BlueScope Hikes Earnings Guidance for H2 of FY2021
Australian steel maer BlueScope now expects underlying earnings before interest and tax for H2 of FY2021 to be in the range of AUD 1.0 billion to
Australian steel maer BlueScope now expects underlying earnings before interest and tax for H2 of FY2021 to be in the range of AUD 1.0 billion to AUD1.08 billion. This is above the prior guidance range of AUD 750 million to AUD 830 million, and is subject to spread, FX and market conditions. BlueScope Managing Director and CEO Mr Mark Vassella said “The business has gone from strength to strength, benefitting from strong spreads, prices and demand. All of the BlueScope team are doing an outstanding job in working to meet exceptional customer demand. The performance continues to demonstrate the unique strength and value of our business model. BlueScope is a very different type of steel company and is in a compelling position to take advantage of emerging trends, such as demand for lower density and regional housing and for e-commerce and logistics infrastructure.”
Key drivers in improved outlook
The largest change to the expected result is from North Star in the US. Midwest benchmark HRC steel prices have risen strongly since the outlook was provided in February, up by around USD 250 per metric tonne, resulting in stronger than expected spreads, noting North Star's specific sales mix relative to benchmark. Importantly, the expansion project remains on track, with the new plant to be commissioned during 2H FY2022.
Australian Steel Products is also benefitting from improved realised domestic and export steel spreads. In addition, domestic despatch volumes are currently tracking ahead of expectations, particularly for higher value products in the building and construction sector.
Building Products segment is now expected to deliver an improved result over 1H FY2021 earnings, mainly due to expanding margins in the North America coated business driven by rapidly increasing steel prices. ASEAN earnings are also anticipated to be better than prior expectations due to higher than expected steel prices favourably impacting realised margins.