By Rhiannon Hoyle
Australian steelmaker BlueScope Steel on Monday reported a 27% fall in first-half profit, reflecting weaker prices for its sales, and said it expects earnings to fall slightly in its second fiscal half.
The company said it made a net profit of 439.3 million Australian dollars (US$287.0 million) in the six months through December, down from A$598.9 million in the year-earlier period.
The steelmaker reported underlying earnings before interest and taxes of A$718.4 million, down 16% year-on-year. As recently as November, BlueScope had guided to underlying earnings at the upper end of A$620 million-$670 million range.
BlueScope said it expects second-half underlying Ebit to be between A$620 million and A$690 million.
BlueScope is facing historically low spreads in Asia, although that is being largely offset by the strength of its business in North America, where it runs the North Star mini-mill as well as a business making coated steel products.
Directors declared an interim dividend of 25 Australian cents a share, in line with its payout a year ago, and approved a top up to its share buyback. BlueScope said the increase to its buyback will enable the company to purchase as much as A$400 million in stock over the next 12 months.
“The full-year dividend level will be assessed in light of the growth and resilience of BlueScope’s business portfolio, the reduced share count, and the medium-term macroeconomic and industry outlook,” the company said.
Mark Vassella, the company’s chief executive, highlighted volatility in the global economy, and said it is “particularly prevalent” in the steel sector.
“Our outlook for the company in the second half is for a result slightly below 1H FY2024, in an environment of unprecedented softness in Asian steel spreads,” he said.
In Asia, where BlueScope runs a number of metallic coating, painting and steel building-product operations, it forecast second-half earnings “around three-quarters” of first-half levels. In Australia, it cautioned investors to “expect a result less than half that of 1H” due to weaker prices and spreads.
Second-half earnings are expected to be bolstered again by its U.S. arm, where the steelmaker forecasts higher prices and spreads. BlueScope estimated a lagged spread for its U.S. mini-mill around US$510 a metric ton, compared to an Asian benchmark spread of roughly US$145 a ton.
Write to Rhiannon Hoyle at [email protected]
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