BlueScope Steel has revealed a strong result for the 2020 financial year with its results in the 18 countries where it operates reflecting local fallout from the Covid-19 pandemic.
Business was disrupted by compulsory industry closures in some markets such as Malaysia and the United States, China is recovering strongly and the company is reviewing its New Zealand operations.
BlueScope’s primary steel, coated steel and steel buildings businesses expect underlying earnings before interest and tax of around $560 million reflecting ‘better than expected’ business results.
Second half EBIT is expected to be around $260 million with the balance sheet remaining strong with cash of $100 million, according to a statement.
Managing director Mark Vassella said: “The results show the strength of our business model and our financial disciplines.
“However, there is currently a high level of uncertainty in BlueScope’s key markets at the start of FY 2021 due to the pandemic and weaker steel spreads.”
In BlueScope’s home market of Australia domestic demand was resilient with steel dispatch volumes similar to last year.
Shutdowns of the US auto industry led to weak demand and downward pressure on margins, however BlueScope North Star’s capacity utilisation remained above 90 per cent.
However the company’s operation constructing completed buildings in North America was hit by slow demand and project delays.
In Asia weaker demand impacted sales in Malaysia, Indonesia, Vietnam and India while Thailand performed well.
The New Zealand business was also hit by shutdowns in March and April and ongoing cost pressures.
BlueScope announced a review of the carrying value of the NZ business based on lower sustainable earnings in future, with a $200 million impairment expected.
A strategic review of NZ is also underway due to policy settings in carbon, trade and energy affecting the country’s industrial base.
Vassella said: “Despite these difficult conditions, I remain confident that BlueScope, with its strong balance sheet,high quality assets and proven team will continue to meet the challenges of this unprecedented period.”
Picture: BlueScope Colorbond
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