Record result for BlueScope but future murky

Company News

by Glenn Dyer

While BlueScope Steel (ASX:BSL) has met guidance with a record result for the year to June of $2.81 billion, investors will not like the near 70% slide in the company’s December half profit forecast.

The company Monday reported a June 30 year net profit of $2.81 billion, $1.62 billion higher than the result in 2020-21.

Underlying earnings before interest and tax (EBIT) soared to an all time high of $3.79 billion, with the June half EBIT of $1.58 billion second only to the record December half result of $2.20 billion.

But the company has slashed forecast EBIT for the current December half to “the range of $800 million to $900 million, driven particularly by significantly lower Midwest US HRC (Hot Rolled Coal) steel spreads and weaker Asian HRC steel spreads. Expectations are subject to spread, foreign exchange and market conditions”

BlueScope shares closed at $16.89 on Friday, down on the day, up on the week and the past month. The shares though are down a third in the past year as investors chose to think that the first half boom could not be sustained into the June half and beyond.

That view was supported by the lower second half results and outlook.

Still the company says its looking to grow through its expanded US operations at North Star in Ohio where the new steel making and rolling facilities have started their 18 month ramp up towards grabbing 5% of the US flat products market.

Its coated steel products expansion is now in place and BlueScope says that it has now invested $5 billion in the US and employs 4,000 people.

Final dividend of 25 cents a share is down from the 44 cents paid a year ago, but with the 25 cents a share interim (6 cents a share previously) the full year payout is an unchanged 50 cents a share.

In addition the company bought back $638 million of shares in the year to June (as well as $344 million in dividend payments) and Monday revealed that has been extended by another $500 million for another year.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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