Shares in the country’s leading steelmaker BlueScope Steel (BSL) copped a hammering yesterday after the company revealed weaker than expected results for the year to June 30 and a very subdued outlook for the current December half year.
The shares were down 12.8% at the close at $5.32 and friendless.
Profit before impairments and restructuring costs rose to $112.3 million for the year to June 2014 from $105.6 million a year earlier, the company told the ASX yesterday. But that was a little lower than market hopes.
The result was released well before the market opened for business and the shares sold off all day.
Not helping improve sentiment was the downbeat outlook for the December half which BlueScope management said would see earnings in line with the weaker than expected second half of 2013-14.
"The second half has traditionally been stronger than the first half," the managing director Paul O’Malley said yesterday.
"Therefore signalling the first half (of 2014-15) would equal the second half is a very good outcome."
But that wasn’t the view of the market yesterday. It was definitely gloomy about the company’s outlook.
The result is also taking a hit from the lower iron ore price – BlueScope exports iron sands from its NZ mining operation and the fall in the price of iron ore to $US90 a tonne hit the share price as well.
In Australia, while domestically, residential construction demand is firm Mr O’Malley said engineering, construction and mining sector "seeing some softness".
The market ignored the company’s claim that its turnaround process remains on track.
All investors focused on was the ‘now’, or why BlueScope doesn’t expect its trading situation to improve significantly in the current six month period. That’s why the shares were sold-off yesterday.
BSL 1Y – Bluescope dumped, narrows losses, misses forecasts
Net loss after tax for the year to June 30, 2014 was $82.4 million, a $24.7 million improvement in full-year profitability from the previous financial year.
Underlying net profit after tax grew by $105.6 million to $112.3 million. This market forecast was for an underlying annual net profit of $122 million.
Sales from continuing operations rose 10%, and earnings grew across all six operating businesses.
Total revenue, as measured by earnings before interest and tax, rose to $8.007 billion, missing market forecasts for a figure of $8.148 billion.
In its core Australian coated and industrial products business underlying full-year earnings jumped 216% to $65.4 million, boosted by higher domestic sales volumes and lower loss-making exports.
The company again did not declare a dividend.
"The board is pleased with the company’s continued turnaround and progress on growth initiatives," BlueScope chairman Graham Kraehe said.
"We have actively invested to lower our cost base, to better serve customers and to grow our iron sands exports.
"These actions have laid a solid foundation for a future return to paying dividends," he said.
