The Steel & Tube Holdings posted an 85% slump in its first-half profits, thereby reflecting weaker demand and prices.

The company's net income fell to $3.17 million, in the six months, ended December 31, from $20.8 million, or 23.5 cents, the previous year.

Steel & Tube suffered a decline in demand of materials for commercial construction due to the financial crisis and recession in New Zealand's economy.

"Strong competition for reduced volumes and declining steel prices has squeezed margins", said Chief Executive Dave Taylor.

"The strength and sustainability of any pickup in activity is still uncertain as economic conditions show varying growth rates across our trading partners. The company's low gearing ratio of 19 per cent means the company is well positioned for any upturn", he added.

The company will pay a first-half dividend of 3.5 cents, a share.

Taylor also explained that the company's focus on inventory, management of debt and discretionary expenses, resulted in a positive operating cash flow of $27.3 million in the first half, from a negative $8.8 million, a year earlier.