Vulcan provides update on trading and earnings guidance for FY23

Company News

by Peter Milios

Vulcan (ASX:VSL, NZX:VSL), a leading industrial product distributor and value-added processor operating across Australasia, has announced an update for its financial year ended 30 June 2023.

Following the completion of the fourth quarter of FY23, Vulcan is revising its earnings expectations for the fiscal year as outlined below.

Vulcan now anticipates that integration costs for its Ullrich Aluminium business in FY23 will amount to NZ$10 million, compared to the previously expected NZ$5 million.

The increase in integration costs is attributed to additional factors, including stamp duty payable.

Excluding these integration costs, Vulcan expects FY23 EBITDA and NPAT to range between NZ$215 million to NZ$219 million and NZ$93 million to NZ$96 million, respectively.

Rhys Jones, Managing Director and Chief Executive Officer of Vulcan, stated, "As signalled at the full-year FY22 results in August last year and the FY23 half-year results in February this year, we expected the 2023 financial year to be more challenging. Vulcan's FY23 underlying earnings, excluding integration costs, have been broadly in line with our expectations, although towards the lower end. Our overall margins have been tracking as expected, with volume excluding aluminium down 13% in FY23 compared to FY22. We have seen encouraging customer engagement, achieving the highest number of monthly active trading accounts for both New Zealand and the Vulcan Group since November 2021, despite the challenging environment."

Jones further highlighted the uncertainty of near-term market conditions, especially in New Zealand leading up to the upcoming general election.

Regarding Vulcan's aluminium business, Jones mentioned the completion of the systems migration for New Zealand in December 2022 and for Australia in May 2023.

The company is now focused on consolidating processes and operations for the new aluminium unit, expecting the integration benefits to become more apparent in financial performance during the second half of FY24.

Vulcan also made significant progress in managing its working capital, with group net debt declining by NZ$50 million in the six months to June 2023.

The decrease can be attributed to factors such as the NZ$32 million interim dividend payment and the NZ$20 million deferred settlement for the Ullrich Aluminium acquisition.

Net debt decreased from NZ$390 million at the end of the first half of FY23 to NZ$340 million at the end of FY23.

Vulcan plans to release its full-year FY23 results on Tuesday, 29 August 2023. Due to uncertain trading conditions, the company will not provide earnings guidance for FY24.

However, a trading update is scheduled to be provided at its annual meeting of shareholders in November 2023.

Peter Milios

Peter Milios is a recent graduate from the University of Technology - majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.

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