Profit slumps but BlueScope upbeat
The Age
Tuesday August 18, 2009
MELBOURNE-BASED BlueScope Steel said yesterday the "global liquidation steel sale" was over as it announced a 93 per cent drop in underlying profit for the past financial year.In a year in which there was an "unprecedented" drop in demand for steel products, BlueScope's underlying profit fell from $816 million for the 2007-08 financial year to $56 million.Reported profit also tumbled, from $596 million to a loss of $66 million.The result surprised investors because analysts had factored in a net loss of between $8 million and $52 million. Shares fell almost 7 per cent, down 23 to $3.07.BlueScope chief executive Paul O'Malley said demand had fallen each month from October to April. While the company had produced month-on-month growth since then, Mr O'Malley said he still expected a small net loss for the first half of this financial year."The global liquidation steel sale is now over," he said. "Our core customers are keen for us to provide them with more steel than we can supply at the moment . . . we are being a bit cautious about the demand recovery, but at the moment it appears very strong."The loss came amid lower steel sales and the closure of the company's No. 5 blast furnace at Port Kembla. Mr O'Malley said the furnace was about to be relit and would run at 75 per cent capacity from September."We are looking forward to bringing the No. 5 furnace back on. The sooner we can do that, the sooner we will return to profitability," he said.The big fall in the price of hot rolled coil €” from about $US1000 ($A1219) a tonne a year ago to as low as $US400 €” had not helped the company. Coil is now fetching above $US500 a tonne.Mr O'Malley said the most pleasing aspect of the results was the reduction in debt from more than 30 per cent last financial year to 11.8 per cent now.BlueScope went to the market twice during the financial year, raising a total of $1.8 billion to pay down most of its $2.1 billion debt. No final dividend was declared.
© 2009 The Age
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