I would now like to hand the conference over to Mr. Rhys Jones, Chief Executive Officer and Managing Director. Please go ahead.
Thank you, everybody, for attending. I have with me Gavin Street, Adrian Casey, and Kar Yue, and we'll start the presentation now. If you could just move to page six, the performance highlights, please. I'd like to draw attention in this chart to our operating cash flow, which is NZD 81 million. We thought it was a credible result. NZD 34 million of that was used to reduce debt. And our customer performance was a highlight for us as well. The real focus on stock availability and excellent customer service meant that our customer ATAs, our active trading accounts, increased slightly in an environment where a number of clients weren't buying as frequently. This enabled us to limit our EBITDA reduction to 30% in the period. If we can move to the next page, please, page seven. This describes our Vulcan business as a total.
It talks about our six verticals: three in steel, three in metals. And just to remind you, steel distribution is all broad ranges of steel for general engineering, construction, and the like. Plate processing is very much focused on heavy equipment, automation, a lot of unique capability and equipment where we actually deliver the process or manufactured product to the client. And coil processing specifically to the manufacturing industry where sheet and coil is manufactured or slit. In the metals side, we've got stainless steel, principally focused on a broad range of stainless steel, including fittings and pipe, but also we have stainless sheet and plate processing. Engineering steels, as the name says, very big bars of steel, principally focused on the mining industry, very long lead time, often these products, hard to handle, broad range of product, very specific need, and very much linked to mining.
Lastly, aluminum, a new vertical. We have two plants where we make our own extrusions, and then we have a broad range of sheet plate and sections across a network right across Australasia. So those are our six verticals. We trade with roughly 22,500 clients, and our top 20 clients represent around 9% of our revenue. So we've got a very broad customer base. We're in a wide number of market segments, so we really do reflect what's going on in the economy. The only segment we're not overly exposed to, and we have a small position in through our coil business, is residential construction. So in food and agriculture, sheet metal, transport, mining, fabrication, broad ranges of manufacturing, export and domestic, and engineering. Lastly, I'd like to draw your attention to our geographic spread.
We're right across Australasia, but it's important to note that both Queensland and New Zealand combined represent roughly 60% of our revenue, and I'll draw attention to that later, and separately, Victoria, which is a challenging market, is 11% of our revenue, and I'll reference those at a later date. We move now to the next page, page eight. This is a description of what our network looks like: 66 sites, 1,307 employees, and 22,500 clients. The number of sites is marginally reduced simply because we've consolidated two, three positions into one in a number of locations, and that's basically generated efficiency and customer benefits by being a one-stop shop. We move to the next slide, please.
Our growth strategy, we're always focusing on making sure in our brownfields expansion that we're growing all our businesses by gaining more customers, focusing on the right customers, the right segments, offering the right range of products. It's an ongoing, relentless process across all 66 sites. We've also entered into new geographies. Aluminum in particular has enabled us to do that. We've also, through our hybrids, opened up completely new positions, for example, in Campbellfield and Melbourne. Separately, we've expanded into new products and service offerings. A good example of that is our metals division. 10, 12 years ago, we weren't in metals. We've expanded into aluminum in the last few years. Prior to that, it was engineering steel, and prior to that, it was stainless steel. So new verticals are on the horizon through our mergers and acquisitions, our yellow bar there.
And we're always looking at either building out and expanding our current market share in some of our existing verticals or entering new verticals. We believe some of those opportunities will emerge in the near term. And lastly, business improvement opportunities, ongoing focus on managing and maintaining service levels or improving them. And particularly when we acquire new businesses or start up new hybrids, we really put a huge focus on getting those businesses up to the standard of our pre-existing model. And that's an ongoing program. The next page is really talking about how, even though it's been a very difficult environment, we want to look back and look at what we have the ability to influence directly. So outside just straight market conditions, what is it that we've achieved as a team? First of all, we've fully integrated our aluminum business.
And again, just to highlight the fact, there was over 30 branches right across Australasia, broad product range. IT system had to be altered, and we had to completely change the business model into the Vulcan system. So that's now completed. We've also, in the period, implemented 13 hybrid sites. So we're very pleased with that progress. And there'll be more sites coming each year, as we've mentioned previously. We've maintained a very high service level. So despite a very tough environment where there's a lot of focus on cost, we have not compromised on service. We've maintained our employee numbers by absolutely doubling down on customer service and stock availability and ensuring that we're supplying an absolutely superior service.
We've also managed to grow our non-ferrous aluminum customer base by 8% over the last two years, which we think is a credible effort in a very tough environment where customers are buying less frequently. We've lowered our cost in an environment where cumulative inflation has been very challenging, and we've improved our cost position year on year. It's a very detailed focused approach, primarily focused on better efficiency, better gains, not just random cost cutting. Very focused discipline programs. In terms of strong cash flow generation, NZD 395 million of operating cash flow generated since FY22.
Working Capital is a good example of this: NZD 130 million through a very disciplined approach, making sure we still have the right product range, AAA stock availability, making sure our customers, when they ring up, we have what they want, but ensuring that disciplined approach reduces over time the amount of working capital required to reflect the fact that demand is down. We've also reduced our debt by NZD 148 million. So that matches the debt-funded acquisition of aluminum for NZD 149 million.
So again, we think that's a credible result. In terms of our return on capital employed, we use that as a core metric. At the peak of the cycle, FY22, very unusual set of circumstances, we were running in the mid-50s return on capital employed. Now we're running at 10 to low teens. We don't believe either of those reflect the trend line of the business over time.
We had a very, very high peak, virtually unheard of. We've had a low, which we haven't experienced such poor demand for many decades. We believe the business, real return on capital employed, is over 30% in the trend line, and that reflects the fact that we can achieve above cost of capital in probably the most challenging environment a number of companies have experienced for many years. The next page, please. In terms of our priorities for FY26, obviously, we're absolutely driven on making sure our customer service mindset and focus on absolutely doing things to the highest possible standards, whether it's stock management, performance in terms of our processing delivery, or our calling on new clients and giving them the best service they desire, is a key focus.
We also want to absolutely match up our skills with the fact that the market is turning and is going to grow in the near term. So we want to make sure we're capitalizing on the emerging economic upswing. We're also building our bench strength. People like Gavin Street and others, we're bringing into the company, and we're absolutely building our bench strength and focus, and that's having a marked effect already in places like Australia. And we're further exploring acquisition opportunities in this very challenging market. You've seen a number of businesses struggle, and that's leading to some opportunities that we believe could possibly emerge later in the year. And we want to continue with our rollout of our hybrid sites. We completed eight in 2024 and five in the first half of 2025.
The next session is page 13, and we're looking here at the operating backdrop during the first half of 2025. I'm going to do this first slide. I'm going to hand over to Kar Yue, our CFO, to give you more details about the financial performance. In terms of our general market performance, our customers across Australia and New Zealand, they definitely had a very challenging environment. We had subdued customer confidence. We had very, very high interest rates across the environment, Australasia-wide, and we had very weak trading conditions. We're particularly exposed in New Zealand, which had probably the weakest period of economic demand for many decades. Also, Victoria was really struggling: high interest rates, high costs, and a complete lack of business confidence.
We also faced aggressive stock liquidation by some market participants, who were desperately trying to turn steel into cash due to balance sheet pressures. And we also saw the industry marked by several participants experiencing significant operating losses. So all of those factors meant that the absolute last six months was one of the most challenging periods we've faced for many years. The global economic outlook is certainly uncertain. The tariffs recently announced by Donald Trump in terms of steel and aluminum have unsettled things. And we've seen the exchange rate decline over the last period, particularly in the last four months, has declined by 5%, which has meant that product pricing is affected by that depreciating dollar. Lastly, inflationary pressures on operating costs have been very high for the last two years. They're definitely moderating, but we're still seeing a lot of rental costs go up.
So they're quite elevated in specific locations. We still face that cost pressure. So we're going to have to be very, very mindful and systematic in driving further costs out of the business. I'd now like to hand over to Kar Yue. He's going to go through some of the overall economic trends we're facing and some of the interpretations of how we've seen the last six months. Kar Yue.
Thank you, Rhys. Good morning to everyone on our results conference call. Turning to slide 14, just echoing Rhys's comment on the economy, as you can see, our economies have been well below trend for an extended period now. The economic growth in Australia has averaged at around 1% over the last two years, while New Zealand economy has experienced virtually no growth over the same period.
That said, the most recent business confidence survey in both markets, both countries, point to strong economic outlook for New Zealand and certainly also in Queensland. As shown on the next slide, slide 14, the building and construction sector in both Australia and New Zealand appears to have reached a trough in the present cycle. Turning to reference prices that we follow for base metals products on the next slide, aluminum has performed the best in the December half year of calendar year 2024. Now turning to slide 18 on our financial performance, overall decline in revenue in the first half of 13% was due to 8% reduction in volume and 5% reduction in price achievement. Encouragingly, though, our active trading accounts in the first half were steady. Our gross margin was steady, while gross profit dollar per tonne fell by $89 on a year-on-year basis, reflecting weaker market conditions.
As a result of this, our EBITDA declined by 30% year-on-year. Despite the weaker earnings, our operating cash flow came in at NZD 81 million in the first half of our current financial year, which benefited from ongoing discipline management of our working capital position. Turning to slide 19, our half-year volume and financial trends. This really reflects the strength of our business over the cycle, as Rhys mentioned, basically how it has impacted by the Australia and New Zealand economy through the cycle. As Rhys mentioned earlier on, the key point I wanted to highlight here is that our reported return on capital employed was 10.3% on a rolling 12-month basis to December, 12 months to December 2024. However, the key measure that we internally use as a more traditional measure is done on a pre-accounting leases basis, pre-IFRS 16 basis.
Our return on capital employed is currently hovering at 15% at this point of the economic cycle. Turning to slide 20, this reflects the key drivers of the 30% decline that we mentioned earlier on at the EBITDA level. Sales volume contributed to NZD 17 million of this decline, while gross profit dollar per tonne accounted for NZD 10 million of the decrease. Some of these were somewhat offset by lower operating expenditure, which reflects our cost management discipline. At a segment level on the next slide, starting with steel, volume and price achievement fell approximately 9% each year-on-year basis. New Zealand experienced a larger decline than in Australia. In Australia, the Victoria state was notably weaker than other regions in our business. Gross profit dollar per tonne in steel fell by 14.5% year-on-year. As a result, EBITDA for this segment declined by 42%.
Turning over to the metals business, our metals business, which comprises engineering steel, stainless steel, and aluminum, our revenue saw a 9% decline year-on-year, while gross margin overall was steady. EBITDA fell by 16%. Finally, on the operational side of our review for the first half, our group Opex on the next slide, our group Opex was broadly steady. In some aspects of our business, we were able to actually reduce our cost to operate the business. Selling and distribution costs benefited from our focus on productivity and moving to an in-house freight model to reduce costs and improve customer service level, as measured by DIFOT. As an aside, what I would like to point out is that while we had a 3% increase in headcount in terms of our overall headcount costs, this was a combination of slightly higher headcount and an increase in our base pay rate.
We expect that our headcount has reached a low point as we continue to expand into new geographies. Turning to slide 24, despite weaker earnings, our operating cash flow, as I mentioned earlier on, came in at NZD 81 million in the first half, reflecting ongoing discipline management of inventory while maintaining a good level of stock availability for our customers. Our capital expenditure was steady year-on-year at NZD 14 million. We now expect our annual Capex to be in the range of NZD 25 million-NZD 30 million this year. This reflects an adjustment for the timing of certain investment initiatives that we've got in place. Turning to the next slide, Vulcan sees itself as a growth business long term. We aim to strike a balance between returning funds to shareholders and investing for a business cycle recovery as well as our growth opportunities.
To maintain financial flexibility, our company has taken the position to adjust our annual dividend payout policy to 40%-80% of net profit after tax from previously a range of 60%-80% of net profit after tax. Accordingly, we have declared a NZD 0.025 dividend per share with 100% franking for Australian domiciled shareholders and 20% imputation credits for New Zealand domiciled shareholders. We are targeting a total dividend payout in the range of 40%-60% of net profit after tax for financial year 2025. Finally, our banking syndicate continues to be very supportive. As announced in October last year, the banks have agreed to provide a relaxation of our existing banking covenants thresholds until the end of this calendar year. I will now turn the session back to Rhys for concluding remarks.
Thank you, Kar Yue.
Look, I'm just going to give you a brief update on what we believe the outlook shows. I want to first of all focus between both Australia and Queensland, which I talked about 60% of our revenue. Both these two markets are demonstrating similar trends. In Queensland's case, they've got the Olympics emerging soon. Business confidence has definitely increased. They've had a new state government, which has increased business confidence further, and they've had migration from different parts of Australia and increased numbers of people in Queensland. So we're seeing definite uptick there, even though the full Olympic projects haven't yet started. A number of projects have been actioned, and we're seeing genuine improvement in demand. We believe that will continue on. We're getting a similar story in New Zealand. Clearly, the interest rate impact is slowly starting to occur.
We've got a number of larger clients, particularly in our stainless segment, showing definite signs of improvement. Certain big clients have actually increased their sales dramatically. So we're seeing genuine signs of growth emerging. We believe this will just be progressive. The commercial construction segment isn't likely to really gain much strength until the second half of the year. That's simply the lead time required. Even though a project may be ticked off, resource consenting, planning, and process before our products are used, it's much later in the process. So our gut feel is that the rural segments are really showing signs of improvement, and we believe that's already in play. But the Christchurch and Auckland segments are far more reliant on larger construction projects. That's going to be slower. It's probably going to be the second half of the year.
So we believe the tide has fully gone out and is now returning in New Zealand, but it's going to be variable in pace by segment and by product type. Back to Australia again, the real concern is Victoria. That's 11% of our revenue. That's a state government that's got very high debt levels. A number of projects on the horizon are basically stalled or there's no more coming. You've got very high costs, and you've got a very negative investment environment. Hence, we see Victoria, which is a large user of structural steel, being in a very slow environment for some time. We don't see any real improvement in the near term there. Separately, New South Wales, it's been stable, but we do believe that will improve progressively over the 12 months as interest rates drop and confidence emerges.
The balance of Australia, particularly Western Australia, we're seeing real signs that that will continue to be a strong area, and we believe that earnings there will improve further. We're quite confident, and South Australia, Tasmania, much smaller segments for us, geographic segments, but they're stable to small improvements, so overall, we're seeing we're at a turning point, but it is mixed by geographic region and by product, but New Zealand specifically, we are seeing a turning point emerging. I'd also like to highlight the seasonality of our business. Our second six months, we actually have 10 fewer working days, and we're very much a working day business, so that's a significant impact on our earnings in the second half year.
I'd like to conclude now by just thanking you all for attending, but we'd also like to just have a Q&A session, and I think we're going to go back to the controller who's going to manage that process.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Lee Power from UBS. Please go ahead.
Hi, team. Rhys, just your comments around New Zealand pre-sales activity, like when you've looked at that in the past, like how long would that typically take to come through and then the quantum and kind of shape of recovery that that's suggesting?
Well, I'll give you a specific example.
We've got one larger account where they've placed a whole lot of orders for the steel, and they'll progressively buy that from March onwards, which gives you a pretty good indication, Lee, that's a large project. Then we've got a number in our plate processing division, for example, where they've got orders, and we know that they've got a number of orders that will keep the clients going for six to eight months, and so they're starting to order off us. So what we're seeing is patchy real behavior in that area. Multiple examples. Stainless steel's numerous examples as well, but it's not a broad brush yet. We've still got Auckland and Christchurch, particularly small medium clients with the high interest rates, high mortgage costs in these big cities. That still hasn't kicked in yet, but we do expect that to occur later in the year.
And your view just around the pace of any recovery, is there any kind of other moving parts? Obviously, everyone's kind of running pretty lean at the moment and taking a lot of cost out of their business. Is this something that means that the industry can't normalize to the degree that it might usually do, or is it just kind of once the market turns, it's all back on?
No, I think it'll be just progressive. I think our improvement is not going to be accelerating up rapidly. I think it's just going to be slowly progressive improvement. Maybe Gavin, do you want to talk about Queensland, your comment there? Because that's a very good item as well, Lee, because clearly that's a big part of our business. Yeah.
I think obviously Queensland changed the government late last year, which has been important, I think, from that state in order to be really focused on what they need to do for the Olympics. Projects are still very much in the design phase. I think there's a bit more pressure on the government around determining where the stadium's going to be. But we're now starting to hear the conversations are starting to take place with various players in the industry around what that needs to be done in Queensland over the next number of years out to 2032. So I think the outlook period looks pretty positive in Queensland. The amount of work that needs to be done around there is positive. And then also attracting people to Queensland will be significant because it'll need to drive trades in order to do the work.
So pretty positive over where things are going to be around that opportunity in Queensland.
Excellent. Thanks for that, Gavin.
And then maybe just one more, Rhys or Kar Yue, I'm not sure which of you would prefer to answer it, but I mean, you've obviously done a pretty good job on controlling Opex. In your comments, you called out some growth initiatives that you got kind of irrespective of what the market does, and yet we're trying to match that with 10 fewer trading days. What do you think's the appropriate kind of start point for EBITDA when you match off the cost, those initiatives you've talked about, irrespective of what the market does? Should we be thinking on a half and half basis to start? What is the net of them in terms of a headwind, if it is a headwind?
Hi, Lee, it's Kar Yue. Good morning.
Happy to take that question. So if you start with the first half numbers, and on average, the average revenue per day effectively is hovering at about that four million mark today across Australia and New Zealand. So if you use that as a reference point and make some broad assumptions around the up to 10 fewer working days, immediately the headwind, if you like, sequential movement, other things being equal in the operating environment, we'll have a NZD 40 million headwind that we need to make up from improvements. So if you then take the gross margin at a group level and you apply that against that 40 million, that should help you bridge the differences between first half and second half before factoring in any margin recovery, volume recovery on the back of the economic cycle and market conditions.
Do you think we should be factoring in any sort of meaningful shift around just Opex control or those other growth initiatives that you talk to into that number, or do you think it's appropriate to start there and then just factor in what we think the market's doing?
I think you start in the first instance with the seasonality, and Opex will naturally be a factor to be considered in terms of ongoing initiatives when it comes to hybridization of some of our existing sites, as well as rolling out new hybrid sites in new geographies.
Okay. Perfect. Thank you, team. Appreciate the color as always.
Thanks, Lee.
Thank you. The next question is from Harry Saunders from E&P. Please go ahead.
Good morning, guys. Thanks for taking my questions.
Firstly, you just talked about the geographies separately, but just wondering overall if you could talk through recent trading at the group level. Are you seeing any improvement in recent weeks post December? Can you just maybe talk through that first, please?
Okay. Yeah. We've been quite deliberate in our commentary there. We've called a turning point, and so we've definitely seen that. So we're seeing definite signs of improvement. Kar Yue went through a quite detailed description of how those investment surveys, own activity surveys are improving. So we're seeing some of that emerge. But the point being, it doesn't all happen at once. Somebody might approve a project, but then it might be three, four months before they actually order the steel, but we know about it. So versus this time, July, August, we were getting the opposite feedback. Mid last year was very, very challenging.
The really positive element is that we're seeing that definitely emerging in both Queensland and New Zealand, and I think New South Wales has never really dipped to too great a level, so that can pick up relatively quickly, but the one that worries me, as I've mentioned, is Victoria because I can't see that improving at all.
Got it, so it sounds like on a net basis, given Victoria's 11%, effectively on a net basis, you've got sort of some sequential volume improvements on a trading day basis, if that makes sense.
Yes. Yes, and I think what you'll see, and it's obviously very hard to predict, but what we, and obviously with these interest rates, the lag before they actually kick in and the like, you're starting to see that emerge, and we've got a slate of interest rates coming potentially in Australia, but highly likely in New Zealand.
So you've got a scenario where that will just continually build momentum, we believe, going forward.
Okay. Thank you. And maybe just on the steel GP per tonne decline flagged was particularly weak. I mean, how are you thinking about that in the second half? Do you expect some improvement there? And then just also implied metals GP per tonne was relatively strong. So can we extrapolate that into the second half? Thanks.
Yeah. A couple of quick points I'll make. I'll get Kar Yeo to comment as well. He studies this very closely. The metals includes aluminum. So aluminum, remember, we've got self-help initiatives, which we've talked about repeatedly, that our margin management and service levels weren't high enough in aluminum. We're progressively improving those. So the margin per tonne in aluminum is going to be definitely just straight out self-help.
We've also had subsidized exports from China, which dominates the world aluminum market with 60% output, being eradicated in December. So the price of aluminum has gone up. So that's helpful on a margin per tonne basis for us. And then separately, we're seeing pretty strong improvements in demand potentially in metals generally and stainless in New Zealand in particular and opportunity and growth with our hybrids in Australia. So all of that argues quite strongly to sustain or improved margins in metals. In steel, we've got some challenged environments. We referenced the fact that a number of people are struggling. I don't think there's any secret that InfraBuild/Sanjeev Gupta has been in the media a lot, probably in the media today again. That particular behavior of that party, they're obviously running their business for cash. They've got all sorts of queries.
That has been very negative to the margin on steel. So that could have an impact on us if something happened there. Does that answer your question?
Yes. Thank you. And I suppose.
Do you want to comment at all, Kar Yeo?
Great. Thanks.
No comment to that.
Thank you. Sorry. One other one here. Just on corporate costs, pretty reasonable performance if we strip out the divisions, 9.5 million versus I think it was 11.8 million in the second half last year. And sort of given fewer trading days, how are you thinking about corporate costs in the second half of 2025? Thanks.
Yeah. Harry, good morning. I would expect corporate costs to remain at about similar level in terms of run rate in the second half.
There are projects that we are continuing to undertake, both in terms of functional costs, especially in IT, that may end up bumping up our corporate costs somewhat in the second half compared with the first half of the current financial year.
Got it. So similar run rate, but then some other projects may bump it up.
Sorry.
Finally, just on working capital, reasonable performance in that first half. Depending on the macro environment, is there an opportunity to bring that debt down further for the FY25 end?
Yeah. Yes, there is. The quick commentary would be that we have deliberately maintained good stock holdings so we don't let the clients down, but there is a further opportunity to improve. And we have had a scenario where, for example, the issues with InfraBuild, with Gupta have been not opening, being closed down.
We've had to import a significant amount of product, which affects us. So you see where I'm coming from. We've had a few disruptions to our working capital because of that. So we believe there's still further improvement, and we're determined to do it. The other comment I'd make is just generally in aluminum, we're progressively getting their stock management to an improved standard. And again, that has provided us with some opportunities for further working capital improvement, but improving stock availability. So we're trying to do both. So it's going to do it very carefully in a measured way.
Got it. Thanks for that.
Thank you. The next question is from Grant Swanepoel from Jarden. Please go ahead.
Good morning. Can you hear me? Yes, Grant. Good morning. Fantastic. My first question is just around your change-driven policy for the full year.
I understand you're a growth company in your words, but normally when you go into a down cycle, the payout ratio goes up, not down. Is this because you're worried about your debt covenants? I thought you'd got some relief on that. You told me that your debt is continuing to go down at the year-end. Can you just give a bit more color why you've cut your dividend payout?
Yep. So we're repositioning our payout ratio for the long term, in fact, both short and long term. The short-term dynamics is actually, as you know, we've got obviously NZD 9 million earnings in the first half, and we leave the market to conclude what our annual earnings is compared with NZD 40 million last year.
So if you think in the context of the reduced cents per share payout, even if we kept the payout ratio at 68%, it will naturally be lower in absolute terms compared with this time last year. But coming back to your covenant point, our banks are absolutely maintaining their support for our business and absolutely understand the timing differences between recovery in the economy and what it means for our business. But as far as the way we think about our business, we're not managing to a debt number. First and foremost, we're managing to customer service level. And that's the key thing that comes into play as to how we think about our debt management.
Thank you. My second is a double question and my last question. In terms of your outlook, we've had false starts before where you've expected green shoots.
How's this start to the second half different to the same time last year and the year-end result where you're also hoping for some sort of green shoot recovery? And then when the recovery does come, it looks like volumes will come first, and margins, because of such a deep cycle, will probably be delayed. Is that the right way to think about how the recovery comes? And does your little bit of indication that you've got some forward book purchases support the view that it's more about volume than margin in the near term?
Okay. I can have a crack at that and also let Kar Yue comment as well.
Look, first of all, the volumes we experience. I'm talking New Zealand in particular. The volumes we experience in New Zealand the last six months, Grant, my God, if they continued, I think we'd have a train wreck of an economy if that persisted. So it was always going to recover to a degree. So what we're specifically saying, if you're wanting some green shoots, one very large client, for example, with literally hundreds of employees, started back on the 6th of January. Five, six months ago, they were very quiet. Now they're very busy. Another client, similar scenario, laying people off, now placing significant large orders, and they're fully back into it in February, March, April, and they've got six to nine months workload. So we've got genuine green shoots.
Then we're getting the overall sentiment across our client base, which is a lot more positive than what it was. So we don't think this is a false dawn, so to speak, like last time. So that would be the first comment. The second comment is, yes, I agree, I think volumes in New Zealand will progressively increase, but it could be an up and down rate. And remember, we're heavily exposed to the export-related industries, particularly with our stainless and the like. So that's a real advantage which other parties aren't necessarily exposed to. So they could be still very challenged, particularly if they're heavily reliant on commercial construction and infrastructure, which I don't believe is going to start till late in the year. Then on top of that, we've had inflationary cost bases, and we've had a depreciating dollar and driving up costs of some raw materials.
So all in all, I would actually argue that there'd probably be a margin turning point as well because I don't think it's sustainable the way people have been pricing in some segments. But it will vary by segment. Does that answer it? Or maybe you could comment, Kar Yue, you've got another comment.
Sure. Happy to add to that, Rhys. Thanks, Grant. So if you think about March quarter of last year, this time last year, our tons per day specific to New Zealand, and in some instances, actually some segments in Australia, in the March quarter, tons per day averaged higher than what it was in the December quarter. Specifically in February and the first few weeks of March, the volume was actually running quite strongly compared with the December quarter, sequentially on tons per day basis across both sides of the ditch.
If you think about visibility, which is the other indicator that we look at, our visibility of order into the future a year ago was relatively low. Now, what we're seeing is we're seeing a handful of customers, not everyone, a handful of customers are starting to actually order forward as far as two months out, whereas a year ago, we were seeing maybe only two to three weeks out. So that, to us, alongside with the pre-sales activity, gives us more comfort that this feels like a turning point, albeit early.
Well, that's great, Rhys. And thanks for those tangible points. That's it from me.
Okay. Thanks, Grant.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question is from Rohan Kore man-Smit from Forsyth Barr. Please go ahead.
Morning, guys.
Maybe just sorry to labor the point, but just talking about your certainty in this being an actual turning point, can you just maybe give us some color on tons per day, say, first quarter, second quarter, and third quarter to date in terms of what you've been actually seeing on the ground?
So if I think about the tons per day average, so if I can because we've not disclosed the numbers on a quarterly basis, Roland, I'm not keen to actually call these numbers out. But what I can tell you is in terms of if I indexed it and if we thought about the tons per day on a quarterly basis in financial year 2024, for the most part, they were steady within a very narrow band in each other quarter, tons per day across Australia and New Zealand.
However, in the September quarter in New Zealand, we saw a significant step down in the September quarter. Australia also stepped down somewhat, but not as significant as New Zealand. In the December quarter, we saw a market step down in New Zealand again compared to the September quarter outcome in New Zealand. In Australia, December quarter stabilized. Hopefully, that helps to provide some color.
That probably just adds that, yeah, the current trading seems to reflect when we got those GDP data, which was just horrific for New Zealand, our volume seemed to reflect that, Roland. We believe it's definitely moved on from there. Obviously, we've had January, we're into February, so we've got a bit of specific evidence for that.
Roland, just to put in context, the December quarter tons per day in New Zealand. You would have to go back probably close on 15 years, i.e., the GFC period, in terms of absolute tons per day that we're currently experiencing.
Okay. Thank you. You called out 13 hybrid sites up and running. I think previously you'd said 12 was kind of the target. And you've also said you're going to go on from 13. Can you kind of give us some sort of new target and maybe some color on how the current sites are running versus expectations?
Yep. So I think in the past, we've talked about up to potentially 20 locations in terms of site hybridization. And so obviously, we've done 13. So we will continue to move towards and strive towards those targets in new geographies as well as existing geographies.
Just a quick comment, Roland.
Some of the delays on some of them are just getting the property sorted out. It's actually in some of these small locations, property's tightly held, and so you've got to get sites built. In terms of performance, look, it always comes down to getting the right people. A greenfield startup, you have to have the right person. Where it's pre-existing, we're adding a product range that's going a lot better. We've had a couple of greenfields. We've had one misstep, but the balance have been overall pretty good. And when we have a misstep, we just go, "All hands on deck. What are we going to do to fix it?" Maybe get Gavin to comment because Gavin's done a lot of greenfields historically in his career.
I'll just really emphasize your comment there, Rhys, around getting the right people.
I mean, that's the focus around making sure we've got the right site leader, the right capability in that site so we can actually make a success, and then what we've got here as well is a really good support network that can get in and help and actually drive and know what we're doing and know how we actually can build that capability in that site.
Perfect, and I actually did have a question more directly for Gavin, if I'm allowed. I was just wondering.
Yeah, sure.
Given he's new to the business and come from a very successful business, maybe if you can give us some high-level thoughts about strengths, weaknesses, opportunities of Vulcan as he's found it over his first few months.
Yeah. Thanks for that, Roland. Look, probably from my perspective is that this is really a values-led business.
And I think that's something that I've been familiar with in the past. And I think that's something that's really important for us to really embrace and drive for the future. I think we've seen some really strong capabilities in New Zealand, deep expertise, capability that's been developed over many, many years. It's been really strong. And I spent my first sort of six weeks in New Zealand learning the business, understanding what we're doing. I think in Australia, the opportunity is significant. I think we're really working towards building on our bench strength and capability. We brought in someone who I previously worked with who's going to come into it and started with the business in the last month. And he'll have some responsibilities to really drive some of our capability. I think the opportunities are really positive.
I think there's opportunities for us across different segments in different countries that we need to continue to focus on and continue to drive.
Just a quick comment, Roland, because we often bring people into the business, but there's very rare to have somebody that's adapted so well to our company. So Gavin's been a great hire. I think the values and culture, and we use the Good to Great sort of mechanism a lot. The overlap between our two, our business and the business experience and mindset he has is very, very close. So we're very pleased. We obviously got a lot of his skill set around growing a business because he was there at Reece when it was about a billion, and it went up to about seven or eight billion in his tenure.
So that's a great addition to our ability as a team to understand how to grow appropriately.
Perfect. And sorry, one final one, if you'll indulge me. Just the competitive environment at the moment, have you noticed any change, given that sector profits are quite low, possibly negative for some at the moment? Is there any change in behavior?
Yeah. Look, I'd quickly comment on that. Certainly, one competitor has put a price rise letter out as we have. And look, my sense is the profitability and challenge a lot of parties are facing, they're starting to see the real results. And look, who knows what will happen in the future, but there are some signs that the behavior is slowly changing. Do you want to comment on that, Adrian?
Yeah. Look, I agree with Rhys.
So I think when we look at price increase and understanding what the markets are doing, it's not just the steel cost now. It's the inflationary pressures we've had over the last three years, leases, people, etc. That's coming into account now more in Australia and New Zealand. But from a competitive point of view, we have noticed some companies dropping stock at prices that we don't go near. So volumes could be down a little bit because of that. But we have some core disciplines we just don't break. But it's always a competitive market. So that's the point I would make. We look at our own company and how we can navigate that, not so much the external side.
The one thing I would observe, Roland, is that in these very difficult environments, often parties' performance drop as they restructure and reduce staff or reduce stock or get very tight on credit terms. There's a variety of elements that actually impact the service to the client. So we try to avoid those pitfalls.
Perfect. Thanks. Thank you.
There are no further questions at this time. I'll now hand back to Mr. Jones for closing remarks.
Look, thank you, everybody, for attending our call. We really enjoyed this opportunity to talk to you and answer your questions. We're looking forward to hopefully a good calendar year. And we'll catch up with you in the near term in person, no doubt. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.