Steelmaker, BlueScope Steel, has forecast a strong first half this financial year but warned the turmoil in financial markets may affect future demand.
Chief executive Paul O’Malley said in the company’s 2008 annual report, released yesterday, that the company expected "a good first half in the 2008/09 year" but the high cost of raw materials would have a significant impact on its Australian business.
On the outlook for the company, Mr O’Malley says in the report that "the ongoing crisis in the financial markets may affect funding of commercial and industrial projects, dampening demand, although the weaker US dollar has provided some boost to manufacturing exports from the US".
He said demand for the company’s products remained solid in Australia but the residential segment continued to be "soft".
BlueScope has forecast a drop in output during the second half of this financial year due to a reline of the No 5 blast furnace at its Port Kembla steelworks. The associated sinter plant will also be upgraded at the same time.
The reline will begin in March 2009 at a cost $370 million and is scheduled to take 105 days.
Shares in BlueScope had gained 40c, or 6.9% to $6.20 in early trading, before easing down 14c at $5.66. The earnings forecast wasn’t convincing
Mr O’Malley said the company’s long-term view of the global steel industry remains positive on the back of continued strong demand and solid global steel prices.
The annual report reveals that Mr O’Malley, who replaced Kirby Adams as chief executive in November 2007, received a 179% rise in pay to $4.176 million in 2007/08, up from $1.496 million, which is understandable, given his big promotion.
Brisbane based services group, Campbell Brothers has upgraded its 2008-09 profit forecasts on the back of a strong performance from its laboratory services business, ALS Laboratory Group.
The company said its underlying net profit is now expected to be 75% higher for the six months to September 30, 2008 than the prior corresponding period.
"The full year result ending 31 March 2009 is expected to be approximately 70 per cent up on last year’s record result," Campbell Brothers said in a statement to the ASX.
The company told shareholders at its annual general meeting in August it expected a 60% increase in underlying profit for both the half year and full year.
The company said the ALS operation was the driver behind the improvement.
The division “continues to benefit from the significant capacity upgrades that have been invested in over the last two years and from acquisitions made over the past eighteen months, assisted by favourable exchange rates."
The company posted an underlying net profit of $71.27 million, up 38%, for the year ended March 31, 2008, close to its guidance in February for an underlying result of about $70 million.
"Despite the current global economic uncertainty, the Company remains confident in the underlying strength and opportunities for its core businesses," the company said in the statement.
The company’s shares rose by more than 7%, or $2.13 to $29.75, hitting a day’s high of $30.32.
