BlueScope reports earnings growth

Full-year underlying earnings before interest and tax (EBIT) was $301.8m, with second-half underlying EBIT coming in at $130.8m – 15% higher than the comparable period in 2014.

BlueScope will announce the progress of its strategic review ahead its annual general meeting in November, with Mr O’Malley tipping “the right shareholder and community outcomes”.

The steelmaker said its full-year underlying profit rose 9 per cent to $134.1 million, but the pressure on steel prices was undermining the group’s competitiveness.

Between 2010-2013 China’s finished steel exports have doubled to a run-rate of over 100 million tonnes a year, an increase equivalent to 20 times the output from the massive Port Kembla steelworks in Wollongong.

“We have to address the major challenge of losses in commodity steelmaking in Australia and New Zealand”, Mr Kraehe said.

“Indicative Asian hot rolled coil steel spreads are now below $US200 per tonne, down from an average of around $US295 per tonne over the five years to 30 June 2014”, he said.

Chief executive Paul O’Malley said there have been dramatic recent changes in the global steel industry.

BlueScope is pursuing cost reductions in raw materials, manufacturing, procurement, supply chain and property and is targeting more than $200m in annual permanent cost reductions in Australia and more than NZ$50m in New Zealand by the 2017 financial year.

“The Company is also reviewing the ongoing viability of steelmaking in both Australia and New Zealand and comparing the existing business model with an alternative business model of importing quality hot rolled coil and billet substrate.”

The company hopes to maintain its steel making at Port Kembla and Glenbrook if it can negotiate a more flexible labour force.

In June The Illawarra Mercury reported that the company told workers at the site it needed to operate more efficiently or shutting the blast furnace would be considered.

Mr O’Malley said that the iron sands export business was “also under review”.

The company wants state and federal governments to reduce payroll tax, environmental and WorkCover costs, and to defer carbon costs to help secure the “game-changing” cost reductions it says are necessary to save its Australian operation.

Mr O’Malley said, in the meantime, BlueScope will continue to focus on building its premium branded business of painted and coated steel products globally.

Management’s guidance is for the first half of financial year 2016 to be similar to the second half of financial year 2015.

A fully-franked dividend of 3 cents per share has been declared.

BlueScope bucked the trend of a falling market, opening 4.7 per cent higher at $3.54.