BlueScope (BSL) shares surged yesterday after the steelmaker revealed a 4th profit upgrade in 9 months – proving that the anti-dumping curbs on steel imports from China in particular can be a profit booster, along with staff cuts and state aid from the NSW government, and surprisingly, rising returns in the US and global steel markets.
BlueScope late Thursday told the ASX that second-half earnings before interest and tax guidance had been boosted by $70 million to $340 million, largely on unexpectedly strong steel margins in the North America.
BlueScope spent $US720 million last October, increasing its stake in the North Star steel mill in Ohio to 100% by buying out long time partner, Cargill.
That deal coincided with a strong recovery in US steel prices this year driven in part by aggressive anti-dumping levies on steel imports (read Chinese) by the US government.
BlueScope shares closed yesterday at a six-year high of $7.85, up 53c, or 7% and 160% from their trough last year as the company wavered on the edge of closing its huge Port Kembla steelworks. That move was avoided by $200 million in cost cuts, including 500 jobs, and tax relief from the NSW government.
“The improved performance since the company’s last update is mainly due to higher margins across our international businesses…the turnaround in Asian region steel prices and their favourable impact,” BlueScope said.
Since October, when the first BlueScope guidance upgrade the company has issued $231 million of upgrades to underlying EBIT guidance. The latest is for $US570 million for the 2015-16 financial year.
BlueScope said its preliminary unaudited net debt as of June 30 was expected to be about $780 million, down from $1.37 billion at the end of calendar 2015.
The company releases its full year figures on August 22.
BlueScope’s revival has happened as Arrium, the country’s other steelmaker, collapsed into receivership in April. Receivers are currently looking for a buyer for the Whyalla-based business. It is also looking for aid from the Federal Government.
