BlueScope delivers $531M 1H FY2021 underlying EBITMonday, February 22, 2021
BlueScope today reported for the first half financial year ending December 2020:
- a net profit after tax (NPAT) of $330.3 million, up 78 per cent on 1H FY2020
- an underlying NPAT of $332.8 million, and
- an underlying EBIT of $530.6 million, up 75 per cent on 1H FY2020, and double that of 2H FY2020.
Managing Director and CEO, Mark Vassella said, “All operating segments have performed well across the half. We have seen strong volumes and improving steel spreads in our largest steelmaking business in Australia and the US. Australian Steel Products’ domestic despatches were the highest in a decade, driven by a resurgent residential construction sector. Across the portfolio from India, ASEAN, China, the US and NZ & Pacific Islands, our businesses recorded strong earnings improvements.
“Total group operating cash flow for the half, after capital expenditure, was $265.1 million, or $433.3 million excluding investment in the North Star expansion. The balance sheet finished the half in a strong position at $305.2 million net cash. This gives us real confidence to pursue our strategy of transformation and growth.
“The Board has approved the payment of a 6 cents per share interim dividend – in line with last year. With our near-term focus on the completion of the North Star expansion, the buy-back remains on hold.
“The results demonstrate our strategy at work with the strength and quality of our diverse portfolio. This performance, and the healthy condition of the Group at the start of 2H FY2021, are a tribute to the efforts of our 14,000 people across all 18 countries.
“Importantly, our people continue to respond diligently to the COVID-19 pandemic, maintaining their personal health, safety and wellbeing – and that of the business, our customers and our communities,” Mr Vassella said.
You can read more on results across the business below, and detailed financial information HERE.
Australian Steel Products:
- Delivered underlying EBIT of $259.1 million, up 103 per cent on 1H FY2020 and 46 per cent on 2H FY2020.
- Domestic construction and distribution segment demand has been strong, particularly for coated and painted products – leading to the strongest domestic volumes since 2H FY2010. Realised spread movements outperformed benchmark movements and were broadly consistent with 2H FY2020. The contribution from export coke remained elevated and exceeded 2H FY2020.
- Delivered underlying EBIT of $69.6 million, down 39 per cent on 1H FY2020 and 7 per cent on 2H FY2020.
- Despatch volumes ran at capacity and end-use mix normalised towards the end of the half as auto production ramped up. Spreads were similar to 2H FY2020, however the stronger A$:US$ impacted on translation of earnings.
- North Star Expansion Update
On the cornerstone project to expand the North Star mini-mill in Delta, Ohio, by around 850,000 tonnes per annum Mr Vassella commented, “We are very pleased with progress. Over the last six months work commenced on installing the Melt Shop, Caster and Shuttle Furnace. Equipment continues to be delivered to site, with ancillary equipment such as cranes, water and electricity infrastructure, also being installed.
“All this progress has been done in the face of the widespread COVID-19 pandemic in the US. So, it’s a great credit to the team at Delta but we continue to be mindful of the ongoing health and safety risks.”
Building Products Asia and North America:
- Delivered underlying EBIT of $150.3 million, up 87 per cent on 1H FY2020 and 100 per cent on 2H FY2020.
- Performance in ASEAN improved significantly on better volumes and cyclical margin expansion driven by relatively lower steel feed costs in a rising price environment.
- The North America business also improved significantly, due to improved manufacturing performance and cyclical margin expansion driven by relatively lower steel feed costs in a rising price environment.
- China and India also both delivered stronger results.
Buildings North America:
- Delivered underlying EBIT of $70.5 million, up 189 per cent on 1H FY2020 and over 400 per cent on 2H FY2020.
- The core engineered buildings business delivered a result that was broadly in line with 1H FY2020 and better than 2H FY2020.
- BlueScope Properties Group’s contribution was higher than last half including the approximately $40 million additional contribution from the November property sale. This magnitude of contribution is not expected to be repeated in 2H FY2021.
New Zealand & Pacific Islands:
- Delivered underlying EBIT of $57.4 million, up over 300 per cent on 1H FY2020 and $76.1 million on the loss in 2H FY2020 of $18.7 million.
- Performance improved substantially, primarily due to a return to normal operations post-COVID-19 government mandated closure during 2H FY2020, very strong domestic demand particularly for coated and painted products and reduced depreciation charge.
The Board has today approved the payment of a 6 cents per share interim unfranked dividend.
“A key element of BlueScope’s strategy is to maintain strong financial capacity. As it is highly value accretive project, our capital allocation focus is on the North Star expansion, supported by our robust balance sheet. Given this large capex program and ongoing uncertainty in market conditions, BlueScope’s buy-back program will remain on hold,” Mr Vassella said.
Outlook for 2H FY2021
At the beginning of this second half, order and despatch rates in key markets remain robust. Spot steel spreads in North America are materially higher than both 1H FY2021 and longer-term averages. However, it is uncertain whether these conditions will be sustained throughout the half due to volatile macroeconomic and market factors – including potential impacts from COVID-19 which could disrupt demand, supply chains and operations.
Accordingly, we expect underlying EBIT in 2H FY2021 to be in the range of $750 million to $830 million. Expectations are subject to spread, foreign exchange and market conditions – including potential impacts from COVID-19.