BlueScope cuts guidance on China’s exports, elections

BlueScope Steel today cut guidance for earnings before interest and tax (EBIT) for 1H FY2025 on continued record China steel sales in the region and softness in North America in the countdown to the Presidential election.

The company told investors it expected underlying EBIT to be in the range of $270 million to $310 million, down from the prior guidance range of $350 million to $420 million.

BlueScope’s Managing Director and Chief Executive Officer Mark Vassella said: “The revised outlook highlights the challenging operating conditions not only facing BlueScope, but the broader global steel
industry.

“These challenges include the continued softness in East Asian spreads off the back of record levels of Chinese steel exports, ongoing cost inflation and a period of pause and uncertainty in the US pending the outcome of the elections and timing of further rate cuts.

“Whilst these pressures are impacting performance in the near-term, we are confident in BlueScope’s resilience, underpinned by a robust balance sheet, diversified business model and strong operating disciplines.”

BlueScope North America is now expected to deliver a result slightly below half that of 2H FY2024, due to moderation in prices and customers deferring orders until the operating environment gains some certainty on election outcomes and timing of future rate cuts.

In response, BlueScope has supplemented management by appointing Chief Technical and Development Officer, John Nowlan, to lead a business turnaround, with a focus on operational excellence.

In Australia performance at Australian Steel Products (ASP) has been impacted by a softer export coke contribution, which is now expected to be $10 million lower, and the unfavourable impact of the sustained softness in East Asian steel pricing.

ASP now expects to deliver a 1H FY2025 EBIT around two thirds of that in 2H FY2024.

Performance in the China business has been impacted by the softening domestic Chinese economy, and the South East Asian business has been affected by short-term operational challenges in Thailand, which have since been resolved.

The Coated Products Asia (CPA) segment is now expected to deliver a result similar to 2H FY2024.

“Good progress has been made on productivity improvements and cost savings in 1H FY2025, however to ensure the ongoing resilience of the business, BlueScope is targeting a further improvement in annualised earnings through the identification and delivery of approximately $200 million of cost and productivity initiatives across the group.”

Picture: BlueScope North America