Next up we've got Steel & Tube. We've got Mark Malpass, who's CEO, and we've also got Richard Smyth, the CFO and Company Secretary joining us. Welcome guys. Just a quick introduction on both them and Steel & Tube. Steel & Tube is a sort of sources, processes, and distributes steel products across the country. Involved in sort of heavy industry and a lot of the building sector. Mark, CEO, and Mark's got significant experience since starting obviously as CEO in 2018 at Steel & Tube. Formerly was Chief Executive of Fletcher Building's Infrastructure Products, strong background in the sector. Richard Smyth, CFO and Company Secretary, started last year in April, and formerly a PwC partner across Wellington, Auckland, and the U.S.
Also spent a bit of time at SkyCity in a CFO type role there. A lot of great experience and probably quite a topical industry to be talking about as well. I'll hand over to you both.
Great. Well, thank you, Oliver, and welcome to everyone joining us here online. With me today is, as Oliver said, Richard Smyth, who's Steel & Tube's CFO. I'll start with an introduction on Steel & Tube, a bit about, you know, who we are, our products, the market structure, and our journey as a business over the last five years. Richard will then cover our performance and sustainability focus, before coming back to me and I'll talk about our growth strategy and also our outlook, and take any questions. Steel & Tube is one of the leading product providers of steel solutions. And we service customers through our national network and online platforms. We're a proud New Zealand company. We're in our 70th year of trading this year.
Our goal is to be the best in the sector. The preferred choice for steel products and solutions. A rewarding place to work and an attractive investment for our shareholders. We do this by investing in the things that matter, so our people, our customers, digital innovation, operational excellence, quality, health and safety. We operate through two key divisions, so we have a Distribution division and an Infrastructure division. Distribution is where we bring products in or source products from preferred mills, and then we distribute them through our national network throughout the country. In the Distribution division, we're basically a trader. What that means is we aggregate products for our customers that don't have the scale to meet our steel mill minimum order quantities.
We have significant procurement scale to buy well, and we then sell on in smaller quantities while managing price and credit terms. What matters in that distribution space is really good customer service, pricing disciplines, managing our mix towards high value products, and then basically keeping our operational and distribution costs as low as we possibly can. Our Infrastructure division is where we really process products for sale. We process them before we actually sell them. This is typically on a contract or a project basis. That includes products like roofing steel, composite floor decks, large reinforcing assemblies that may be going into infrastructure projects like bridges and tunnels and wind farms, that type of application.
Our core competitive advantage for Steel & Tube is our ability to cross-sell our extensive range of product offers to our customers. You can see on this sort of market structure map on the slide here that we have the most comprehensive range of steel products in New Zealand that includes services and solutions. We operate in all key sectors across the sort of steel markets and more than any of our competitors. Importantly, we are targeting sectors and products that both strengthen our core offer as well as move us up the value chain. I'd like to talk a little bit about our journey. Steel & Tube has really been transformed over the last five years.
Prior to 2017, the company had made quite a few acquisitions, although its base business had been losing scale, particularly in that distribution business that I talked about. Now we've fully integrated those acquisitions and they're all adding value to our group. We've also seen substantial positive outcomes from Project Strive that we drove in the first three years, and that was really driving benefits that are now dropping through. For example, our national network, we've been able to rationalize that but also maintain a national presence. We've been able to reduce our lease costs by NZD 2 3 million per annum. We've also had a very laser focus on delivering outstanding customer experience.
We've locked in significant cost reductions, and we've also been able to invest in operational excellence and supply chain disciplines, which have obviously paid dividends through a difficult trading period of COVID and bringing products into the country. Yes, most importantly, we really have a great leading team across the company that are very passionate about what they do and very focused on delivering solutions and great customer experience. In the last couple of years, we've also moved to a growth focus, so that means that we've really concentrated on moving to high value segments and continued investing in those areas of the business that will create a diversified and resilient business. The 2022 financial year allowed us to demonstrate the value of that turnaround and also our focus on growth.
We delivered a record financial performance and now have a very robust operating model in place to support our growth ambitions. We have a very clear focus on two pathways to continue to generate double-digit return for our shareholders. The first is continuing to strengthen our core business, and secondly, to grow by investing in high-value products, services, and sectors. We're very well-positioned to deliver through the economic cycle. We've got the right expertise on board with both our Board and Management. We have an operating platform and a growth strategy that will create continued shareholder value. I'll now hand over to Richard before I provide an update on our strategic growth progress.
Sorry about that.
We were very pleased to deliver record performance for the FY 2022 year, driven by a focus on customer service and value adds, operational performance, and disciplined supply chain management, which means that we had inventory available when our customers needed to support the growth across a range of sectors. Revenue increased 25% to almost NZD 600 million. EBIT increasing 130% to NZD 47.6 million, with EBITDA up 73% to NZD 66.6 million, and our net profit almost doubling to NZD 30.2 million. On the back of this strong performance, our board declared a final dividend of NZD 0.075 per share, which will be 50% imputed, taking our full year dividends to NZD 0.13 per share. Other key metrics also improved.
In particular, return on funds employed was 14.6%. As Mark has said, our company has been transformed over the last five years since we started Project Strive in 2018. You can see here the significant improvement in our financial performance to this year's record results. With the embedded value now being realized from Project Strive and our growth strategy that is underway. At 11.4%, Steel & Tube is a high dividend yield with total shareholder returns of 19.1% in the FY 2022 year. We have a clear forward strategy, a strong operating platform, and the means to invest into growth. The turnaround and commencement of the growth strategy has been proven with this year's record results.
Our long-term aim is to operate our business in a way that is financially rewarding to our shareholders and positive for our people, our customers, and our planet. We have three key focus areas: maximizing steel's contribution into a sustainable and low emission society, supporting our people and customers, and delivering value to our shareholders. One new initiative that we're excited to support in 2023 is a carbon credit offer in conjunction with HERA for our infrastructure customers. Now, customers can opt to offset the embedded carbon in steel that they order, with Steel & Tube facilitating that through our partners. These credits will be passed directly through to the customer, with the cost being used to fund the planting and protection of native trees across New Zealand and the Pacific Islands. Steel & Tube does not make any money from this program.
We are focused on continued improvement in key areas that matter to us. Our employee satisfaction Net Promoter Score was 35 versus an industry average of 18. We were very pleased with this score. Also, importantly, our Safety Employee Total Recordable Injury Frequency Rate improved to 1.13, well below industry averages of 5. Pleasingly, our people have rated their satisfaction score at 7.8 out of 10, a reflection of the supportive and strong culture at Steel & Tube. It is worth noting that early on in COVID, we recognized mental well-being was going to be important, and during the lockdowns we supported our people, not only financially, but also looking at their whole well-being. Every six weeks, we have continued to run webinars on a range of topics that affect our people, both in the workplace and at home.
These range from mental health, parenting, managing stress, financial advice, nutrition, and mindfulness. It is also important that our people and families were healthy and safe. We were the first to invest in COVID vaccine incentives. We pushed booster support, and we provided RAT tests for families. We have also invested in training and skills development for many of our workers who were stuck at home to both keep them engaged and also allow them to upskill and progress their careers. Customer satisfaction also continues to increase, and our Net Promoter Score moved up to 40 compared to an industry average of 32. This is reflective of our ability to deliver products during what was a challenging year for our customers. Our Greenhouse Gas emissions reduced year-over-year with a 21% reduction in emissions per NZD 1 million of revenue.
This is a result of multiple supply chain and operational initiatives. I will now hand back to Mark to give you an update on our strategic progress.
Thanks, Richard. Look, our goal is simple: to make life easy for our customers needing steel solutions and to be their preferred supplier of choice. We continue to build on initiatives under each of our five pathways, which again are focused on customers, our people, technology, service, and operational efficiency. With a strong business platform now embedded, we have moved our focus to growth. In particular, our efforts are concentrated on the two key areas to drive gross margin dollar per tonne improvements. These are firstly, continuing to strengthen our core foundation and secondly, growing high-value products, services, and sectors. The first area of building on our core involves continued strengthening of our core business foundation, the foundation that is now in place. The focus is on building best-in-class customer experience, leveraging the breadth of scale to cross-sell to a wider range of products and services.
It's also about leveraging industry-leading digital platform that we've put in place. Now, in New Zealand, it is a very traditional analog business model across the steel distributors. What we've observed is trading and using digital steel trading is starting to emerge in the U.S. and in Europe, which provides us with continued conviction to invest in our digital and IT offering and accelerate that shift for our customers to make life easier for them, also deliver efficiencies for our business and also New Zealand Inc. The second area of growth into high-value products, services, and sectors is all about focusing on expanding what we can offer to our customers. This includes adjacent materials and value-added services. We're very mindful the investment that our shareholders have made in our company, and we don't believe in growth for growth's sake.
Instead, we have taken a very disciplined approach to investment and new opportunities to ensure that we will deliver financial and strategic value. Two examples of this growth strategy in action are our recent investment and expansion into plate processing capabilities and also the acquisition of Kiwi Pipe & Fittings. In plate processing, we've acquired new high-capacity equipment to expand our capability and offer. This was operational from June this year on time and within budget. Plate processing is a high-value category with strong demand that provides attractive margins. It also builds on our existing offer that we already have in place, and it also has a very strong forward workload in place. On the first of August, we acquired Kiwi Pipe & Fittings, which is also symbolic of our strategy to selectively invest in high-value products and sectors.
Kiwi is a small business which specializes in fire and water reticulation products. It builds on our existing offer and provides us with scale and market share growth, as well as being immediately earnings accretive. Looking at the 2023 financial year that we've just started, we're expecting continued volatility in the global and local economy. Steel pricing is expected to remain elevated in the near term. Shorter-term, steel demand is also anticipated to remain strong across most sectors. Medium- to- long term, demand will moderate in some sectors. For example, residential, where we will see some softening of the recent extraordinary high levels of demand that we've seen. We have a clear focus on continuing to strengthen our core and invest in high-value products, services, and sectors. The majority of our growth will be organic.
We will also continue to consider small bolt-on acquisitions where they meet our criteria. The benefits of our strategic initiatives are expected to commence this financial year and will be fully reflected in the results in 2024 financial year and onwards. Our goal is to continue to deliver sustainable double-digit return on funds employed for our shareholders. Thank you for listening, and I'll now hand over for questions.
Great. Thanks, Mark. Thanks, Richard, as well for that. A couple of questions. One, Mark, just on supply chain, where is a lot of your sort of raw material sourced from, and how have you seen the sort of dynamics around that over, say, the last 18-24 months change, through your supply chain?
Yeah. Look, I mean, we would be sourcing somewhere between 40%-50% of our products locally through New Zealand Steel and Pacific Steel. Then that balance of, you know, at least half of our products are coming in from offshore. We'll be buying from many parts of the world, mostly through, you know, the Asia Pacific region, everywhere from China through Taiwan, Japan, other markets through the region. The change in dynamic over the last 18 months has been, you know, massive. We've seen, you know, huge congestion in terms of supply chains, both in physical flows of product into the country, as well as port congestions in country and from source location.
We have seen in the last, you know, three to six months, some of that congestion easing up and some of the mills coming off allocations, which is pleasing. We're still seeing some very high freight rates out there, and it will take some time before they normalize back for both bulk shipping, which is, you know, still very high and even containerized shipping.
Great. Yeah, thanks. Richard, looking forward, are there any sort of sectors of the economy that you at Steel & Tube look towards as sort of leading indicators around what demand might be doing or there's probably the obvious ones in terms of construction, but are there any other things outside of that that you guys when you're looking forward and more on the demand side consider?
As Mark mentioned, residential is the area we think we're gonna start to see some moderation. We track very closely all of the sectors that we perform in, that we operate in. But residential is the one that you'll start to see. We also track, as Amy said, you know, interest rates and the like. As those rise, we are very aware of the potential impact it can have elsewhere, and we watch those sort of indices quite closely.
Great. Thanks. One last one might be for both or whoever it suits best. In terms of Mark, you mentioned acquisition opportunities going forward, small bolt-ons. Have you seen over the last 12 months in terms of where the interest rate cycle's gone, the dynamics there change in terms of valuation expectations, or just the appetite out there in the market?
Yeah, look, I mean, I think it's a fairly active M&A market right across New Zealand as many commentators have reported, you know, in recent months. For us, we're more a trade buyer, so we, you know, we have a sort of a very clear window that we look at, you know, in terms of opportunities through that we've got quite clear criteria around the type of businesses that we're interested in. They're really in that higher value segments that we want to grow into. Our first pathway is always organic growth, and we are actually growing in quite a few products that we've invested in inventory and to grow.
Where we can't either grow quick enough or that we can see the market structure doesn't need another participant, we'll look at buying as we did with Kiwi Pipe & Fittings. You know, the potentially the opportunities have opened up a little bit in some of those sectors. I think with probably working capital requirements for many businesses have been fairly stretched as, you know, we've seen very high commodity pricing over recent periods, particularly, you know, post-COVID, but also with the, you know, unfortunate events, you know, with Russia and Ukraine and some of the other items that Amy mentioned are kind of driving those factors. That's of course stretching the balance sheets of typically smaller businesses as well. I think, you know, you're seeing that across many parts of the economy.
We do see some quite nice macro thematics around the infrastructure markets, underspent in New Zealand, and so there's quite a lot of activity to come there in future periods. We're also seeing manufacturing, some of the factors that Amy mentioned around the low dollar perversely is quite helpful for manufacturers. I think as many have realized that in a COVID environment, actually local manufacturing sometimes makes more sense. We're seeing some growth. Of course, rural agricultural activity there and commercial is still quite strong. You're seeing some good opportunities in the market. Of course, for us, steel is a great circular economy product.
It's very sustainable and so, you know, it's quite a sweet spot if you like in terms of, you know, the economy at the moment for steel.
Great. Thank you very much, Mark and Richard. It's all good. We've got a lot out of it and so, yeah, we'll hope to have you on again soon.
Thanks, Oliver.
Thank you.
Next up we've got Kevin Bowler and Mark Winter joining us from My Food Bag. Kevin's CEO at My Food Bag and joining us now, and Mark's CFO. Most of you will be familiar with My Food Bag and what they do, so I'll leave it to you guys to introduce a little bit more around that. Just introductions around the speakers. Kevin's previously
been CEO at Frucor Beverages, Tourism New Zealand and Yahoo! Xtra, so brings a wealth of experience to the My Food Bag team. Mark has previously been at Fonterra as Group Financial Controller, so is obviously also background in food and beverage, but also finance aspect to it. Without further ado, we'll hand over to Mark and Kevin.
Thanks, Oliver. I appreciate the introduction. My Food Bag is a very different business to Steel & Tube. We're just nine years old. You'll hear predominantly from me today and with some support from Mark. I'll just ask Mark to flick us forward. My Food Bag at a glance. It's a well-established business, and it's over across its nine years, a well-recognized brand. We have got a very strong database of New Zealand households who have purchased from us before, and a very strong knowledge base around what Kiwis want to eat with something like 10,000 rated recipes in our database.
We reach nearly all urban addresses with support from New Zealand Post, who have been working with us from the very beginning of the inception of the business and continue to be a very strong partner for My Food Bag. What we have now is a very strong platform for growth. We're starting to innovate on that, and I'll talk a little bit about how some of that's playing out over the course of this presentation. Thought we'd start with some quick highlights from our year that ended at the thirty-first of March this year. Our revenue was just under NZD 200 million. EBITDA was NZD 34.2 million at a margin of 17.6%, and NPAT was NZD 20 million.
Average order value was NZD 126 and very high or very positive news around our high-value customer growth. Contribution margin was a strong 27%, and we were able to meet or exceed all of the dimensions of the business that were offered to the market prior to listing in our PFI. We paid NZD 0.07 per share fully imputed dividend. In our most recent market announcement, the board indicated its expectation that an interim dividend will be paid in line with last year, this year. The business model has many similarities with food businesses, but some differences as well. The key thing is the weekly cycle. The week for us typically commences on a Sunday evening with customer orders locking at midnight.
Customer payment occurs overnight, and then starting with a clean sheet or a clean floor, we procure the food from our many suppliers, predominantly in New Zealand, on a Monday morning. That food's delivered through Tuesday, Wednesday, and sometimes into Thursday when picking commences. We're picking in three locations, two in Auckland and one in Christchurch. We start distributing to customers on a Friday, for a delivery into customers' addresses on Saturday. The majority of customer deliveries are on Sunday, and then some are also the following Monday. That is the nature of the cycle. What's so great about that is, of course, we are able to be paid in advance, and we're making to order. We're not incurring any stock obsolescence risks, nor are we buying inventory that we don't need.
We've quite a scalable business from that point of view. The negative working capital aspect makes a very cash accretive business. In terms of our growth strategy, we've defined this into three general buckets. One of them is winning in meals, which is our heartland, where we started the business. We're already showing how one of the ways that we're thinking about that is by investing in ready-made meals. We're also looking to expand what we do, and we've introduced an assortment of products and food solutions under the banner of the My Food Bag Kitchen, which is continuing to grow and show real promise in terms of where the business might continue to expand towards. We're also looking and actively evaluating some new categories.
We've got a very strong culture, but we're also taking advantage of resetting that as people return to the office at the back end of the effects of the pandemic. We've just done quite a big program around people and culture, and we're really excited to start sharing that with staff over the next few weeks. We've got a big focus on operations. Operations is a key area for us in terms of the maturing of the business, bearing in mind we are only nine years old. I'll talk a little bit about the operations as we come forward. Of course, ESG is a really important part of the business from a measurement point of view and a strategy point of view and a decarbonization perspective.
What you'll see from this sort of business is a business that's all about reducing waste, both at our end, but also, for consumers in that they're only receiving the food that they've ordered and what they need for the week ahead. In terms of winning in meals, what we've seen here is very strong performance across a portfolio of brands, which has proven very successful. We have an entry-level brand in Bargain Box, which of course has worked very well in these more difficult economic times. Our leadership in ready-made meals is going from strength to strength as we grow that breadth of offering and also look to new channels to distribute it alongside our meal kits.
The Kitchen has already proven to be very successful in driving average order value, and we are continuing to expand the number of products we are offering in the Kitchen. I'll show that shortly. The Kitchen's also giving us insights into what our customers are interested in buying, and not all of the products that we thought would be successful have been. Some that we weren't so confident in have actually done very, very well. We continue to look at some small, relatively small M&A bolt-on opportunities. Talked a little bit about culture and capability already, but that's a big focus of the business this year. One of the other big areas is just strengthening our foundations, particularly around operations.
We have a very manual operation at the moment, and I'll talk shortly about how we see that transforming into something with more technology, which will support both more innovation but also a higher quality product output. We're continuing to do a lot in the ESG area. One of the most recent things we've done is remove the plastic-wrapped wool insulation with a cardboard solution, which from a temperature point of view, performs just as well, but is easier for our customers to recycle at the curbside. Everything we can do about reducing packaging is high on our agenda. Of course, the caution there is to make sure that we're not jeopardizing food safety. This is an image of a new factory that we commissioned in April this year.
This was built in lease back for us and the transition to this plant was on time, on budget, and has continued to perform well above the previous facility that we had and sets us up well for further growth in the South Island. It also allows us to buy more of the food locally and not incur the risks of transport from the North Island and also reduce food miles. Well, this is among other things a logistics business, but it's also a digital business. It's a native digital business in that this is a very important interface between our customers and the businesses by web and app.
We've continued to drive and develop more personalized and customized features, allowing customers more flexibility in terms of the number of or the types of meals that they buy and the number of meals that they buy. One recent very successful implementation was allowing customers to buy a gourmet upgrade for one meal during their week, rather than encouraging people to either buy all gourmet meals or all classic meals. Those sorts of flexibility features are something that we think customers are going to continue to want from us, and that we're looking at ways that we can deliver those more effectively. The Kitchen, as I mentioned before, overall we've now exposed some 380 different products to customers.
At the moment, in any given week, we're somewhere around 150 different products across multiple categories, food and non-food. We're getting a really good sense now of what customers are going to buy on a regular basis. Of course, this is very additive to the business because there's no additional customer acquisition costs and in most cases no additional distribution costs. We're seeing 10%-15% of our customers attaching something from the Kitchen with an average incremental order value north of NZD 20 typically on average. Of course, we're continuing to improve the usability of our app and our web through sort of ongoing testing and learning. One of the big changes for us over the next 12 months will be the introduction of more technology into our picking and packing operation.
This will have quality benefits, it'll have productivity benefits, but probably, and most importantly, what it will do is it will enable us to offer more customization, and custom features and personalization features so that customers can adjust their order every week, without it overcomplicating the operational side of the business. In fact, the operational side of the business won't even really be affected as customers seek to personalize their order each week. We're very excited about this and we're in the delivery phase of what is about a NZD 5 million investment in technology, to be delivered in the North Island, this summer and late summer in the South Island facilities. That concludes the slides, and very happy to take questions and look forward to those. Thank you.
Great. Thanks, Kevin. We do have a couple questions. One's just around the sort of competitive environment that you're operating within. In sort of just speaking to how do you try to make customers as sticky as possible and sort of stop them from jumping between yourself and a HelloFresh or another competitor?
Yeah, that's a terrific question. One of the things about the competitive environment I'd point out is that we've now had international competition in the market since 2018, so it's not a new thing for us. This is definitely our day jobs in terms of acquiring customers, reactivating customers and retaining customers. We think at the moment the opportunity is around making sure that the recipes are as good as possible, that our accuracy and operations is excellent and that customers are delighted with every box they open. Making sure all that happens and of course being competitive on price is also really important, particularly at the moment. We heard Amy talk about inflation, the pressure that New Zealand households are under.
We're very aware of that and very awake to it.
Great. Another one maybe just around the sort of supermarket type offering as well. There's obviously been a lot of media coverage around the duopoly and what opportunities that might make for something maybe disruptive to come into that space. You probably see yourselves as being in there. Is it a case of kind of like you say, leveraging the existing network and distribution that you have and having it as sort of an add-on? Over time, do you see that as being a you know, a substantial part of the business?
I think it's an interesting space. There are likely to be some changes, some of which we think we may be able to take advantage of. We're actively engaged in looking at how the industry may restructure and whether there's opportunities for us. I think the fundamentals are, and perhaps it's fair to say that, the pandemic has accelerated this, that more people are buying food online, whether they're buying it from a traditional grocery reseller or seller or from one of the meal kit providers. That's really playing towards us. The question for us really is how do we make the process of buying as frictionless as possible and the experience of the food as good as possible.
One of the big things that our customers keep feeding back to us is it's just it's the lack of waste. They're only getting the food that they've ordered, which is what they need for the week ahead of them, as opposed to buying a whole lot of things that they end up not consuming during the week.
Right. One last one just around sort of your geographic spread. Can you speak to, yeah, sort of your coverage across the country? Is there any places you're looking at going into or have you got everything covered already or, you mentioned obviously South Island, new distribution center there. Yeah, sort of just around your geographic spread.
We're I think one of the slides mentioned that we've got about 86% coverage of New Zealand homes. The areas which we will have difficulty with our product to reach will be rural addresses. But we're constantly looking at city fringe growth, like whether it be on the edges of Auckland or other parts of New Zealand, to take advantage of people moving into new subdivisions and areas. I think the geographical opportunity is marginal, but it continues to grow.
Great. That's it for now, but thank you very much for joining us, Mark and Kevin, and yeah, all the best going forward.
Thanks a lot.
Thank you.
Cheers.
That concludes the event for today. Thank you to all the presenters in particular, and also to the audience for joining us. As we mentioned at the start, the video has been recorded and it will be available online following for anyone who missed or would like to re-watch. Also if there were any questions we were unable to get to, we'll send them out over email, and we'll make sure we get answers for you. In the meantime, thank you very much for joining. Our next event will be on the 20th of September, so in a couple of weeks, and we will see you then. Thanks.