One of Australia’s largest manufactures of steel products has defied a COVID economic slowdown to almost double its profits.
Releasing its results for the first half of 2020/21, BlueScope said its statutory net profit after tax increased by 78 percent from $185.8 million over the six months to December 20219 to $330.3 million over the half year to December 2020.
Stripping out one-off items such as asset sales, restructuring costs and business development/acquisition costs, the company recorded an increase in underlying net profit after tax from $199.6 million to $332.8 million.
Whilst revenues trended lower due to unfavourable currency movements, the company recorded a solid increase in the volume of goods shipped from its facilities from 3.615 kt to 3.808 kt.
Moreover, the result was aided by improving ‘spreads’ within its US and Australian business amid lower costs for raw materials.
The ‘spread’ measures the difference between the price of steel as a commodity output and its inputs such as iron ore and coking coal.
A large part of the improvement came from the company’s Australian Steel Projects business, which doubled its underlying earnings before interest and tax (EBITDA) to come in at $259.1 million on the back of the strongest domestic volumes of shipments in more than ten years amid an improving building market as well as higher spreads.
Demand has particularly been strong for coated and painted products.
Results also improved across three of the company’s other four divisions but fell back in its Northern Star business.
Going forward, BlueScope says it expects underlying earnings before interest and tax to range between $750 million and $800 million over the six months to June 2021 on the back of strong order and dispatch activity in key markets.
This is up from $261.6 million in the COVID impacted six months to June 2020.
In a statement, BlueScope Managing Director and CEO, Mark Vassella s director welcomed the results.
“The results demonstrate our strategy at work with the strength and quality of our diverse portfolio,” he said.
“This performance, and the healthy condition of the Group at the start of 2H FY2021, are a tribute to the efforts of our 14,000 people across all 18 countries.”
Vassella said also welcomed progress on the company’s cornerstone project to expand its North-Star mini-mill in Delta, Ohio by around 850,000 tonnes per annum.
Despite COVID disruption, the company has installed the melt shop, caster and shuttle furnace as well as ancillary equipment such as cranes, water, equipment and infrastructure.