Vulcan Steel share price dips despite record year

The Vulcan Steel Ltd (ASX: VSL) share price is 1% in the red despite the company boasting a “record performance” in FY22, according to its full-year results announcement today.

Vulcan is an Australasian steel and metal products distributor and processor. It was dual-listed on the ASX and New Zealand’s Exchange (NZX) in November last year.

The Vulcan Steel share price opened Wednesday’s session at $8.40 — a 1.95% increase from yesterday’s closing price of $8.24. Over the day, the shares have deteriorated to as low as $8.01.

At the time of writing, the shares have regained some ground and are swapping hands for $8.17. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.56% for the day so far.

Vulcan Steel share price down despite record result

The highlights of the report are as follows:

• Net profit after tax (NPAT) of NZ$124 million, up 91% on the prior corresponding period (pcp)
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of NZ$224 million, up 68% pcp
• Adjusted NPAT NZ$142 million, up 119% pcp
• Adjusted EBITDA NZ$243 million, up 82% pcp
• Final dividend of 37.5 NZ cents per share (ASX shareholders will receive 42.8 NZ cents per share, equating to 38 AU cents per share on today’s currency conversion)
• Total dividends for FY22 of 65 NZ cents per share, down 20% pcp.

What else happened in FY22?

Vulcan Steel started trading on the ASX on 4 November 2021 after a successful initial public offering (IPO) to raise AU$371.6 million at a share price of AU$7.10.

By year’s end, the Vulcan Steel share price was up 27.5%.

Vulcan Steel became part of the All Ords index during the March 2022 quarter rebalance. The All Ords represents the top 500 companies on the ASX by market capitalisation.

Also, in March, the company won New Zealand’s 2021 Deloitte Top 200 Award for ‘best growth strategy’. This gave the Vulcan Steel share price a 2% boost on the day.

What did management say?

Commenting on the results, Vulcan Steel managing director and CEO Rhys Jones said:

Notwithstanding the disruptions caused by COVID-19 and major floods across parts of Queensland and New South Wales during the year, Vulcan’s FY22 adjusted NPAT of approximately NZ$142m exceeded our prospectus forecast by 89%.

The strong FY22 performance has enabled the company to invest in our staff, working capital and processing capacity and support the debtfunding for our acquisition of Ullrich to position the company for long term growth.

What’s next?

Vulcan Steel says rising interest rates and ongoing COVID-19 disruptions in some major markets are “likely to temper global economic activity and demand for steel and metal products”.

The company said:

For Australia and New Zealand, Vulcan expects a more challenging industry environment in FY23 due to the impact of higher interest rates. New Zealand business confidence remains weak while in Australia economic activity appears more resilient for now. Some normalisation in industry margins will likely occur in FY23.

Vulcan’s FY23 EBITDA guidance of NZ$215m-NZ$235m reflects these business cycles and industry headwinds.

… Vulcan’s FY23 NPAT is expected to be in the range of NZ$93m-NZ$107m compared with NZ$142m achieved in FY22.

Vulcan Steel share price snapshot

The Vulcan Steel share price is down 14% in the year to date alongside a 9% drop in the All Ords index.

The post Vulcan Steel share price dips despite record year appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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