In a week's time, BlueScope Steel Limited will present the full year audited results for FY 2012.
The year end audit is not complete; however the reported net loss after tax for the year is expected to be approximately AUD 1 billion. This in large part reflects the cost of the major Australian steelmaking business restructure as announced in August 2011 and impairment charges of approximately AUD 310 million in the Australian businesses.
The company expects to deliver on previous guidance for an underlying net after tax loss1 for H2 FY 2012 (before year end net realizable value provision on inventory and including Metl Span operational earnings) that is lower than the underlying net after tax loss in H1 FY 2012 of AUD 76 million.
Mr O'Malley MD & CEO of BlueScope Steel said that the company has reduced net debt to AUD 384 million at June 30th 2012. He added that "This is a very good outcome that was achieved with a more favorable working capital reduction than originally expected. Adjusting for the favorable timing of various year end cash flows, a net debt balance of approximately AUD 580 million would be a more appropriate amount to compare against our year end net debt target of AUD 650 to AUD 750 million. This represents a reduction of more than AUD 200 million from our December 31st 2011 balance of AUD 796 million."
As noted above, the board has decided to recognize non current asset impairment charges totaling approximately AUD 310 million within the Australian businesses. These charges result from a slower recovery in domestic demand than previously expected. Furthermore, as a result of increased volatility in equity markets, a higher discount rate has been applied to expected future cash flows. The impairment charges are across Australian Distribution (approximately AUD 160 million), Coated and Industrial Products Australia (approximately AUD 135 million), Lysaght Australia (AUD 10 million) and BlueScope Water (AUD 5 million).
Mr O'Malley said that "We expect our Coated and Industrial Products Australia business to deliver positive underlying EBITDA in FY 2013, with a positive contribution in H2 FY 2013, after a neutral to negative contribution in H1 FY 2013 (subject to spread, FX and market conditions). Capital expenditure of AUD 140 million is expected within the CIPA business. A third of this will be invested in manufacturing facilities to deliver the next generation of COLORBOND and ZINCALUME steel products, an investment in our future in Australia that draws on technology developed with NSC."
He added that "In summary, the board has made a decision to recognize impairment charges within the Australian businesses, our H2 FY 2012 underlying result is expected to be in line with guidance and our year end net debt of AUD 384 million is a very good outcome. NSC’s investment in our business will make USD 540 million of net proceeds available to fund opportunities for future profitable growth from a further strengthened balance sheet. The CIPA business is expected to deliver a positive underlying EBITDA in FY 2013."
Source - BlueScope Steel Limited
(www.steelguru.com)
