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 (VSL) will report its 1H24 result on Tuesday, 13 February.</li><li>We expect 1H24 EBITDA down -30% with operating deleverage from volume declines in NZ and competitive pressure reducing gross dollar margin per tonne.</li><li>Looking forward, we believe we are close to trough earnings and currently forecast improved volumes in 2H24. </li></ul>

Vulcan Steel (VSL) will report its 1H24 result on Tuesday, 13 February.We expect 1H24 EBITDA down -30% with operating deleverage from volume declines in NZ and competitive pressure reducing gross dollar margin per tonne.Looking forward, we believe we are close to trough earnings and currently forecast improved volumes in 2H24. 

Vulcan Steel - 1H24 Preview: Checking on the Steel

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

<ul><li>Vulcan Steel (VSL) reported a soft four month trading update at its annual shareholder meeting.</li><li>EBITDA was down -29% on the prior period, driven by margin pressure from higher costs and operating deleverage from slower activity in NZ.</li><li>This was not unexpected (we forecast 1H24 EBITDA to be down -30%) with trading comments provided at the FY23 result pointing to a slowdown in activity ahead of the general election. </li></ul>

Vulcan Steel (VSL) reported a soft four month trading update at its annual shareholder meeting.EBITDA was down -29% on the prior period, driven by margin pressure from higher costs and operating deleverage from slower activity in NZ.This was not unexpected (we forecast 1H24 EBITDA to be down -30%) with trading comments provided at the FY23 result pointing to a slowdown in activity ahead of the general election. 

<ul><li>Residential consents continued their downward trajectory in September, falling to 33.4k (seasonally adjusted and annualised), and are now -38% below the February 2022 peak.</li><li>The decline was largely in higher density dwellings, which have seen some significant falls over recent months (Figure 17).</li><li>With H1 building code changes having pulled forward a number of consent applications, we expect residential consents to decline further over the balance of the year. </li></ul>

Residential consents continued their downward trajectory in September, falling to 33.4k (seasonally adjusted and annualised), and are now -38% below the February 2022 peak.The decline was largely in higher density dwellings, which have seen some significant falls over recent months (Figure 17).With H1 building code changes having pulled forward a number of consent applications, we expect residential consents to decline further over the balance of the year. 

Building Sector  - NZ Consents — Continued Declines

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 - 1H24 Preview: Checking on the Steel

Vulcan Steel (VSL) will report its 1H24 result on Tuesday, 13 February. We expect 1H24 EBITDA down -30% with operating deleverage from volume...

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

Vulcan Steel - Testing Its Mettle

EBITDA was down -29% on the prior period, driven by margin pressure from higher costs and operating deleverage from slower activity in NZ.

Forsyth Barr

Building Sector - NZ Consents — Continued Declines

Residential consents continued their downward trajectory in September, falling to 33.4k (seasonally adjusted and annualised), and are now -38%...

Forsyth Barr

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