BlueScope Steel surges on better-than-expected earnings
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More news: Shares in BlueScope Steel jumped nearly 11% to $24.75 in early trading after Australia’s biggest steelmaker posted earnings near the top end of its guidance range. Underlying earnings before interest and tax were down 57% from a year ago at $308.8 million but were still 5% ahead of Visible Alpha estimates.
"1HFY25 result was a small beat driven by a strong ASP result. 2H EBIT guidance $360-430million is below consensus but we note that spot spreads imply ~$70m EBIT upside risk should conditions hold as is. While cashflow was weaker than expected we note BSL remains net cash and also continues to work on $200m cost out in addition to working cap optimization," UBS analysts said in a note.
BlueScope first-half profit slides as lower steel prices weigh
The news: Australia’s biggest steelmaker BlueScope has posted a 59% slide in first-half profit as lower steel prices and higher costs weighed on the result.
The numbers: Net profit for the six months to December slumped to $179.1 million, down from $439.3 million a year ago. Underlying earnings before interest and tax came in at $308.8 million, a 57% drop from a year ago but near the top end of the company’s revised guidance of $270 million to $310 million. Revenue was down 7% to $7.9 billion, and it will pay an interim dividend of 30 cents a share, up from 25 cents a year ago.
The context: CEO Mark Vassella said the profitable result came despite lower margins across the board. "While an 8.1% return on invested capital is not at the level we would like to see, it is a solid result in this climate of soft steel spreads in Asia and the US and soft demand conditions for our operations outside the US,” he told investors.
The US operations, where the company owns the North Star steel mill, suffered a 65% drop in earnings, although earnings from operations in Australia and Asia were higher. The steelmaker expects an improvement in the second half, with underlying EBIT likely to be in the range of $360 million to $430 million, with conditions in Australia set to improve and cost-cutting likely to boost returns.
The source: ASX
