New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Vulcan Steel's (VSL) FY23 result was in line with recent guidance and our expectations.</li><li>Lower volumes and margin pressure impacted the Steel division, while Metals held up better with Ullrich Aluminium (Ullrich) providing a timely maiden contribution.</li><li>Reduced volumes were largely driven by NZ which slowed again over the final weeks of the year with the upcoming general election weighing on activity. </li></ul>

Vulcan Steel's (VSL) FY23 result was in line with recent guidance and our expectations.Lower volumes and margin pressure impacted the Steel division, while Metals held up better with Ullrich Aluminium (Ullrich) providing a timely maiden contribution.Reduced volumes were largely driven by NZ which slowed again over the final weeks of the year with the upcoming general election weighing on activity. 

Vulcan Steel - FY23 Result — Bending, Not Breaking

<ul><li>Vulcan Steel (VSL) reported a disappointing trading and earnings guidance update.</li><li>VSL downgraded its FY23 EBITDA and NPAT guidance range by -7%/-14% at the mid-points respectively.</li><li>At the operating level (excl. integration costs), this was c.-7% below our forecast which was primarily driven by a late fourth quarter decline in NZ activity (particularly in the Steel division) with Australian activity holding up better.</li></ul>

Vulcan Steel (VSL) reported a disappointing trading and earnings guidance update.VSL downgraded its FY23 EBITDA and NPAT guidance range by -7%/-14% at the mid-points respectively.At the operating level (excl. integration costs), this was c.-7% below our forecast which was primarily driven by a late fourth quarter decline in NZ activity (particularly in the Steel division) with Australian activity holding up better.

Vulcan Steel: FY23 Trading and Earnings Guidance Update

<ul><li>Soft end to FY23 driven by NZ: VSL downgraded its EBITDA/NPAT guidance range by -7%/-14% at the mid-point largely due to a decline in NZ activity particularly in the Steel division.</li><li>Working capital normalising and net debt reducing: VSL had been carrying elevated inventory and debt due to the Ullrich Aluminium acquisition and high steel prices. </li><li>Increased near-term macro uncertainty but some internal offsets: Forward indicators of NZ activity remain soft and the upcoming election creates additional near-term demand uncertainty. </li></ul>

Soft end to FY23 driven by NZ: VSL downgraded its EBITDA/NPAT guidance range by -7%/-14% at the mid-point largely due to a decline in NZ activity particularly in the Steel division.Working capital normalising and net debt reducing: VSL had been carrying elevated inventory and debt due to the Ullrich Aluminium acquisition and high steel prices. Increased near-term macro uncertainty but some internal offsets: Forward indicators of NZ activity remain soft and the upcoming election creates additional near-term demand uncertainty. 

Vulcan Steel: Near-Term Uncertainty in the Pipe

Thematic (Sector/Industry)

<div id="m_2532418749359313970iubdj-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2"><ul><li>After having run at record levels over 2021–2022, residential building consents finished the year down -25% on 2022 but still at a solid 37k.</li><li>The decline was concentrated in metro areas, in particular Wellington and Auckland, and there were similar levels of declines in both detached and high density dwellings.</li><li>While consents are likely to continue to soften over the first half of 2024, forward indicators suggest activity will likely improve over 2024. </li></ul></div>

After having run at record levels over 2021–2022, residential building consents finished the year down -25% on 2022 but still at a solid 37k.The decline was concentrated in metro areas, in particular Wellington and Auckland, and there were similar levels of declines in both detached and high density dwellings.While consents are likely to continue to soften over the first half of 2024, forward indicators suggest activity will likely improve over 2024. 

Building Sector - NZ Consents — A Year in Decline

<ul><li>September quarter ready-mix concrete (RMC) production highlighted continued soft NZ construction activity, with volume declines on both the prior quarter (seasonally adjusted) and the prior year.</li><li>The -10% year on year decline in RMC volumes is broadly consistent with recent trading updates from Fletcher Building (FBU) and Vulcan Steel (VSL).</li><li>Concrete volumes are now broadly back to pre-pandemic levels, but there maybe some signs of life in Auckland where there have been two quarters of sequential volume growth. </li></ul>

September quarter ready-mix concrete (RMC) production highlighted continued soft NZ construction activity, with volume declines on both the prior quarter (seasonally adjusted) and the prior year.The -10% year on year decline in RMC volumes is broadly consistent with recent trading updates from Fletcher Building (FBU) and Vulcan Steel (VSL).Concrete volumes are now broadly back to pre-pandemic levels, but there maybe some signs of life in Auckland where there have been two quarters of sequential volume growth. 

Building Sector - Ready-Mix Concrete — Set in Its Way

New Zealand

Vulcan Steel Ltd operates as a metals distributing and processing company. The Company offers stainless and engineering steel products. Vulcan Steel serves customers in Australia and New Zealand.

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Vulcan Steel Limited (VSL NZ)

Vulcan Steel - FY23 Result — Bending, Not Breaking

Lower volumes and margin pressure impacted the Steel division, while Metals held up better with Ullrich Aluminium (Ullrich) providing a timely...

Forsyth Barr

Vulcan Steel: FY23 Trading and Earnings Guidance Update

Vulcan Steel (VSL) reported disappointing results with a -7% downgrade in FY23 earnings guidance, mainly due to a decline in NZ activity, while...

Forsyth Barr

Vulcan Steel: Near-Term Uncertainty in the Pipe

Vulcan Steel (VSL) has lowered its FY23 earnings guidance due to further weakness in NZ and higher Ullrich integration costs; Whilst VSL has a...

Forsyth Barr

Building Sector - NZ Consents — A Year in Decline

After having run at record levels over 2021–2022, residential building consents finished the year down -25% on 2022 but still at a solid 37k.

Forsyth Barr

Building Sector - Ready-Mix Concrete — Set in Its Way

September quarter ready-mix concrete (RMC) production highlighted continued soft NZ construction activity, with volume declines on both the prior...

Forsyth Barr

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