BlueScope Steel Reports 27% Profit Decrease

Australian steelmaker BlueScope Steel has reported a 27% decrease in first-half profit, citing weaker prices for its sales. The company anticipates a slight decline in earnings for its second fiscal half.

Financial Snapshot

• Net profit of A$439.3 million in the six months through December, compared to A$598.9 million in the year-earlier period.
• Underlying earnings before interest and taxes at A$718.4 million, a 16% year-on-year decrease.
• Second-half underlying Ebit expected between A$620 million and A$690 million.

Market Challenges

Facing historically low spreads in Asia, BlueScope finds some relief in the strength of its North American operations. The company operates the North Star mini-mill and a business focused on coated steel products in the region.

Shareholder Benefits

• Interim dividend declared at 25 Australian cents per share, consistent with the previous year’s payout.
• Share buyback program set to increase, allowing for the repurchase of up to A$400 million in stock over the next 12 months.

BlueScope’s Dividend Outlook

BlueScope’s full-year dividend level will be assessed considering the growth and resilience of its business portfolio, the reduced share count, and the macroeconomic and industry outlook.

Volatility in the Steel Sector

Mark Vassella, the company’s chief executive, pointed out the global economic volatility, especially in the steel sector.

Second-Half Forecast

BlueScope expects a second-half result slightly below 1H FY2024 due to unprecedented softness in Asian steel spreads.

Asia Operations

In Asia, where BlueScope operates metallic coating, painting, and steel building-product operations, the forecasted second-half earnings are around three-quarters of first-half levels.

Australia Operations

In Australia, investors should anticipate a result less than half of 1H due to weaker prices and spreads.

U.S. Arm Performance

On a positive note, BlueScope foresees higher prices and spreads in its U.S. arm, contributing to second-half earnings. The company estimates a lagged spread for its U.S. mini-mill around US$510 per metric ton compared to an Asian benchmark spread of roughly US$145 per ton.