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BlueScope Market Update on Earnings & Buy Back Extension

Steel News - Published on Tue, 18 Jun 2019

Image Source: The Australian
BlueScope announced that it now expects FY2019 underlying EBIT approaching AUD 1,350 million, which is an increase of approximately 6 per cent on FY2018 and implies 2H FY2019 underlying EBIT approaching AUD 500 million. This compares to prior guidance of around a 10 per cent increase on FY2018. The key changes since prior guidance, provided in February, are

North Star: sales volume and operating performance remain strong, however benchmark steel spreads' across the half year are now expected to be approximately USD 150 per tonne lower than 1H FY2019, compared to a previous expectation of a USD 130 tonne decline.

Building Products Asia and North America: good progress is being made on the cost reduction and manufacturing improvement program however market conditions, particularly in ASEAN and North America, have been softer than anticipated.

Buildings North America: general market conditions and order intake remain positive however despatch volumes and margins continue to be impacted by longer customer lead times relative to prior expectations.

Other businesses are performing generally in-line with the expectations set out in the February guidance - with Australian Steel Products seeing stronger realised steel spreads offset by weaker than expected domestic volumes.

Update on North Star expansion opportunity
BlueScope's evaluation of the opportunity to add a further 800,000 to 900,000 tonnes per annum of capacity to its North Star mini-mill in Ohio, US, is progressing well. BlueScope has commenced detailed design and engineering and critical path items, costing USD 50 million.

Extension of buy-back program
The business continues to generate strong cash flow. In light of this, and with the AUD 250 million on-market buyback program announced in December 2018 nearing completion, BlueScope announced that it will extend the current on-market buy-back program by a further amount of up to AUD 250 million, as part of its 1H FY2020 capital management program.

The Company expects to continue share buy-back activity, at its discretion, during July 2019 and then after the release of its FY2019 financial results on 19 August 2019.

Managing Director and Chief Executive Officer, Mr Mark Vassella, said "With the transformed business continuing to generate strong cash flow, we are able to pursue a mix of returns to shareholders and investing for future growth. We remain committed to our clearly stated financial principles and disciplined approach to capital allocation. Naturally we will always invest to maintain safe and reliable operations, and seek to retain strong credit metrics."

Source :

Posted By : Ratan Singh on Tue, 18 Jun 2019
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