BlueScope Steel has reported a successful FY16, after a $947 million move to acquire 100% of a North American steel mill paid off big time.
The company announced a 160% improvement in statutory net profit after tax to $354 million in FY16, after reporting $136 million in FY15.
BlueScope said sales revenue was boosted due to the 100% ownership of the North Star steel mill in the US, which benefited massively from a major crackdown from US authorities on Chinese steel dumping.
“We have anti-dumping in Australia, but the US has anti-dumping on steroids,” the company’s chief executive Paul O’Malley said earlier this week.
The anti-dumping regime in the US has effectively closed off the market from cheap international competition, he explained, meaning BlueScope’s North Star mill generated a $62 million increase in profits in the second half of FY16.
O’Malley said the company also benefited from a successful cost cutting program.
“Our direct interventions in reducing costs have significantly lifted performance of our steelmaking operations in Australia and New Zealand despite continuing global overcapacity and production which drove regional commodity steel spreads in the six months to 30 June 2016 to their lowest levels since BlueScope listed in 2002,” he said.
“Moving forward, we must not be complacent in our pursuit of continued productivity improvements.”
BlueScope faces a major decision in 10 to 15 years, of whether to reline the blast furnace at Port Kembla – a decision O’Malley says the company is not taking lightly.
“What we have achieved in the last year is essential to being the competitive and profitable producer needed to support this future reinvestment opportunity,” he said.
Net debt at the end of FY16 was at $778 million, down $595 million over the last six months thanks to strong operating cash flow.