Mining and Heavy Industries

BlueScope profit up 23%

Australia’s largest steelmaker BlueScope has enjoyed a recent upswing in steel demand, announcing a $441.2 million net profit in the first half of FY18.

The ASX-listed firm announced on Monday it would buy back another $150 million in shares, after delivering at least $500 million in underlying EBIT in each of the last three half-years.

“The BlueScope balance sheet is robust, with great flexibility, and we have a clear capital management framework in place,” Mark Vassella said in his first results report since he replaced Paul O’Malley as managing director.

“BlueScope is very well positioned and we have both an appetite and a capacity for growth. There are many organic growth opportunities across our portfolio of businesses and we place a strong focus on sustainability, innovation and diversity, as we implement our plans.”

Vassella told the media that a good result had been delivered in Australia despite rising energy costs.

“It is not as disastrous as we thought six months ago,” he said, “but energy costs have still gone from $50 million to $100 million, which is unacceptable.”

Vassella also said BlueScope was continuing to see the benefits of its strategic initiatives, which include a recent push into the US market.

BlueScope’s recent US investments, which include the acquisition of 100% of the North Star facility in Ohio in 2015, should help protect it from the mixed bag of the Trump Administration’s corporate tax cuts, and potential steel trade tariff and quota measures.

North Star delivered a “very solid result” in the first half compared with expectations, BlueScope said, with $145.2 million in underlying EBIT down 31%, “with steel spreads returning to their historical range from the elevated levels of FY17”.

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