BlueScope Beats Profit Forecasts and Flags Stronger Second Half
Synopsis
BlueScope Steel reported stronger-than-expected first-half earnings, driven by higher U.S. margins, improved volumes and tight cost control. The Australian steelmaker posted underlying net profit of A$382 million, beating market estimates and more than doubling last year’s result. It expects second-half EBIT between A$620 million and A$700 million. The company also increased shareholder returns, declaring a higher interim dividend and announcing a A$310 million buyback. Shares rose above a previously rejected takeover offer, reflecting renewed investor confidence in its growth and cash flow outlook.
BlueScope Steel of Australia reported better-than-expected first-half earnings and said it expected to record improved performance in the months ahead, helped by robust U.S. margins, firmer sales volumes, and strict cost control. The company also returned cash to shareholders through dividends and a share buyback as its stock traded above the earlier rejected takeover offer.
- BlueScope's net profit after tax has nearly doubled to A$382 million, topping estimates
- Company forecasts stronger second-half earnings
- Declares 65-cent interim dividend and A$310 million buyback
- Stocks rise higher than the A$30 a share offer that was previously rejected as too low
Australian steelmaker BlueScope Steel said that it posted better-than-expected first-half earnings and signalled an improved performance in the second half amid firmer margins in the United States, higher sales volumes and disciplined cost controls.
Underlying earnings before interest and tax (EBIT) came in at A$557.5 million for the half year to Dec. 31. Underlying net profit after tax rose to A$382 million, more than double the market’s forecast for A$349.2 million and well above the A$176.4 million reported a year ago.
BlueScope said it anticipates underlying EBIT in the second half to be between A$620 million and A$700 million. The lower outlook reflects firm spreads in its U.S. operations and stable demand in key markets, as well as ongoing focus on efficiency and cost management.
The earnings update is months after BlueScope rejected an A$13.2 billion takeover bid from SGH and U.S.-based steelmaker Steel Dynamics, describing the offer as undervaluing the company. BlueScope shares on Monday jumped as much as 3.2 per cent to $30.10, overshadowing the $30-a-share cash offer it rejected in January.
Managing Director and Chief Executive Tania Archibald said the work on one of its major projects, an electric arc furnace at New Zealand Steel, was progressing as planned. She said that these investments would make the bank’s operations more resilient and support growth over the long term.
The company also pointed to efforts to streamline its portfolio, including the sale of a 50% stake in Tata BlueScope Steel and a piece of the West Dapto site. BlueScope declared an interim dividend of 65 Australian cents a share, more than twice last year’s payment, and said it would undertake a A$310 million on-market buyback as part of its goal to return at least 75% of free cash flow to investors.
Overall, BlueScope handed down a solid first-half result, exceeding profit expectations and pushing forward with even stronger earnings for the future, while enhancing shareholder returns and sending a strong confidence message about rejecting a multibillion-dollar takeover offer earlier this year.
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