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BlueScope Steel Delivers Strong Half Results
02/26/2009 - BlueScope Steel reports net profit after tax of A$407 million for the first half of fiscal year 2009, and an underlying net profit after tax of A$479 million, a 57% increase compared to the first half of fiscal year 2008.
BlueScope Steel announced a reported net profit after tax of A$407 million for the first half of fiscal year 2009 (FY09), which compares to net profit after tax of A$116 million in the first half of FY08. The company also reported an underlying net profit after tax of A$479 million, which represents a 57% increase compared to the first half of FY08.
First-Half Results—The company said the results translate to reported Earnings per Share of 52.7 cents per share, which compares to EPS of 15.7 cents per share in the corresponding period last year.
“This excellent first half result was driven predominantly by improved spread and the weaker Australian dollar in the first quarter which delivered an underlying Q1 NPAT of approximately $430M,” commented Managing Director and CEO, Paul O’Malley. "However, in the second quarter of the reporting period, export sales from Australia were materially curtailed by the economic downturn around the world and the substantially lower demand for steel globally and in Australia. We are also seeing lower international steel prices while still experiencing peak raw material costs.
Outlook—“The outlook for the second half of FY09 is now weaker than anticipated,” continued O’Malley, commenting on the current outlook. “We had factored in lost production due to the scheduled Blast Furnace No 5 reline. However, should lower demand and prices — coupled with high raw material prices — continue, we expect to see a negative underlying net profit after tax contribution for second-half FY2009, the extent of which is dependent upon demand and spread.
"Government stimulus packages may translate into some improvement in economic activity later this calendar year, but it remains to be seen how it will affect steel demand,” continued O’Malley. “We are focused on four key areas: a robust balance sheet; strong liquidity position; disciplined capital expenditure management and delivering an expected $150 million savings on existing and new cost management programs.
“BlueScope Steel aims to emerge from the downturn with our position as a low cost, high quality steel manufacturer intact.”
Trade Policy in Australia—“Trade protectionism is counter-productive and harmful to exporters like BlueScope Steel,” said O’Malley, commenting on the mounting pressure for trade protection measures in Australia. “Normally, half our Australian and New Zealand steel production is exported. Access to export markets is important to our business.”
Carbon Pollution Reduction Scheme—“BlueScope Steel faces the imposition of higher costs if the CPRS in the White Paper is implemented and this will put steel jobs and investment at risk,” said O’Malley, commenting on the Federal Government’s proposed Carbon Pollution Reduction Scheme.
“The proposed Carbon Pollution Reduction Scheme needs an effective transitional plan to minimize the financial impact in the early years and minimize competitive disadvantage to Australian industry until its major global competitors are carbon constrained.
“We are engaging constructively with the Federal Government with proposals that promote reductions in carbon emissions while protecting this vital manufacturing industry and Australian jobs,” added O’Malley.
