The company told the NZX that talks with staff and union delegates had begun and that it would bring forward a restructuring plan to ensure “a cost base that is fit for purpose”.
Having reviewed its outlook, the company believed “economic forecasts for the various sectors are mixed and all indicators currently suggest there will be a decline in economic activity overall”.
However, it assured investors its balance sheet and debt facilities were providing enough financial liquidity at the moment.
But its investment in digital capabilities and e-commerce, improved customer service and “geographic sales strength” had enabled it to make cuts to its physical branches.
The company told shareholders that at the end of March its net debt was below $3m in net debt and it had bank debt facilities of $70 million.
Discussions with its banks had been “constructive” and it had approval to extend the term of its working capital facility.
Prior to Alert Level 4, Steel & Tube said its sales had been improving and it had secured large project work, but lock-down-related delays meant sales in the second half would be considerably below the prior period, although cost cutting had helped offset the drop.
Although the company had been able to operate as an essential service during the lockdown, many of its staff had been forced to stay home and the company had sought wage subsidies.
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However, chief executive Mark Malpass said it was “well positioned” for anticipated government infrastructure projects.
“The world is now in a much different place than it was just four weeks ago and we are making structural changes to our business model to ensure Steel & Tube emerges from Covid-19 as a stronger and more resilient company.
“These decisions have not been made lightly and we believe they are essential to our future as the first choice for steel customers in New Zealand.
The company had secured customers during the lock-down, including a significant Government roofing contract and other large projects were being finalised, he said.
It was one of several steel companies investigated by the Commerce Commission over the claimed ductility of its earthquake-grade steel mesh, and was fined over $1.8m in 2018, which was later raised to just over $2m on appeal, for breaching the Fair Trading Act.
The company also made a shock $38 loss in 2018, which led to asset writedowns and the sale of its plastics division. It said then that the biggest underlying problem had been a new technology system slowing manufacturing and sales transactions.