2021’s global steel boom powered Australian/US producer and exporter, BlueScope Steel to its best ever six months and the company says it is expecting its second-best six-month period in the current half that ends June 30.
And should guidance for this half (on an Earnings Before Interest and Tax basis, or EBIT) be met, then the company will have the biggest ever annual result – over $3.4 billion of EBIT.
“Underlying EBIT in 2H FY2022 is expected to be in the range of $1.20 billion to $1.35 billion – which would be second only to last half when looking back over BlueScope’s 20-year listed history,” directors said in Monday’s earnings release.
While that will also be up to a third less than the first half figure of $2.20 billion, which could worry some investors, no one seemed really upset and the shares ended down 1.3% at $18.83.
As good as the full year could end up, the share price is well under the all-time high of $26.15 hit last August around the time of the full year result, which was when the previous record annual EBIT of $1.72 billion was reported.
Add the projected second half EBIT to the $2.20 billion for the first half and BlueScope could be looking at earnings before interest and tax of $3.4 to just under $3.6 billion for the year to June 30.
“Expectations are subject to spread, foreign exchange and market conditions. It is flagged that there are elevated risks – particularly from pandemic-related impacts on operations, supply chains and demand, volatility in steel prices and spreads, and the current geopolitical environment,” the company warned in its now usual list of possible negatives.
BlueScope’s interim dividend was boosted from 6 cents a share ago to 25 cents, and the current buyback of $500 million ($285 million worth of shares already purchased) has been more than doubled to allow up to a further $700 million worth of shares to be bought back.
The result was not unexpected because the company had confirmed its guidance of a very strong half year at the AGM in November.
CEO Mark Vassella said in Monday’s release, “Underlying EBIT for the half year was $2.20 billion, clearly the best half-year performance BlueScope has produced in its 20-year history as a listed company.”
“Demand in key segments, especially in building and construction, has been strong, coupled with particularly robust margins driven by increased steel prices in Asia and the US.”
Underlying net after tax profit for the December half was $1.57 billion, almost three times the $332.8 million reported for the December, 2020 half.
The star for BlueScope was its North Star electric furnace steel making business in Ohio which is in the final throes of a big expansion.
North Star reported underlying EBIT of around $1.2 billion – 1,665% more than it did in the December half of 2020. Its Australian Steel Products segment had $688 million of underlying EBIT, while its Building Products Asia and North America earned $266 million – increases of 165% and 77% respectively. The company’s New Zealand and Pacific Islands segment saw 50% rise in underlying EBIT to $86 million.
