Posted on 22 Feb 2016
BlueScope Steel chief executive Paul O'Malley said that tough decisions including 500 job cuts underpinned a dramatic improvement in earnings when much of the global steel industry is losing money.
Two weeks ago, BlueScope upgraded its half-year earnings forecast by $50 million to $230 million, demonstrating a huge lowering of costs at the Port Kembla steelworks just months after deciding not to close the plant's last blast furnace.
"We are currently one of only a handful of steel companies around the world that is profitable," Mr O'Malley said.
"It shows the benefit of tough decisions and good strategy over the last few years."
On Monday, the steel maker said it more than doubled its interim profit to $200.1 million from $92.7 million a year ago, with a positive asset revaluation and the sale of the McDonald's Lime business boosting the result.
Excluding one-off charges, underlying profit rose 47 per cent to $119 million, while underlying earnings before interest and tax jumped to $230.1 million, up $59.1 million.
Stronger sales to the Australian residential housing market, buoyed by booming new home construction and an increase in home alterations and additions, also improved earnings in the Australian steel business.
BlueScope dispatched 372,000 tonnes of steel to the domestic dwelling segment during the half - the highest level in 5 years.
Local residential demand is a key driver of higher margin coated and painted product sales such as Colorbond.
Mr O'Malley said the lower Australian dollar is making local product more competitive against imports.
He said that the 500 Port Kembla workers who lost their jobs, and the remaining workers who agreed to wage freezes, deserved to be thanked.
"It was a tough six months but it is fantastic that plan A [to keep the Port Kembla blast furnace running] is successful...economically it is the right thing for us to do," he said.
Revenue for the six months ended December 31 rose 2 per cent to $4.43 billion from $4.33 billion in the year-earlier period because of stronger sales into China.
The statutory result was impacted by $567.5 million of impairments against BlueScope's New Zealand and Pacific Steel and Australian Steel businesses, and the positive impact of the McDonald's Lime sale and the write-up of the North Star steel business in the United States.
BlueScope said that its Taharoa iron sands export business, which is struggling with the low iron ore price, is now up for sale.
The company declared an unchanged interim dividend of 3￠ per share.
BlueScope shares were up 1.7 per cent to $5.57 at 12:20pm AEDT on Monday.
