and performance, and have time for questions at the end.

Mark Malpass: Thank you, and welcome to everyone on the call. Here with me today is Richard Smyth, Steel & Tube CFO. We will discuss our financial year 2026 results and performance and have time for questions at the end. New Zealand has now experienced three recessionary years in a row, with the downturn continuing longer than we had anticipated. While it was good to see the improvements this year, it has been uneven, with continued market weakness delaying the return to profitability. As a cyclical business, we are highly leveraged to the economy. We started to see some positive recovery and demand across the first three quarters of the year and achieved positive normalized earnings in March and break even in May before the market disruption as a result of the Middle East conflict and pre-election caution.

Speaker #3: New Zealand has now experienced three recessionary years in a row. With the downturn continuing longer than we had anticipated, it is good to see the improvements this year; however, they have been uneven, with continued market weakness delaying the return to profitability.

Speaker #3: As a cyclical business, we're highly leveraged to the economy. We started to see some positive recovery in demand across the first three quarters of the year, and achieved positive normalised earnings in March and break-even in May before the market disruption as a result of the Middle East conflict and pre-election caution.

Speaker #3: The emerging recovery gave us confidence that the initiatives we put in place to strengthen our operating leverage are working. We saw margins start to expand, earnings improve, and converted modest revenue growth to stronger financial outcomes.

Mark Malpass: The emerging recovery gave us confidence initiatives that were put in place to strengthen our operating leverage of working. We saw margins start to expand, earnings improve, and converted modest revenue growth to stronger financial outcomes. Normalized EBIT was improved 23.7% on last year, and H2 earnings were improved 40% on the H1. This reinforces to us that the changes that we have made in the past few years are working and will deliver more meaningful uplift in financial performance as the market demand returns. Over the past five years, we have acquired a number of high-performing businesses. The acquisition of Perry Metal Protection last year was a bottom-of-cycle purchase with a favorable deal structure. However, it saw our borrowings increase ahead of the market recovery, which put pressure on our balance sheet.

Speaker #3: Normalised EBIT improved by 23.7% on last year, and second-half earnings were up 40% on the first half. This reinforces to us that the changes we’ve made over the past few years are working, and will deliver a more meaningful uplift in financial performance as market demand returns.

Speaker #3: Over the past five years, we've acquired a number of high-performing businesses. The acquisition of Perry Metal Protection last year was a bottom-of-cycle purchase with a favorable deal structure.

Speaker #3: However, it saw our borrowings increase ahead of the market recovery, which put pressure on our balance sheet. To manage this, we've paused our M&A activity, put capex restrictions in place, and dividends are on hold.

Mark Malpass: To manage this, we have paused our M&A activity, we have put CapEx restrictions in place, and dividends are on hold. Importantly, we renewed our banking arrangements with the ANZ for a further year until September 2027, providing additional financial stability for the company. We have also undertaken a comprehensive portfolio review to ensure our capital is allocated toward the highest value opportunities. Initial outcomes of this review have been to exit our Reinforcing and Wire business and our plate processing operations. These are currently in the consultation phase. We are also closing seven smaller sites and two larger sites. While still below desired levels, this year's results are a solid improvement on last year. Volumes are up 15.9%, revenue increased 13.9% alongside improved earnings. Although we are not yet at the level needed to generate profit.

Mark Malpass: To manage this, we have paused our M&A activity, we have put CapEx restrictions in place, and dividends are on hold. Importantly, we renewed our banking arrangements with the ANZ for a further year until September 2027, providing additional financial stability for the company. We have also undertaken a comprehensive portfolio review to ensure our capital is allocated toward the highest value opportunities. Initial outcomes of this review have been to exit our reinforcing and wire business and our plate processing operations. These are currently in the consultation phase. We are also closing seven smaller sites and two larger sites. While still below desired levels, this year's results are a solid improvement on last year. Volumes are up 15.9%, revenue increased 13.9% alongside improved earnings. Although we are not yet at the level needed to generate profit.

Speaker #3: Importantly, we renewed our banking arrangements with ANZ for a further year, until September 27, providing additional financial stability for the company. We've also undertaken a comprehensive portfolio review to ensure our capital is allocated toward the highest-value opportunities. Initial outcomes of this review have been to exit our reinforcing and wire business and our plate processing operations.

Speaker #3: These are currently in the consultation phase. We're also closing seven smaller sites and two larger sites. While still below desired levels, this year's results are a solid improvement on last year.

Speaker #3: Volumes are up 15.9%, and revenue increased 13.9%, alongside improved earnings. Although we're not yet at the level needed to generate profit. This year's results include a $51.9 million impairment to reflect the write-down of the carrying value of our business units, as well as other non-trading adjustments of $3.8 million.

Mark Malpass: This year's results includes a NZD 51.9 million impairment to reflect the write-down of the carrying value of our business units, as well as other non-trading adjustments of NZD 3.8 million. Including these, the statutory loss was NZD 61.2 million after tax. It is clearly disappointing to report another loss, and our focus is firmly on restoring the strength of our balance sheet and returning the business to sustainable profitability. Looking at the backdrop in a bit more detail, as I said, the start of the financial year 2026 was encouraging. Inquiry levels lifted, forward orders improved, and customer sentiment showed some recovery. H1 revenue and tonnes per day are both improved year on year, along with a lift in product margin. The improving trend continued to about April this year, supporting increased revenues and volumes.

Speaker #3: Including these, the statutory loss was $61.2 million after tax. It is clearly disappointing to report another loss, and our focus is firmly on restoring the strength of our balance sheet and returning the business to sustainable profitability.

Speaker #3: Looking at the backdrop in a bit more detail, as I said, the start of the financial year 2026 was encouraging. Inquiry levels lifted, forward orders improved, and customer sentiment showed some recovery.

Speaker #3: First-half revenue and tons per day both improved year on year, along with a lift in product margin. The improving trend continued through to about April this year, supporting increased revenues and volumes.

Speaker #3: However, the renewed geopolitical uncertainty, cost inflation, pre-election uncertainty, and the persistent caution amongst our customers affected what appeared to be the early stages of recovery.

Mark Malpass: However, the renewed geopolitical uncertainty, cost inflation, pre-election uncertainty, and the persistent caution amongst our customers affected what appeared to be the early stages of recovery. Despite growth momentum slowing in Q4, our H2 revenue and tonnes per day were still well ahead of the same time last year and ahead of the H1 performance. Although margins were impacted by product mix and competitive pressure and cost inflation. Normalized earnings also improved in line with the market recovery, with a strong improvement year on year and continuing growth momentum from the H1 to the H2 of the financial year, with a return to positive normalized earnings in March and break even in May. We saw quite a marked difference in demand across sectors and regions.

Speaker #3: Despite growth momentum slowing in the fourth quarter, our second-half revenue and tons per day were still well ahead of the same time last year, and ahead of the first-half performance.

Speaker #3: Although margins were impacted by product mix, competitive pressure, and cost inflation, normalised earnings also improved in line with the market recovery, with a strong improvement year on year and continuing growth momentum from the first half to the second half of the financial year.

Speaker #3: With a return to positive normalised earnings in March and break-even in May, we saw quite a marked difference in demand across sectors and regions.

Speaker #3: Manufacturing and export were strong, while construction and infrastructure remained subdued, with New Zealand currently in the worst construction sector recession in decades. Activity in the South Island was stronger than in other regions.

Mark Malpass: Manufacturing and export were strong, while construction and infrastructure remained subdued, with New Zealand currently in the worst construction sector recession in decades. Activity in the South Island was stronger than in other regions. The recovering manufacturing sector was mixed month on month, but the overall trend bodes well for this year. Residential consents also recently improved, but we are cautious about how these will translate into building activities. Likewise, for commercial construction, that has also been very slow, which impacts on demand for reinforcing and mesh in particular. While a number of infrastructure projects have been commenced, public sector activity was still fairly subdued and well below what New Zealand needs. With an election looming, we do not expect there to be much of a tick-up in the infrastructure space in the short term.

Speaker #3: The recovering manufacturing sector was mixed month-on-month, but the overall trend bodes well for this year. Residential consents also recently improved, but we're cautious about how these will translate into building activities—likewise for commercial construction.

Speaker #3: That's also been very slow, which impacts on demand for reinforcing and mesh in particular. While a number of infrastructure projects have commenced, public sector activity is still fairly subdued and well below what New Zealand needs.

Speaker #3: With an election looming, we don't expect there to be much of a tick-up in the infrastructure space in the short term. Export markets remain strong, driven mainly by dairy and agricultural industries, and this benefits us with demand across our product range.

Mark Malpass: Export markets remain strong, driven mainly by dairy and agricultural industries, and this benefits us with demand across our product range. Looking at key priorities as we progress over the past year, the recent macro uncertainty highlights the importance of continuing to evolve our business model to be less dependent on construction cycles. We are consciously expanding our sector diversity, growing into areas where we can create competitive advantage, and galvanizing is a very good example of this. Cost discipline is a continued focus for us with the third phase of our cost out program in FY26. Optimizing our supply chain, rationalizing our SKUs has also benefited our cost line. Lower cost and increased efficiency, as well as the focus on higher value products and services, will continue to support margin expansion as volumes recover.

Mark Malpass: Export markets remain strong, driven mainly by dairy and agricultural industries, and this benefits us with demand across our product range. Looking at key priorities as we progress over the past year, the recent macro uncertainty highlights the importance of continuing to evolve our business model to be less dependent on construction cycles. We are consciously expanding our sector diversity, growing into areas where we can create competitive advantage, and galvanizing is a very good example of this. Cost discipline is a continued focus for us with the third phase of our cost out program in FY 2026. Optimizing our supply chain, rationalizing our SKUs has also benefited our cost line. Lower cost and increased efficiency, as well as the focus on higher value products and services, will continue to support margin expansion as volumes recover.

Speaker #3: Looking at key priorities as we progress over the past year, the recent macro uncertainty highlights the importance of continuing to evolve our business model to be less dependent on construction cycles.

Speaker #3: We're consciously expanding our sector diversity, growing into areas where we can create competitive advantage, and galvanising is a very good example of this. Cost discipline is a continued focus for us, with the third phase of our cost-out program in the financial year 2026. Optimising our supply chain and rationalising our SKUs has also benefited our cost line.

Speaker #3: Lower costs and increased efficiency, as well as the focus on higher-value products and services, will continue to support margin expansion as volumes recover.

Speaker #3: We're conscious that our customers are also operating in a very challenging environment, with cost pressures that are significant for them. Our approach is to maintain a disciplined pricing strategy, ensuring we deliver fair value while maintaining the quality, service, and expertise our customers rely on us for.

Mark Malpass: We are conscious that our customers are also operating in a very challenging environment with cost pressures that are significant for them. Our approach is to maintain a disciplined pricing approach, ensuring we deliver fair value while maintaining the quality service and expertise our customers rely on us for. We are also looking ahead at how our business models can further adapt AI and other technology to deliver smarter, more profitable ways of servicing our customers. Rebuilding our balance sheet capacity continues to be a key priority for the board and management. We have a disciplined approach to capital allocation, as demonstrated by the recent portfolio review and decision to exit businesses that do not meet our investment criteria. The acquisition of the Perry's business was a strong endorsement of our strategy to grow into high-value products and services.

Speaker #3: We're also looking ahead at how our business models can further adapt AI and other technology to deliver smarter, more profitable ways of servicing our customers.

Speaker #3: Rebuilding our balance sheet capacity continues to be a key priority for the Board and management. We have a disciplined approach to capital allocation, as demonstrated by the recent portfolio review and decision to exit businesses that do not meet our investment criteria.

Speaker #3: The acquisition of the Pearys business was a strong endorsement of our strategy to grow into high-value products and services. It has now been part of our group for just over a year and has continued to outperform, with revenue and earnings trending above both the business case and prior year performance.

Mark Malpass: It has now been part of our group for just over a year and has continued to outperform, with revenue and earnings trending above both the business case and prior year performance. The cross-sell and revenue synergies that we had expected are coming through as planned. Our other acquisitions over recent years, such as Kiwi Pipe & Fittings and RoadX Trucks and in-house fleet and organic growth of our aluminum business have all delivered and are providing value for our group. In the past year, we have further expanded our range of aluminum products in response to customer demand, extended the reach of Kiwi Pipe & Fittings into the South Island, and we have grown our in-house fleet and launched a number of new products in different categories. Disappointingly, however, our plate processing business has been an outlier and returns have been below the investment criteria.

Mark Malpass: It has now been part of our group for just over a year and has continued to outperform, with revenue and earnings trending above both the business case and prior year performance. The cross-sell and revenue synergies that we had expected are coming through as planned. Our other acquisitions over recent years, such as Kiwi Pipe & Fittings and Roadex trucks and in-house fleet and organic growth of our aluminum business have all delivered and are providing value for our group. In the past year, we have further expanded our range of aluminum products in response to customer demand, extended the reach of Kiwi Pipe & Fittings into the South Island, and we have grown our in-house fleet and launched a number of new products in different categories. Disappointingly, however, our plate processing business has been an outlier and returns have been below the investment criteria.

Speaker #3: And the cross-sell and revenue synergies that we had expected are coming through as planned. Our other acquisitions over recent years, such as Kiwi Pipe and Fittings and Rodex Trucks, and in-house fleet and organic growth of our aluminium business, have all delivered and are providing value for our group.

Speaker #3: In the past year, we've further expanded our range of aluminium products in response to customer demand, extended the reach of Kiwi Pipe and Fittings into the South Island, and we've grown our in-house fleet and launched a number of new products in different categories.

Speaker #3: Disappointingly, however, as our plate processing business has been an outlier, returns have been below the investment criteria. Over the past several years, we have taken decisive action to reshape the business, strengthen our operating model, and position Steel & Tube for long-term success.

Mark Malpass: Over the past several years, we have taken decisive action to reshape the business, strengthen our operating model, and position Steel & Tube for long-term success. This slide shows the significant work that has been done. We are now a more focused, leaner, and a more efficient company. In Q4 this year, we commenced a comprehensive portfolio review to ensure that capital is directed to the highest value opportunities. We assessed our current portfolio against clear criteria and prioritized product services and markets where we can create the greatest value. We also considered new opportunities that offer strong returns, sustainable competitive advantage, and long-term growth. The review has confirmed the areas where our recent investments are delivering value and where we see further growth potential, while also identifying businesses that no longer meet our criteria.

Speaker #3: And this slide shows the significant work that's been done; we are now more focused, leaner, and a more efficient company. In Q4 this year, we commenced a comprehensive portfolio review to ensure that capital is directed to the highest-value opportunities.

Speaker #3: We assessed our current portfolio against clear criteria and prioritised products, services, and markets where we can create the greatest value. We also considered new opportunities that offer strong returns, sustainable competitive advantage, and long-term growth.

Speaker #3: The review has confirmed the areas where our recent investments are delivering value, and where we see further growth potential, while also identifying businesses that no longer meet our criteria.

Speaker #3: As such, we'll be exiting our reel and wire business and plate operations, and these are currently going through the consultation process with our team.

Mark Malpass: As such, we will be exiting our Reinforcing and Wire business and Plate operations, and these are currently going through the consultation process with our team. Even with the market-leading specialist support and outstanding talent and excellent service, the competitive dynamics in the Reinforcing and Wire market and prolonged low activity across the construction sector has continued to see returns below the value needed for a sustainable, profitable operation. Plate processing has been one of the outlines of our strategic growth initiatives, outlines, excuse me, of our strategic growth initiatives. Despite the early success that we saw, the returns from our investment have been below expectations due to the extensive competitive pressure. Our priority is to maximize the value of both of these businesses through the sale of the assets, with proceeds used to pay down debt.

Mark Malpass: As such, we will be exiting our reinforcing and wire business and plate operations, and these are currently going through the consultation process with our team. Even with the market-leading specialist support and outstanding talent and excellent service, the competitive dynamics in the reinforcing and wire market and prolonged low activity across the construction sector has continued to see returns below the value needed for a sustainable, profitable operation. Plate processing has been one of the outlines of our strategic growth initiatives, outlines, excuse me, of our strategic growth initiatives. Despite the early success that we saw, the returns from our investment have been below expectations due to the extensive competitive pressure. Our priority is to maximize the value of both of these businesses through the sale of the assets, with proceeds used to pay down debt.

Speaker #3: Even with market-leading specialist support, outstanding talent, and excellent service, the competitive dynamics in the reinforcing and wire market, along with prolonged low activity across the construction sector, have continued to see returns below the value needed for a sustainable, profitable operation.

Speaker #3: Plate processing has been one of the outliers of our strategic growth initiatives—outliers, excuse me, of our strategic growth initiatives. And despite the early success that we saw, the returns from our investment have been below expectations due to the extensive competitive pressure.

Speaker #3: Our priority is to maximise the value of both of these businesses through the sale of the assets, with proceeds used to pay down debt.

Speaker #3: We've received an offer from Euro Corporation for the Rio reinforcing and wire assets, and we've agreed on terms. Any sale to Euro would be conditional on obtaining the necessary approvals and also satisfactory engagement with the Commerce Commission.

Mark Malpass: We have received an offer from Euro Corporation for the Reinforcing and Wire assets, and we have agreed terms. Any sale to Euro would be conditional on obtaining the necessary approvals, and also satisfactory engagement with the Commerce Commission. Under their offer terms, Euro would assume customer contracts and acquire the inventory and assets. Euro would also consider effective staff for future employment opportunities. Separately, we are also conducting a marketing process for the Reinforcing Wire and Plate processing assets over the next few months to ensure that the full market value of those assets is realized. The sale of the assets is expected to realize a value of about NZD 11 to NZD 12 million for the assets and inventory, excluding cost for the Reinforcing and Wire business. We are also working closely with the affected team members through this process and exploring ways to support them.

Mark Malpass: We have received an offer from Euro Corporation for the reinforcing and wire assets, and we have agreed terms. Any sale to Euro would be conditional on obtaining the necessary approvals, and also satisfactory engagement with the Commerce Commission. Under their offer terms, Euro would assume customer contracts and acquire the inventory and assets. Euro would also consider effective staff for future employment opportunities. Separately, we are also conducting a marketing process for the Reinforcing Wire and Plate processing assets over the next few months to ensure that the full market value of those assets is realized. The sale of the assets is expected to realize a value of about NZD 11 to NZD 12 million for the assets and inventory, excluding cost for the Reinforcing and Wire business. We are also working closely with the affected team members through this process and exploring ways to support them.

Speaker #3: Under their offer terms, Euro would assume customer contracts and acquire the inventory and assets. Euro would also consider effective staff for future employment opportunities.

Speaker #3: Separately, we're also conducting a marketing process for the reinforcing wire and plate processing assets over the next few months, to ensure market value of those assets is realised.

Speaker #3: The sale of the assets is expected to realize a value of about $11 to $12 million for the assets and inventory, excluding costs for the reinforcing and wire business.

Speaker #3: We're also working closely with the affected team members through this process and exploring ways to support them. As we mentioned at the half year, we have also reviewed our lease portfolio. Over the next 12 months, we'll exit seven smaller sites, lowering our operating costs and improving returns on capital through more efficient use of assets.

Mark Malpass: As we mentioned at the half year, we have also reviewed our lease portfolio. Over the next 12 months, we will exit seven smaller sites, lowering our operating costs, improving returns on capital through more efficient use of assets. Our regional hubs will not be affected and will continue to provide our customers with a one-stop shop. As part of the portfolio review, we are also exploring the exit of two further larger sites. I will now hand over to Richard to talk through the FY26 results in more detail.

Speaker #3: Our regional hubs won't be affected, and we'll continue to provide our customers with a one-stop shop. As part of the portfolio review, we're also exploring the exit of two further, larger sites.

Speaker #3: I'll now hand over to Richard to talk through the financial year 2026 results in more detail.

Speaker #2: Thanks, Mark, and welcome, everyone. A relentless focus on financial discipline over the past few years underpins the year-on-year improvement in our FY26 trading results.

Richard Smyth: Thanks, Mark, and welcome everyone. A relentless, excuse me, a relentless focus on financial discipline over the past few years underpins the year-on-year improvement in our FY26 trading results. Volumes and revenue increased. Earnings growth was ahead of revenue and a meaningful uplift on prior years. We benefited from the long-term cost-out program with lower structural costs supporting increasing operating leverage. The statutory results this year include impairment losses and other adjustments mentioned by Mark earlier. These are non-cash, with the impairments reflecting a write-down in the carrying value of the Steel & Tube's business units as a result of accounting assessments made at this point in time each year. While impairments reduce the carrying value of assets today, they may be partially reversed as performance improves and recoverable values increase.

Richard Smyth: Thanks, Mark, and welcome everyone. A relentless, excuse me, a relentless focus on financial discipline over the past few years underpins the year-on-year improvement in our FY 2026 trading results. Volumes and revenue increased. Earnings growth was ahead of revenue and a meaningful uplift on prior years. We benefited from the long-term cost-out program with lower structural costs supporting increasing operating leverage. The statutory results this year include impairment losses and other adjustments mentioned by Mark earlier. These are non-cash, with the impairments reflecting a write-down in the carrying value of the Steel & Tube's business units as a result of accounting assessments made at this point in time each year. While impairments reduce the carrying value of assets today, they may be partially reversed as performance improves and recoverable values increase.

Speaker #2: Volumes and revenue increased. Earnings growth was ahead of revenue and represented a meaningful uplift on prior years. We benefited from the long-term cost-out programme, with lower structural costs supporting increasing operating leverage.

Speaker #2: The statutory results this year include an impairment, losses, and other adjustments mentioned by Mark earlier. These are non-cash, with the impairments reflecting a write-down in the carrying value of Steel & Tube's business units as a result of accounting assessments made at this point in time each year.

Speaker #2: While impairments reduce the carrying value of assets today, they may be partially reversed as performance improves and recoverable values increase. As you can see in the graph, the emerging market recovery through the first three quarters drove upward momentum in demand and revenue. First half revenue in tonnes per day both improved year on year, along with a lift in product margin.

Richard Smyth: As you can see in the graph, the emerging market recovery through the first three quarters drove upward momentum and demand in revenue. H1 revenue and tonnes per day both improved year-on-year, along with the lift in product margin. While growth continued in the H2, the pace slowed in Q4 due to macro headwinds. Despite this, H2 revenue and tonnes per day was still ahead of the same time last year and ahead of the H1 performance. Although margins were down slightly due to product mix and cost inflation. Average selling price reflects increasing price pressures in a tighter market offset by the higher value galvanizing service. While we seek to be competitive and meet the market, we are not necessarily the cheapest, nor do we want to be. So maintaining market share is a good reflection of our value in a price-sensitive market.

Speaker #2: While growth continued in the second half, the pace slowed in Q4 due to macro headwinds. Despite this, second-half revenue, in tonnes per day, was still ahead of the same time last year, and ahead of the first half performance, although margins were down slightly due to product mix and cost inflation.

Speaker #2: Average selling price reflects increasing price pressures and a tighter market, offset by the higher value galvanising service. While we seek to be competitive and meet the market, we are not necessarily the cheapest, nor do we want to be, so maintaining market share is a good reflection of our value in a price-sensitive market.

Speaker #2: Margins lifted year on year as a result of the galvanising acquisition, offsetting base business margin decline. Efficiency initiatives in freight and warehousing are also delivering benefits.

Richard Smyth: Margins lifted year-on-year as a result of the galvanizing acquisition offsetting base business margin decline. Efficiency initiatives in freight and warehousing are also delivering benefits. While we have had to shed some margin to retain volumes, we are still being disciplined about pricing and adding value through our service offer. We have built a more efficient business so that when demand returns, we are well positioned to convert into stronger margins and improved earnings. The increase in operating expenses year-on-year is directly attributable to inflation and the additional Perry's business. Excluding these, OpEx was almost flat year-on-year. A further NZD 6 million program is underway, and we expect to deliver a NZD 3 million benefit to operating expenses from FY27. The cost program has been a big focus for the past three years. We have looked to make our business more efficient, more competitive, and more profitable.

Speaker #2: While we've had to shed some margin to retain volumes, we are still being disciplined about pricing and adding value through our service offer. We've built a more efficient business so that when demand returns, we're well positioned to convert that into stronger margins and improved earnings.

Speaker #2: The increase in operating expenses year on year is directly attributable to inflation and the addition of the Perrys business. Excluding these, OPEX was almost flat year on year.

Speaker #2: A further $6 million programme is underway, and we expect to deliver a $3 million benefit to operating expenses from FY27. The cost programme has been a big focus for the past three years, and we've looked to make our business more efficient, more competitive, and more profitable.

Speaker #2: We're keeping close control of the costs, with further measures for FY27, including constrained salary increases, no management incentive programme, reductions in inventory, and a freeze on mergers and acquisitions and discretionary expenses.

Richard Smyth: We are keeping close control of the costs with further measures for FY27, including constrained salary increases, no management incentive program, reductions in inventory, and a freeze on M&A and discretionary expenses. The site consolidation over the coming months is expected to deliver an annualized cash saving of approximately NZD 2 million in FY28. Normalized EBITDA improved year-on-year from NZD 2.1 million to NZD 9.9 million, an increase of 376%. Looking at the waterfall on this page, you can see the positive impact of growth investments, largely driven by Perry's and our group freight initiative. Volumes in our base business have increased. However, this was offset by a decline in the base business margin. The impact of inflation is less than recent periods and has been largely offset by our cost-saving initiatives. Rebuilding our balance sheet remains a priority following the acquisition of Perry's last year.

Speaker #2: The site consolidation over the coming months is expected to deliver an annualised cash saving of approximately $2 million in FY28. Normalised EBITDA improved year on year from $2.1 million to $9.9 million, an increase of 376%.

Speaker #2: Looking at the waterfall on this page, you can see the positive impact of growth investments, largely driven by Perrys and our group freight initiative.

Speaker #2: Volumes in our base business have increased. However, this was offset by a decline in the base business margin. The impact of inflation is less than in recent periods and has been largely offset by our cost-saving initiatives.

Speaker #2: Rebuilding our balance sheet remains a priority, following the acquisition of Perrys last year. The portfolio review has identified opportunities to release capital and exit loss-making operations.

Richard Smyth: The portfolio review has identified opportunities to release capital and exit loss-making operations. In June, we extended our banking facility with ANZ to September 2027 and agreed revised bank covenants, which provides us with financial stability and flexibility. The board regularly reviews the company's capital structure and is comfortable that the group's financing position remains sound. Net operating cash was NZD 12.7 million for the period, with borrowings reflecting the Perry's acquisition as well as support for ongoing operations. We are managing our cash flow very carefully with good cash collections in a softened operating environment and a disciplined approach to inventory and supply chain. Working capital continues to be prioritized with close cash control mechanisms in place. We have a prudent approach to CapEx in the current environment, and priority spend is guided by our strategic framework.

Speaker #2: In June, we extended our banking facility with ANZ through to September 2027 and agreed to revise bank covenants, which provides us with financial stability and flexibility.

Speaker #2: The Board regularly reviews the company's capital structure and is comfortable that the Group's financing position remains sound. Net operating cash was $12.7 million for the period, with borrowings reflecting the Perrys acquisition as well as support for ongoing operations.

Speaker #2: We are managing our cash flow very carefully, with good cash collections, a softened operating environment, and a disciplined approach to inventory and supply chain.

Speaker #2: Working capital continues to be prioritised, with close cash control mechanisms in place. We have a prudent approach to CAPEX in the current environment, and priority spend is guided by our strategic framework.

Speaker #2: CAPEX was $7 million in FY26, with approximately two-thirds of that being maintenance spend. We continue to carefully manage our inventory to make the best use of working capital, with year-end inventory of $111 million.

Richard Smyth: CapEx was NZD 7 million in FY26, with approximately two-thirds of that being maintenance spend. We continue to carefully manage our inventory to make best use of working capital with year-end inventory of NZD 111 million. We have continued to invest in the products and locations where customer demand is strongest while reducing slow-moving and obsolete inventory, sometimes at reduced margins. This has seen SKUs decrease from 23,000 to around 13,000. The implementation of our Netstock forecasting platform has enabled better purchasing decisions and more disciplined stock management. Our deep supplier relationships have allowed us to progressively turn towards a more just-in-time inventory model with shorter lead times. This provides greater operational flexibility, supports working capital efficiency, and enables us to respond more quickly to changing customer demand. I am happy to take questions at the end of the presentation, but in the meantime, I will hand you back to Mark.

Richard Smyth: CapEx was NZD 7 million in FY 2026, with approximately two-thirds of that being maintenance spend. We continue to carefully manage our inventory to make best use of working capital with year-end inventory of NZD 111 million. We have continued to invest in the products and locations where customer demand is strongest while reducing slow-moving and obsolete inventory, sometimes at reduced margins. This has seen SKUs decrease from 23,000 to around 13,000. The implementation of our Netstock forecasting platform has enabled better purchasing decisions and more disciplined stock management. Our deep supplier relationships have allowed us to progressively turn towards a more just-in-time inventory model with shorter lead times. This provides greater operational flexibility, supports working capital efficiency, and enables us to respond more quickly to changing customer demand.

Speaker #2: We have continued to invest in the products and locations where customer demand is strongest, while reducing slow-moving and obsolete inventory—sometimes at reduced margins.

Speaker #2: This has seen SKUs decrease from 23,000 to around 13,000. The implementation of our net stock forecasting platform has enabled better purchasing decisions and more disciplined stock management.

Speaker #2: Our deep supplier relationships have allowed us to progressively turn towards a more just-in-time inventory model, with shorter lead times. This provides greater operational flexibility, supports working capital efficiency, and enables us to respond more quickly to changing customer demand.

Speaker #2: I'm happy to take questions at the end of the presentation, but in the meantime, I'll hand you back to Mark. Thank you.

Richard Smyth: I am happy to take questions at the end of the presentation, but in the meantime, I will hand you back to Mark. Thank you.

Richard Smyth: Thank you.

Speaker #3: This year demonstrated that our operating leverage improved our ability to increase earnings and margin as volumes improve. Although the timing and pace of the economic recovery remain uncertain, there are encouraging signs that activity across several sectors is gradually improving.

Mark Malpass: This year demonstrated our operating leverage improved our ability to increase earnings and margin as volumes improve. Although the timing and pace of the economic recovery remain uncertain, there are encouraging signs that activity across several sectors is gradually improving. We are cautiously optimistic but do expect that any recovery will be gradual and uneven rather than a sharp rebound. Export and manufacturing activity should remain comparatively resilient and infrastructure work continues, although the timing of major projects and funding constraints means workloads are likely to remain uneven. Residential construction should improve from a low base. However, the recovery is expected to be gradual, with headwinds continuing to impact the translation from increased consents to spades in the ground. Commercial construction is likely to lag, with businesses remaining cautious about committing to new projects and longer timelines.

Speaker #3: We're cautiously optimistic, but do expect that any recovery will be gradual and uneven, rather than a sharp rebound. Export and manufacturing activity should remain comparatively resilient, and infrastructure work continues, although the timing of major projects and funding constraints means workloads are likely to remain uneven.

Speaker #3: Residential construction should improve from a low base; however, the recovery is expected to be gradual, with headwinds continuing to impact the translation from increased consents to spades on the ground.

Speaker #3: Commercial construction is likely to lag, with businesses remaining cautious about committing to new projects and longer timelines. We are well placed for the opportunities ahead of us, as we showed this year, and will benefit from operating leverage as volumes start to recover.

Mark Malpass: We are well-placed for the opportunities ahead of us as we showed this year, we will benefit the operating leverage as volumes start to recover. We have a clear pathway to improving performance and returns. Our strategy remains unchanged, excuse me, to strengthen the core and grow high-value products and services. Our immediate priorities are to continue to improve capital allocation and strengthen the balance sheet through the exit of loss-making businesses, retaining our focus on cost and margin growth, capturing value from our initiatives and acquisitions, as well as building on our customer alliances and partnerships to increase market share and revenue. In summary, Steel & Tube enters the financial year 2027 well-prepared for market recovery, but we still have some work to do.

Speaker #3: We have a clear pathway to improving performance and returns. Our strategy remains unchanged—to strengthen the core and grow high-value products and services.

Speaker #3: Our immediate priorities are to continue to improve capital allocation and strengthen the balance sheet through the exit of loss-making businesses. We will retain our focus on cost and margin growth, capture value from our initiatives and acquisitions, and build on our customer alliances and partnerships to increase market share and revenue.

Speaker #3: In summary, Steel & Tube enters the financial year 2027 well prepared for market recovery, but we still have some work to do. As one of New Zealand's leading steel solutions providers, we have the scale, customer relationships, and technical expertise in operating leverage to benefit as demand does improve.

Mark Malpass: As one of New Zealand's leading steel solutions providers, we have the scale, customer relationships and technical expertise and operating leverage to benefit as the demand does improve. Our focus remains on disciplined execution, growing returns, and creating long-term value for our shareholders. Thank you. We are now happy to take questions, and I will hand over to the operator to manage these.

Speaker #3: Our focus remains on disciplined execution, growing returns, and creating long-term value for our shareholders. Thank you. We're now happy to take questions, and I'll hand over to the operator to manage these.

Speaker #1: Thank you. If you wish to ask a question via the phone, you will need to press the star key, followed by the number one, on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and hit submit.

Operator 2: Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and hit Submit. Your first question comes from Kieran Carling from Craigs Investment Partners. Please go ahead.

Operator: Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and hit Submit. Your first question comes from Kieran Carling from Craigs Investment Partners. Please go ahead.

Speaker #1: Your first question comes from Kieran Carling from Craigs Investment Partners. Please go ahead.

Speaker #3: I'm wanting Mark and Richard. Thanks for the presentation. Just the first one from me is on Perrys—you've talked about the fact that the acquisition is tracking about 30% ahead of business case.

Kieran Carling: Morning, Mark and Richard. Thanks for the presentation. First one from me is on Perry's. You have talked about the fact that acquisition is tracking about 30% ahead of business case, but from memory, it was historically spitting out about NZD 35 million of revenue and NZD 8 million of EBIT. I guess just looking at your annual report on page 46, it looks like EBIT was NZD 32 million and, I am sorry, revenue was NZD 32 million and EBIT was about NZD 5 million. Can you just talk us through how we should sort of triangulate those comments and what is going on there?

Speaker #3: But from memory, it was historically spitting out about 35 mil of revenue, and 8 mil of EBIT. And I guess just looking at your annual report on page 46, it looks like EBIT was 32 mil, and I'm sorry, revenue was 32 mil, and EBIT was about 5.

Speaker #3: So, can you just talk us through how we should sort of triangulate those comments and what's going on there?

Speaker #2: Hi, Kieran. So, the main difference between those historic numbers that we talked about was our corporate levy. So that's a sizable amount of Mark's and my costs, and various other people's costs that we allocate.

Richard Smyth: Hi, Kieran. The main difference between those historic numbers that we talked about was our corporate levy. That is a sizable amount of Mark and I, and various other people's costs that we allocate. That did not exist in the Perry's world, so those numbers that you are referring to impact that. You are right, revenue is about NZD 33.5 million. We actually think that is slightly up on the prior period, like-for-like basis.

Speaker #2: That didn't exist in the Perry's world, so those numbers that you're referring to impact that. You are right, revenue is about $33.5 million.

Speaker #2: Which we actually think is slightly up on the prior period, on a like-for-like basis.

Speaker #3: And earnings are up just over a million dollars on the prior year, per the presentation there, Kieran?

Mark Malpass: Earnings are up just over NZD 1 million on prior year, per the presentation there, Kieran Carling.

Speaker #4: Right, but it's fair to say that you're not expecting much additional growth from that business going forward.

Kieran Carling: Right. But it's

Kieran Carling: Right. But it's fair to say that you're not expecting much additional growth from that business going forward?

Kieran Carling: fair to say that you're not expecting much additional growth from that business going forward?

Speaker #2: I mean, it's been incredibly resilient given the general volume environment. It's increased, as Richard noted, by about $1 million of revenue. We've seen a lot of cross-synergy benefits between Steel & Tube that are actually continuing to grow.

Mark Malpass: It's been incredibly resilient given the general volume environment. It's increased, as Richard Smyth noted, about NZD 1 million of revenue. We've seen a lot of cross synergy benefits between Steel & Tube that are actually continuing to grow. So perhaps the way to describe it is about 25% of Perry's customer base we weren't servicing. We were servicing about 75% of it. We've been progressively building for Steel & Tube volumes from Perry's customers, and same thing vice versa. Customers that we were having galvanizing with Perry's competitors, we've been switching those across to Perry's. So there's been some synergistic, I guess, growth both ways. It's maintained strong earnings that we've been able to continue to build on from previous ownership. So we're quite happy with the performance.

Speaker #2: So perhaps a way to describe it is that about 25% of Perry's customer base we weren't servicing—we were servicing about 75% of it. So we've been progressively building for Steel & Tube volumes from Perry's customers, and the same.

Speaker #2: And vice versa, customers that we were having galvanizing with Perry's competitors, we've been switching those across to Perry's. So there's been some synergistic, I guess, growth both ways.

Speaker #2: It's maintained its strong earnings that we've been able to continue to build on from previous ownership. So we're quite happy with the performance.

Speaker #4: Okay, thank you. Just on the portfolio and business reset, I think you mentioned about $11 million in potential proceeds from asset sales, and the reinforcing and wire business.

Kieran Carling: Okay. Thank you. Just on the portfolio and business reset, I think you mentioned about 11 million in potential proceeds from asset sales in the Reinforcing and Wire business, and then also the exit of 9 or so sites. Can you just talk us through the timing of those potential asset sales and also what EBIT benefit you expect to flow through the business as you exit those leases and close down the loss-making businesses?

Speaker #4: And then also, the exit of nine or so sites. Can you just talk us through the timing of those potential asset sales, and also what EBIT benefit you expect to flow through the business as you exit those leases and close down the loss-making businesses?

Speaker #2: Yeah, look, the number that we quoted there, the 11 to 12, is both assets and inventory release. We're expecting to wind that—we'll start with the reinforcing and wire business.

Mark Malpass: Yeah. Look, the number that we quoted there, the 11 to 12, is both assets and inventory release. We are expecting to wind the We will start with the Reinforcing and Wire business. We started consultation on that today, and we are winding that down over a 2- to 3-month period as we fulfill customer contract obligations. There are 3 or 4 contracts that are more enduring longer term, and we are working through solutioning around those. We have an early agreement with an MOU with the Euro team that are interested in buying those assets. That is of course subject to Commerce Commission approval, and that process will also likely take a few months to work through. So by Christmas, we should have realized quite a lot of that value. We have not disclosed specifically around the earnings expected from those transactions on the Reinforcing and Wire at this point.

Speaker #2: We started consultation on that today, and we're winding that down over a two- to three-month period as we fulfill customer contract obligations. There are three or four contracts that are more enduring or longer term, and we're working through solutioning around those.

Speaker #2: We have an agreement, an early agreement with an NBIO with the Euro team that are interested in buying those asset sets. Of course, this is subject to Commerce Commission approval.

Speaker #2: And that process will also likely take a few months to work through. So by Christmas, we should have realized quite a lot of that value.

Speaker #2: We haven't disclosed specifically around the earnings expected from those transactions. On the reinforcing and why at this point, I'll let Richard comment on that further.

Mark Malpass: We have not disclosed specifically around the earnings expected from those transactions on the Reinforcing and Wire at this point.

Mark Malpass: I will let Richard comment on that further. On plate processing, we are also winding down that business, announcing that to employees again this morning, and that is expected to yield some further cash as we unwind that business over the next month or two. Regarding the site consolidations, they have been in train, as we mentioned at the half year, and they are progressively working their way through and will be completed by the end of this financial year. They are expected to realize some value which I will let Richard comment on as well.

Speaker #2: On plate processing, we're also winding down that business—announcing that to employees again this morning. That's expected to yield some further cash as we unwind that business over the next month or two.

Speaker #2: And regarding the site consolidations, they've been in train, as we mentioned at the half-year, and they're progressively working their way through and will be completed by the end of this financial year.

Speaker #2: And they're expected to realize some value, which I'll let Richard comment on as well.

Speaker #3: Hi, Kieran. Just to expand on Mark's comment: for each of REO, Wire, and Plate, a chunk of those proceeds comes from the disposal or usage of inventory and non-replacement.

Richard Smyth: Hi, Kieran. Just to expand on Mark's comment. So for each of Reo Wire and Plate, a chunk of that proceeds comes from the disposal or usage of inventory and non-replacement. So that will start assuming we are going through consultation with our staff. Assuming that proceeds, the inventory reductions will occur reasonably quickly over the next coming months. Then the proceeds from the actual sale of the assets and residual inventory will be subject to negotiations. As Mark said, we are hopeful that end of calendar year, we will have everything signed, sealed, delivered. The cash might follow slightly after that. With regards to the site consolidations, Mark mentioned 2 lots of sites. One was the 7 sites which will give us net cash of NZD 2 million when it is fully executed. That will be the end of 2027. It will start in 2028.

Speaker #3: So, that will start assuming we are going through consultation with our staff. Assuming that proceeds, the inventory reductions will occur reasonably quickly over the next few months.

Speaker #3: And then the proceeds from the actual sale of the assets and residual inventory will be subject to negotiations. As Mark said, we are hopeful that, by the end of the calendar year, we'll have everything signed, sealed, delivered.

Speaker #3: The cash might follow slightly after that. With regards to the site consolidation, Mark mentioned two lots of sites. One was the seven million—oh, sorry—the seven sites.

Speaker #3: Which will give us net cash of $2 million when it's fully executed. That will be at the end of 2027. It will start in '28.

Speaker #3: There's a significant amount of costs associated with exiting the sites, so we expect a small cash benefit in 2027. That will primarily occur towards the end of the year, because we'll have costs that we incur in the beginning.

Richard Smyth: There's a significant amount of costs associated with exiting the sites. We expect a small cash benefit in 2027. That will primarily occur towards the end of the year because we have the costs that we incur in the beginning. The other two large sites, we haven't provided any guidance on those because we're still in discussions on those.

Speaker #3: And then the other two large sites—we haven't provided any guidance on those, because we're still in discussions on those.

Speaker #4: Well, that's very helpful. Thank you. I guess that's a good segue into the next question, which is just around your net debt, and the $18 million unwind in working capital through the period.

Kieran Carling: Cool. That's very helpful. Thank you. I guess that's a good segue into the next question, which is just around your net debt and the NZD 18 million unwind in working capital through the period. Factoring in the comments you've just made, is it fair to say we're going to see inventory reduce further over the year ahead, or do you think as you build that inventory into a cyclical recovery it'll stay flat or perhaps even increase a bit from here?

Speaker #4: Sort of factoring in the comments you've just made, is it fair to say we're going to see inventory reduce further over the year ahead?

Speaker #4: Or do you think, as you build that inventory into a cyclical recovery, it will stay sort of flat, or perhaps even increase a bit from here?

Speaker #2: Yeah, look, it actually is relatively flat. I think Kieran is probably the right answer there. Some ins and outs going on there, obviously, with the REO and wire and plate.

Mark Malpass: Yeah, look, it's actually relatively flat, Kieran is probably the right answer. There's some ins and outs going on there. Obviously, with the Reo and Wire and plate, there's a reduction, but then as we see volume growth, as the market does start to improve, we'll see some increase. You can see over the year there's been a lot of work going into that working capital management, and we've achieved, I think, really good results where we've seen a near almost 16% increase in volume, but we've been able to reduce our inventory levels from prior periods. So we've been able to increase the efficiency of that inventory through SKU reduction and a bunch of other tech and initiatives that we've put in place to enable tighter management of our inventory turns.

Speaker #2: There's a reduction, but then also as we see volume growth as the market does start to improve, we'll see some increase. You can see over the year, there's been a lot of work going into that working capital management.

Speaker #2: And we've achieved, I think, really good results. We've seen a 16%, or almost 16%, increase in volume, but we've been able to reduce our inventory levels from the prior period.

Speaker #2: So, we've been able to increase the efficiency of that inventory through SKU reduction and a number of other technologies and initiatives that we've put in place to enable tighter management of our inventory turns.

Speaker #2: And so we've been quite pleased with the progress in that space, as well as the financial receivables, payables, and net balance. We've been able to improve those as well.

Mark Malpass: We've been quite pleased the progress in that space, as well as the financial receivables, payables, net balance, we've been able to improve as well.

Speaker #3: Can I just expand? The site consolidations allow us to be more efficient in holding safety stock as well, so we don't have to have safety stock at each site.

Richard Smyth: Can I just expand? The site consolidations allow us to be more efficient in holding safety stock as well. We do not have to have safety stock from each site. We have a reduction from that as well.

Speaker #3: So we'll have a reduction from that as well.

Speaker #4: And then maybe I'll just squeeze in one last one. I guess, more broadly on the macro backdrop, I appreciate it's pretty challenging to give any sort of guidance at this stage of the year, but can you just give us any sort of steer on what your expected volumes are for the year ahead, or how you expect earnings may be skewed between the first half and the second half?

Kieran Carling: Maybe I will just squeeze in one last one. I guess more broadly on the macro backdrop, appreciate it is pretty challenging to give any sort of guidance at this stage of the year. Can you just give us any sort of steer on what your expected volumes are for the year ahead or how you expect earnings may be skewed between the H1 and the H2? Or anything around pricing and margin expectations?

Speaker #4: Or anything around pricing and margin expectations?

Mark Malpass: I think you can see in the numbers there, in the presentation and some of the graphics as well there, Kieran, that we saw the first three quarters of the year, some nice steady trading performance improvements in terms of just tonnes per day. The capture of margin, even net of Perry's, we have been able to grow our product margins. Product margins are coming back up at a reasonable pace. We have had the disruption of the Middle East conflict, and it took a few months to impact, but I think what we saw is some customers pulling back and putting the brakes on some projects that have been deferred. I think most of those projects are still there and will move forward that impact that commercial construction in our space, which is a key part of our business.

Speaker #2: Well, I think you can see in the numbers there, in the presentation and some of the graphics as well there, Kieran, that we saw steady trading performance improvements in terms of just tons per day.

Speaker #2: The capture of margin, we've been able to even net of periods, we've been able to grow our product margins. Product margins are coming back up at a reasonable pace.

Speaker #2: We've had the disruption of the Middle East conflict, and that has obviously had— it took a few months to impact, but I think what we saw is some customers pulling back and putting the brakes on some projects that have been deferred.

Speaker #2: I think most of those projects are still there, and we'll move forward. The impact of commercial construction in our space, which is a key part of our business—you can see in the mix that we now have over 50% of our business associated with manufacturing in the rural economy.

Mark Malpass: You can see in the mix that we now have over 50% of our business associated with manufacturing and the rural economy, and so that is where we have been able to drive that performance, and we are continuing to drive into those sectors, I guess, are non-construction cyclically dependent, and that has meant that our mix has improved as well. We are not giving forward forecast on earnings, but I think you can see in the trajectory that we were on up until the Iran conflict. We were making some fairly good progress and hitting most months getting around that breakeven mark to improving above the line in March that we saw a reasonably good trajectory that we were on. So it gives you an indication of, I think, the potential.

Speaker #2: And so that's where we've been able to sort of drive that performance, and we're continuing to drive into those sectors that, I guess, are non-construction cyclically dependent, and that's meant that our mix has improved as well.

Speaker #2: We're not giving forward sort of forecast on earnings, but I think you can see in the trajectory that we were on up until the Iran conflict, we were making some fairly good progress in hitting most months, getting around that kind of break-even mark to improving above the line in March. We saw a reasonably good sort of trajectory that we were on.

Speaker #2: So, it gives you an indication of, I think, the potential. More second-half weighted, I think calendar year '27 is when we should start seeing some improvement coming through in terms of macro volumes.

Mark Malpass: More H2 weighted, I think the calendar year 2027 is when we should start seeing some improvement coming through in terms of macro volumes. But this H1 of the financial year, we are expecting it to be still fairly variable. Hope that helps.

Speaker #2: But this first half of the calendar—excuse me, the financial year—we're expecting it to be still fairly variable. Hope that helps.

Speaker #4: Cool. Yeah, fingers crossed. Cool. Thanks for the color, guys. That's all from me.

Kieran Carling: Cool. Yeah. Fingers crossed. Cool. Thanks for the color, guys. That is all from me.

Speaker #1: Thank you. Once again, if you wish to ask a question via the phones, please press star one. Your next question comes from Rowan Coleman-Smith from Fawcett Bar.

Operator 2: Thank you. Once again, if you wish to ask a question via the phones, please press star one. Your next question comes from Rohan Koreman-Smit from Forsyth Barr. Please go ahead.

Operator: Thank you. Once again, if you wish to ask a question via the phones, please press star one. Your next question comes from Rohan Koreman-Smit from Forsyth Barr. Please go ahead.

Speaker #1: Please go ahead.

Speaker #3: Good morning, guys. Some questions from me. First one, congratulations on the volume growth—13%—but revenue only up 6%. If I look at page 15 of the preso, the lines between revenue and volumes get closer together over the year.

Rohan Koreman-Smit: Morning, guys. Some questions from me. First one, congratulations on the volume growth, 13%, but revenue only up 6%. If I look at page 15 of the preso, the lines between revenue and volumes get closer together over the year. This suggests that margins are shrinking. Is that how we should read that?

Speaker #3: This suggests that margins are shrinking. Is that how we should interpret that?

Speaker #2: Oh, hi, Rowan. What chart are you on there, Kieran? Is it printed?

Mark Malpass: Hi, Rohan. What chart are you on there?

Speaker #3: Just page 15.

Rohan Koreman-Smit: Just page 15.

Mark Malpass: Yeah. Okay. I think that is more just the conflict, I think, and the impact that that has had over the most recent period. I think just to correct you as well there on the revenue growth, I think it was more like 13.9% year-on-year, whereas volume is about 15.9%. So there has not been that much compression. You could see the product margin graph as well just shows that general improvement. That is obviously including periods, even if you neg out periods. As I mentioned earlier, there is about a NZD 5 million improvement in core product margins. So that gives you an idea that there has been an improvement flowing through there, and we have continued to see our own mix as we have deliberately shifted our mix to the sectors I mentioned before to Kieran's question.

Speaker #2: Yeah, yeah, okay. I think that's more just the conflict, I think, and the impact that that's had over the sort of most recent period. But I think that just to correct you as well there on the revenue growth, I think it was more like 13.9% year-on-year, whereas volume is about 15.9%.

Speaker #2: So, there hasn’t been that much compression, and you can see the product margin graph as well just shows that general improvement. And that’s obviously including periods—even if you net out periods that I mentioned earlier, there’s about a $5 million improvement in core product margins.

Speaker #2: So, that gives you an idea that there has been an improvement flowing through there. And we've continued to see our own mix, as we've deliberately shifted our mix to the sectors I mentioned before, to where Kieran's questions.

Speaker #3: Okay, just also going back to the question on Perry, obviously there's an overhead that's gone in there. If you go to the graph on page 18 and look at the growth investments, Perry, as you said, earned $8 million, maybe $9 million of EBIT. I'm sure there's some lease costs in there.

Rohan Koreman-Smit: Okay. Just also going back to the question on Perry's. Obviously, there is an overhead that has gone in there. If you go to the graph on page 18 and look at the growth investments. Perry, as you said, earned 8, maybe 9 million of EBIT. I am sure there is some lease costs in there. So EBITDA should be higher again. That is well above the 6 million of growth investments. There is obviously some overheads sitting in that number. If you were to take those overheads out, because that is stuff you have acquired and put them

Rohan Koreman-Smit: Perry, as you said, earned 8, maybe 9 million of EBIT. I am sure there is some lease costs in there. So EBITDA should be higher again. That is well above the 6 million of growth investments. There is obviously some overheads sitting in that number. If you were to take those overheads out, because that is stuff you have acquired and put them

Speaker #3: So EBITDA should be higher again. That's well above the $6 million of growth investments. There's obviously some overhead sitting in that number. Have you got to take those overheads out, because that's stuff you've acquired, and put them in that base business bar to the right?

Mark Malpass: Yeah

Rohan Koreman-Smit: in that base business bars to the right. At the moment, it looks like the base business is fairly stable, but I think all that has happened here is there has been an allocation of overheads to these growth investments. If you were to reverse those allocations, what does the base business look like on a margin and OpEx and other cost inflation basis?

Speaker #3: At the moment, it looks like the base business is fairly stable, but I think all that's happened here is there's been an allocation of overheads to these growth investments.

Speaker #3: If you were to reverse those allocations, what does the base business look like on a margin, OPEX, and direct and other cost inflation basis?

Speaker #2: If we look at Perry on a like-for-like basis, purely at an EBIT level, it's improved by about $1.1 million year on year.

Mark Malpass: If we, on a like-for-like basis, look at Perry just purely at an EBIT level, it has improved about NZD 1.1 million year-on-year. We have got a tight lock on that, Rohan, when you just look at it on a like-for-like basis. So it has not just been a case of shifting overhead into that business. Yeah, of course, it is carrying part of the groups overhead because it is part of our network now. But if you normalize for that business has continued to grow and improve, and it has been incredibly resilient and a great acquisition for us that was bought at the bottom of the cycle at a good multiple. So a deal structure that has been very successful for us.

Speaker #2: So, we've got a tight lock on that, Rohan. When you just look at it on a like-for-like basis. So, it hasn't just been a case of shifting overhead into that business.

Speaker #2: Yeah, of course, it's carrying part of the group's overhead because it is part of our network now. But if you normalize for that, that business has continued to grow and improve, and it's been incredibly resilient and a great acquisition for us. That was bought at the bottom of the cycle at a good multiple.

Speaker #2: So, deal structure that's been very successful for us. Obviously, we've taken on $30 million of net debt with that acquisition, which has flowed into the balance sheet.

Mark Malpass: Obviously, we have taken on NZD 30 million of net debt with that acquisition, which has flowed into the balance sheet obviously that we are managing at the moment, but the fundamentals of that business have been fantastic.

Speaker #2: Obviously, that's something we're managing at the moment. But the fundamentals of that business have been fantastic.

Speaker #3: I'm sorry, I'm not questioning that. I'm just saying that the way you're presenting it suggests the base business is more stable than it really is, given the allocation of overheads to these acquisitions.

Rohan Koreman-Smit: Sorry, I am not questioning that. I am just saying that the way you are presenting it suggests the base business is more stable than it really is, given the allocation of overheads to these acquisitions.

Speaker #2: Yes, there is an allocation.

Mark Malpass: Yes, there is an allocation.

Speaker #3: Yeah, okay. Then, on net debt, can you give us an idea of what net debt is today? Payables are up $20 million year on year, which is the main reason net debt didn't go up as much as expected.

Rohan Koreman-Smit: Yeah, okay. Then on net debt, can you give us an idea of what net debt is today? Payables up NZD 20 million year on year is the main reason net debt didn't go up as much as expected. Inventory came down in the second half as well, NZD 6 million. Payables up NZD 8 million. There would have been a sizable lift in net debt if those two things didn't happen. I understand the SKU rationalization on inventory, but you can't rationalize SKUs to zero.

Speaker #3: Inventory came down in the second half as well—$6 million. Payables were up $8 million. There would have been a sizable lift in net debt if those two things hadn't happened.

Speaker #3: I understand the SKU rationalization on inventory, but you can't rationalize SKUs to zero, and your suppliers eventually need to be paid. When do those tailwinds kind of stop?

Mark Malpass: Yeah

Rohan Koreman-Smit: Your suppliers eventually need to be paid. When do those tailwinds stop?

Speaker #2: Yeah, can I ask that in a second? I think just going back to your earlier question, Rohan, on the base business, I think the observation I'd make there is the metals businesses—so the stainlesses and aluminiums and other mechanical services type businesses that we have—have all been performing well and continued to improve.

Mark Malpass: Can I answer that in a second? I think, just coming back to your earlier question, Rohan, on the base business. I think that the observation I would make there is the metals businesses, so the stainlesses and aluminums and other mechanical services type businesses that we have all been performing well and continued to improve. The steel commodity business is the challenge that I think any industry participant would say at the moment has been short on vertical construction, incredibly competitive in a very difficult space in New Zealand right now on the core steel commodity heavy business. That has flowed into our results, of course. But what we have been able to do is diversify, optimize as much as we can the way that we are running that steel core business, through all of the initiatives I have talked through on the call, and really refocus on those metals.

Speaker #2: The steel commodity business is the challenge that I think any industry participant would say at the moment has been short on vertical construction, incredibly competitive, and a very difficult space in New Zealand right now on the core steel commodity-heavy business.

Speaker #2: And that has flowed into our results, of course. But what we've been able to do is diversify and optimize, as much as we can, the way that we're running that steel core business.

Mark Malpass: But what we have been able to do is diversify, optimize as much as we can the way that we are running that steel core business, through all of the initiatives I have talked through on the call, and really refocus on those metals. We are continuing to try and find ways to optimize our cost structure and the site reductions we have talked about exiting out of the reo and wire business, that has been a real drag and is part of that core commodity steel space. Even plate processing I put into the same bucket. That is just an unattractive part of the business model at the moment. So hopefully that gives a bit more of an answer to your earlier question. I think on the net debt, that 48 that we closed at, we are in a very similar position to that today, Richard.

Speaker #2: Through all of the initiatives I've talked to you about on the call, and really, we are refocusing on those metals. We're continuing to try and find ways to optimize our cost structure and site reductions.

Mark Malpass: We are continuing to try and find ways to optimize our cost structure and the site reductions we have talked about exiting out of the reo and wire business, that has been a real drag and is part of that core commodity steel space. Even plate processing I put into the same bucket. That is just an unattractive part of the business model at the moment. So hopefully that gives a bit more of an answer to your earlier question. I think on the net debt, that 48 that we closed at, we are in a very similar position to that today, Richard. Today is not a good day. You actually have to look at month end because we do go up during the month. So we are not too dissimilar to that at the end of July, and we will not be too dissimilar to that at the end of August.

Speaker #2: We've talked about exiting out of the reel and wire business. It's been a real drag, and it's part of that core commodity steel space.

Speaker #2: And even plate processing I put into the same bucket; that is just an unattractive part of the business model at the moment. So hopefully that gives you a bit more of an answer to your earlier question.

Speaker #2: I think on the net debt, that $48 million that we closed at, we're in a very similar position to that today, which today is not a good day.

Mark Malpass: Today is not a good day. You actually have to look at month end because we do go up during the month. So we are not too dissimilar to that at the end of July, and we will not be too dissimilar to that at the end of August.

Speaker #2: You actually have to look at month-ends, because we do go up during the month. So, we're not too dissimilar to that at the end of July.

Speaker #2: And we won't be too dissimilar to that at the end of August.

Speaker #3: Okay, thanks for that. And just because you touched on it there, the wire closure and the plate processing closure—can you help us quantify those?

Rohan Koreman-Smit: Okay. Thanks for that. Just because you touched on it there, the wire closure and the plate processing closure, can you help us quantify those? What percentage of FY26 sales were those? Obviously, you described them as loss-making, so it helps at the bottom line, but what comes out at the top line?

Rohan Koreman-Smit: Okay. Thanks for that. Just because you touched on it there, the wire closure and the plate processing closure, can you help us quantify those? What percentage of FY 2026 sales were those? Obviously, you described them as loss-making, so it helps at the bottom line, but what comes out at the top line?

Speaker #3: What percentage of FY26 sales were those? Obviously, you described them as loss-making. So it helps at the bottom line, but what comes out at the top line?

Speaker #2: Yeah, we haven't disclosed those numbers, Rohan, to date, but it's the—

Mark Malpass: Yeah. We have not disclosed those numbers, Rohan, to date, but it is-

Rohan Koreman-Smit: Just a rough percentage combined as a quarter.

Speaker #3: Just a rough percentage combined. Is it a quarter?

Speaker #2: Yeah, yeah. I mean, it's going to be—I mean, it's going to be a rough idea that the Reel Wire business for FY26, including its share of the corporate levy, lost about $7.5 million in normalized EBIT.

Mark Malpass: Yeah. I mean, it gives you

Rohan Koreman-Smit: Or even Q3.

Mark Malpass: a rough idea that the reo wire business for FY26, including its share of corporate levy, lost about NZD 7.5 million in normalized EBIT. It is a significant part of our loss. It has been the last couple of years, if you look over the last few years, we saw very good performance as we came out of COVID in that business as we had the significant amount of infrastructure and construction spend going on there. But if you look over time, which we have done as we have said in the presentation, against our investment criteria, it has not met our cost of capital returns that we would expect. It has had two years, I think it was FY23 and 2024, where we saw a return above cost of capital, and the other periods have not.

Mark Malpass: a rough idea that the reo wire business for FY 2026, including its share of corporate levy, lost about NZD 7.5 million in normalized EBIT. It is a significant part of our loss. It has been the last couple of years, if you look over the last few years, we saw very good performance as we came out of COVID in that business as we had the significant amount of infrastructure and construction spend going on there. But if you look over time, which we have done as we have said in the presentation, against our investment criteria, it has not met our cost of capital returns that we would expect. It has had two years, I think it was FY23 and 2024, where we saw a return above cost of capital, and the other periods have not.

Speaker #2: So it's a significant part of our loss, and it's been the last couple of years. If you look over the last few years, we saw very good performances.

Speaker #2: We came out of COVID, and in that business we had a significant amount of infrastructure and construction spend going on there. But if you look over time, which we've done, as we've said in the presentation against our investment criteria, it hasn't met our cost of capital returns that we would expect.

Speaker #2: And it’s had, like, two years—I think it was FY23 and FY24—where we saw a return above the cost of capital, and other periods haven’t.

Speaker #2: So, there hasn't been a—it's been a, despite a massive amount of effort to turn that business around. I know that we are the highest quality player in that space.

Mark Malpass: Despite massive amount of effort to turn that business around, I know that we are the highest quality player in that space. Talk to any of our commercial construction project partners, they will all say that our team do an outstanding job. The challenge is we are just not rewarded for that. Structurally, it is a challenged business because of low barriers to entry. You can get into that business relatively cheaply in terms of capital for equipment, and you have a relatively undisciplined competitor construct where the typical price disciplines that you need to run these businesses well are just not there. It is a bit like whack-a-mole, as you see one competitor come out, you see others pop up quite quickly. The board and ourselves have got to a point where we have called time on that business.

Speaker #2: Talk to any of our commercial construction project partners—they will all say that our team is doing an outstanding job. The challenge is we're just not rewarded for that.

Speaker #2: So structurally, it's a challenging business because of low barriers to entry. You can get into that business relatively cheaply in terms of capital for equipment, and you have a relatively undisciplined competitor construct, where the typical price disciplines that you need to run these businesses well are just not there.

Speaker #2: And so, it's a bit like whack-a-mole: as you see one competitor come out, you see others pop up quite quickly. So the Board and ourselves have got to a point where we've called time on that business.

Speaker #3: Oh, thanks. And then, these leased store closures—are you coming to the end of these leases, or do you have to sublease the sites to remove the ongoing lease obligations?

Rohan Koreman-Smit: Thanks. These lease store closures, are you coming to the end of these leases or do you have to sublease the sites to remove the ongoing lease obligations?

Speaker #2: A bit of a mix, Rohan. So, but we have been able to shore up sublease or assignment opportunities. All of our leases have assignment clauses in them, of course, and we're working through those.

Mark Malpass: A bit of a mix, Rohan. We have been able to shore up sublease or assignment opportunities. All of our leases have assignment clauses in them, of course, and we are working through those. The other two bigger sites that I mentioned, we also have a number of parties that have expressed interest in those sites, so we are just working through those at this stage. We are expecting to be able to clear those bigger sites and also the seventh site that we are working through without any impairments that we have needed to. We do have an impairment against one of the sites, but the rest of them, we are expecting to be able to clear those okay.

Speaker #2: The other two bigger sites that I mentioned—we also have a number of parties that have expressed interest in those sites. So we're just working through those.

Speaker #2: Some at this stage, but we're expecting to be able to clear those bigger sites and also the seven sites that we're working through without any impairments that we've needed to.

Speaker #2: So, we do have an impairment against one of the sites, but the rest of them, we're expecting to be able to clear those okay.

Speaker #3: Yeah.

Rohan Koreman-Smit: Yep.

Speaker #2: They're obviously all on the right of use.

Mark Malpass: They are obviously all in the right-of-use assets.

Speaker #3: Yeah, yeah. So, the $20 million impairment—yeah—so that is effectively your obligation on the remaining leases of those sites that you are closing.

Rohan Koreman-Smit: Yeah. The NZD 20 million impairment there, that is effectively your obligation on the remaining leases of those sites that you are closing. Is that how I should read it?

Speaker #3: Is that how I should read it?

Speaker #2: Yeah. So the way that the way we've calculated it, Rohan, is we for the sites that we're exiting, we did a site by site analysis some have small impairments.

Mark Malpass: The way we have calculated it, Rohan, is for the sites that we are exiting, we did a site-by-site analysis. Some have small impairments. There is actually a partial reversal of an impairment we booked several years ago in there. That is almost a wash across the seven. We have a larger impairment within the Reo impairment that is disclosed in the financial statements, note C2. The main bulk of that impairment that you are referring to there is where we have done our cash generating unit assessments and impairments. That comes up with a recoverable amount, and then accounting standards require us to allocate that initially to goodwill, which is just under NZD 5 million, and then pro rata across the rest of our assets, being the fixed assets, the intangible assets, and the right-of-use asset.

Speaker #2: There's actually a partial reversal of an impairment we booked several years ago, and that's almost a wash across the seven. We've got a larger impairment within the Rio impairment that's disclosed in the financial statements, note C2.

Speaker #2: The main bulk of that impairment that you're referring to there is where we've done our cash-generating unit assessments and impairments. That comes up with a recoverable amount, and then the accounting standards require us to allocate that.

Speaker #2: Initially to goodwill, which is just under $5 million, and then pro rata across the rest of our assets—being the fixed assets, intangible assets, and the right-of-use asset.

Speaker #3: Okay. I don't understand accounting, but all right. There's no inventory impairment. There's no inventory—well, you're taking impairment because you're not going to earn a cost of capital on the value of the assets, right?

Rohan Koreman-Smit: Okay. I do not profess to understand accounting, but all right. There is no inventory impairment.

Mark Malpass: It is a great thing, Rohan.

Rohan Koreman-Smit: Well, you take an impairment because you are not going to earn a cost of capital on the value of the assets, right? I do not know if it is a great thing. I am assuming there is no other impairment.

Speaker #3: So, I don't know if it's a great thing. I'm assuming there's no—

Speaker #2: There's no impairment.

Mark Malpass: There is no other impairment.

Speaker #3: Yeah. Cool.

Rohan Koreman-Smit: Yeah, cool.

Speaker #2: Just backing up, Rohan, I just didn't understand that last comment. There are actually no inventory impairments here.

Mark Malpass: Just backing up, Rohan. Just did not understand that last comment. There is actually no inventory impairments here.

Speaker #3: Yeah, yeah. Perfect. That's what I was asking. If there was any—no, that's all from me. Thank you. I'll hopefully talk later if I have any more questions.

Rohan Koreman-Smit: Yeah. Perfect. That's what I was asking, if there was any.

Mark Malpass: Okay.

Rohan Koreman-Smit: No, that's all from me. Thank you. I'll hopefully talk later if I have any more questions.

Speaker #2: Thank you.

Mark Malpass: Thank you.

Speaker #1: Thank you. There are no further phone questions at this time. I'll now hand the conference back to your speakers to address any webcast questions.

Operator 2: Thank you. There are no further phone questions at this time. I'll now hand the conference back to your speakers to address any webcast questions.

Operator: Thank you. There are no further phone questions at this time. I'll now hand the conference back to your speakers to address any webcast questions.

Speaker #4: Thank you. We've got several webcast questions. The first is from Evan Christian. He asks, "Can you comment on Vulcan Steel's performance compared with Steel & Tube in the same tough market?"

[Company Representative] (Steel & Tube): Thank you. We have several webcast questions. The first is from Evan Christian, who asks, "Can you comment on Vulcan Steel's performance compared with Steel & Tube in the same tough market?

[Company Representative] (Steel & Tube Holdings): Thank you. We have several webcast questions. The first is from Evan Christian, who asks, "Can you comment on Vulcan Steel's performance compared with Steel & Tube in the same tough market?

Speaker #2: Yeah. Look, hi Evan. It's a good question. I mean, we don't have a whole lot to go on in terms of Vulcan's disclosures. We don't really know their New Zealand performance.

Mark Malpass: Well, look, hi, Evan. It is a good question. We do not have a whole lot to go on in terms of Vulcan's disclosures. We do not really know their New Zealand performance. What we have tried to do is pull it apart to the extent we can and we think very similar performance on a revenue basis. It looks like we are up a little bit more on what we understand to be their New Zealand mix and volumes are also stronger in terms of our volume growth. It looks like their EBITDA growth is strong in New Zealand, and that is really a function of their mix is quite different from ours. They have a very large plate processing business operation that they acquired many years ago and have continued to build on that. That has given them a strong result for their plate processing business.

Speaker #2: What we've tried to do is pull it apart to the extent we can, and we think there's very similar performance on a revenue basis. It looks like we're up a little bit more on what we understand to be their New Zealand mix.

Speaker #2: And volumes are also stronger in terms of our volume growth. It looks like their EBITDA growth is strong in New Zealand, and that's really a function of their mix, which is quite different from ours.

Speaker #2: So they have a very large plate processing business operation that they acquired many years ago and have continued to build on that. And so that has given them, I guess, a strong result for their plate processing business.

Speaker #2: And it's probably worth me commenting—I think Rohan was starting to ask the question around the plate processing business. We entered into that business in Auckland about four years ago, and in Christchurch about two years ago, roughly.

Mark Malpass: It is probably worth me commenting, I think Rohan was starting to ask the question around the plate processing business. We entered into that business in Auckland about four years ago, and Christchurch about two years ago, roughly. What we have learned since we have been in that sector, we actually tried to acquire a very large player in that space. Unfortunately, they had, I guess, vendor's remorse a couple of times as we worked through that process that would have put us in a position to have had a very strong plate processing footprint ourselves.

Speaker #2: And what we've learned is we've been in that sector. We actually tried to acquire a very large player in that space, and unfortunately, they had, I guess, vendor's remorse a couple of times as we worked through that process. That would have put us in a position to have had a very strong plate processing footprint ourselves.

Speaker #2: So, we decided to organically grow into that business, but we've just found that, really, the capital requirements to continue growing into that space, as well as the competitor reactions that we've seen over the period that we've been in that—we just felt it's not the right approach from a shareholder perspective in terms of use of funds.

Mark Malpass: We decided to organically grow into that business, but we have just found that really the capital requirements to continue growing into that space as well as the competitor reactions that we have seen over the period that we have been in that, we just felt was not the right approach from a shareholder perspective in terms of use of funds. We have kind of backed away from that sector. But we will, as we continue to rebuild our balance sheet, remain open to acquisition opportunities in that space, obviously down the road. That is the main difference between Vulcan's performance and our performance, we believe.

Speaker #2: So, we've kind of backed away from that sector, but as we continue to rebuild our balance sheet, we will remain open to acquisition opportunities in that space.

Speaker #2: Obviously, down the road, but that is the main difference between Vulcan's performance and our performance, we believe.

Speaker #4: Okay. So the next question is from Peter Truman. It's about the ANZ facility. What consideration has been given to undertaking a capital raise to reduce the amount of interest-bearing debt?

[Company Representative] (Steel & Tube): Okay. The next question is from Peter Trueman. Talking about the ANZ facility, what consideration has been given to undertaking a capital raise to reduce the amount of interest-bearing debt?

[Company Representative] (Steel & Tube Holdings): Okay. The next question is from Peter Trueman. Talking about the ANZ facility, what consideration has been given to undertaking a capital raise to reduce the amount of interest-bearing debt?

Speaker #2: Obviously, all things have been considered with regard to capital management, as you'd expect a Board to be stepping through. We don't have any immediate plans to raise incremental capital.

Mark Malpass: Obviously, all things have been considered regarding capital management, as you'd expect a board to be stepping through. We don't have any immediate plans to raise incremental capital. The moves that we're making, we believe, shore up our balance sheet. We've got a constructive relationship with our banking partner. We don't believe there's any need to be raising capital in the shorter term.

Speaker #2: The moves that we're making, we believe, shore up our balance sheet. We've got a constructive relationship with our banking partner, so yeah, we don't believe there's any need to be raising capital in the shorter term.

[Company Representative] (Steel & Tube): Okay. We've got several questions from Simon Todd. Are you focused on areas that are booming, for example, Queenstown and Christchurch?

[Company Representative] (Steel & Tube Holdings): Okay. We've got several questions from Simon Todd. Are you focused on areas that are booming, for example, Queenstown and Christchurch?

Speaker #4: Okay. We've got several questions from Simon Todd. Are you focused on areas that are booming, for example, Queenstown and Christchurch?

Speaker #2: Yes, we are. We've seen a lot of our growth in the South Island. I mentioned earlier that manufacturing and rural now make up over 50% of our revenue mix.

Mark Malpass: Yes, we are. We've seen a lot of our growth in the South Island. I mentioned earlier that manufacturing and rural now make up over 50% of our revenue mix, and so we've been deliberately diversifying into the South Island, in particular. Also the lower North Island, we've seen some good growth. Really, it's outside of Auckland and Wellington is really where the main growth has been in our business.

Speaker #2: And so we've been deliberately diversifying into the South Island in particular. And also, the lower North Island—we've seen some good growth. Really, it's outside of Auckland and Wellington where the main growth has been in our business.

Speaker #4: The next question is from Simon: Are you able to negotiate better lease terms to get a temporary discount until things improve?

[Company Representative] (Steel & Tube): The next question from Simon: Are you able to negotiate better lease terms to get a temporary discount until things improve?

[Company Representative] (Steel & Tube Holdings): The next question from Simon: Are you able to negotiate better lease terms to get a temporary discount until things improve?

Speaker #2: It's a good question, and we have been working with our landlords to do things like deferring increases, and many of them have been supportive around the standard market ratchet-type formulas.

Mark Malpass: It's a good question, and we have been working with our landlords to do things like deferring increases, and many of them have been supportive around the standard market ratchet type formulas. We'll continue to work with our landlords on those.

Speaker #2: So we've continued to work with our landlords on those.

Speaker #4: Okay, again from Simon: Are you working with the power companies, e.g., contact in Genesis, to provide the steel for the massive solar farms that have been rolled out?

[Company Representative] (Steel & Tube): Okay. Again, from Simon: Are you working with the power companies, e.g., Contact and Genesis, to provide the steel for the massive solar farms that are being rolled out?

[Company Representative] (Steel & Tube Holdings): Okay. Again, from Simon: Are you working with the power companies, e.g., Contact and Genesis, to provide the steel for the massive solar farms that are being rolled out?

Speaker #2: Yes, we have been. In fact, we did the Tamihi Power Station rebuild in Taupo. We've been all over that—everything from the ground up, effectively, right from foundation work through to structural steel, through to roofing—across all of that.

Mark Malpass: Yes, we have been. In fact, we did the Tauhara Power Station rebuild in Taupō. We've been all over that, everything from the ground up effectively, right from foundation work through to structural steel through to roofing, across all of that, and we've got more work that we're continuing to do there. Other power station programs and also wind farms. We've been working very closely with partners around that and data centers. We're also very close to work that's going on in those spaces.

Speaker #2: And we've got more work that we're continuing to do there—other power station programs. And also, wind farms. We've been working very closely with partners around that and data centers.

Speaker #2: We're also very close to the work that's going on in those spaces.

Speaker #4: Okay. Final question from Simon.

[Company Representative] (Steel & Tube): Final question from Simon.

[Company Representative] (Steel & Tube Holdings): Final question from Simon.

Speaker #2: Sorry, I think I missed the first part of his question, which was around negotiating energy costs. Yes, we are, and we run tenders around that.

Mark Malpass: Sorry, I think I missed the first part of his question was around negotiating energy costs. Yes, we are, and we run tenders around that. We are currently working through a tender on our energy as well as on our fuel, and diesel is something that we use a lot of. So we are negotiating that at the moment as well.

Speaker #2: We're currently working through a tender on our energy, as well as on our fuel, and diesel is something that we use a lot of.

Speaker #2: So, we're negotiating that at the moment as well.

Speaker #4: Okay. Final question from Simon. Middleton Port is rolling out an $821 million expansion plan. Is Steel & Tube across that rollout?

[Company Representative] (Steel & Tube): Okay. Final question from Simon. Lyttelton Port is rolling out an NZD 821 million expansion plan. Is Steel & Tube across that rollout?

[Company Representative] (Steel & Tube Holdings): Okay. Final question from Simon. Lyttelton Port is rolling out an NZD 821 million expansion plan. Is Steel & Tube across that rollout?

Speaker #2: We will be. We're working—there are a number of different large projects that we're either in NDAs around or early pricing programs. So, yes, absolutely.

Mark Malpass: We will be. There is a number of different large projects that we are either in NDAs around or early pricing programs. So yes, absolutely. We have got a large footprint in Christchurch, and we have done several projects with Lyttelton Port, and I am assuming we will be able to continue those.

Speaker #2: We've got a large footprint in Christchurch, and we have done several projects with Lyttelton Port, and I'm assuming we'll be able to continue those.

Speaker #4: Okay, that's all we have online. I'll hand back to the operator for any more online calls.

[Company Representative] (Steel & Tube): That is all we have online. I will hand back to the operator for any more online calls.

[Company Representative] (Steel & Tube Holdings): That is all we have online. I will hand back to the operator for any more online calls.

Speaker #1: Thank you. There are still no phone questions at this time. I'll now hand back for any closing remarks.

Operator 2: Thank you. There are still no phone questions at this time. I will now hand back for any closing remarks.

Operator: Thank you. There are still no phone questions at this time. I will now hand back for any closing remarks.

Speaker #2: Thanks everyone for listening, and I appreciate the questions. I will now close the call.

Mark Malpass: Thanks everyone for listening and appreciate the questions. I will now close the call down.

Operator 2: That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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Fully Year 2026 Steel & Tube Holdings Ltd Earnings Call

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