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NZ Steel Earnings Fall on Weaker Prices & Higher Costs

Steel News - Published on Tue, 20 Aug 2019

BusinessDesk reported that BlueScope Steel’s New Zealand business reported a 28% drop full year operating earnings due to higher input costs and a drop in prices for export steel and vanadium. Sales revenue for the business, which includes BlueScope’s Pacific Island operations, increased to AUD 888.1 million for the 12 months to June 30, up 7% from a year earlier. But earnings before interest and tax fell 28 percent to AUD 80.6 million. First-half earnings had been 75 percent higher at AUD 71.9 million, only to plunge to AUD 8.7 million in the second half.

BlueScope said the company, which operates the Glenbrook mill, benefited from strong local demand but faced lower export prices in the second half and a sharp fall in vanadium prices.

While the business made AUD 23 million more from vanadium in the full-year, the second-half contribution was down almost AUD 21 million from the first half, due to weaker prices. Export volumes were “broadly consistent.”

Glenbrook is the country’s only producer of steel which it makes by smelting local iron sands with local and imported coal. It uses vanadium for hardening steel but also sells vanadium slag from its smelting to offset its other production costs.

NZ Steel’s brands include Colorsteel, Axxis and Zincalume. It also operates the Pacific Steel reinforcing business it acquired from Fletcher Building in 2015. Last October it also acquired a 16 percent stake in listed distribution firm Steel & Tube to prevent a take-over by Fletcher Building.

NZ Steel also operates the North Head iron sands mine, having sold the more southerly export-focused Taharoa mine in 2016 as part of a string of initiatives to keep the New Zealand business profitable.

BlueScope noted that domestic New Zealand volumes had been strong, on the back of “buoyant” building and construction activity. The infrastructure segment remained “particularly strong due to ongoing government expenditure on roads, retaining walls and bridges.”

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Posted By : Amom Remju on Tue, 20 Aug 2019
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