BlueScope Steel posts highest first-half profit in 20 years
Last week’s announcements by Origin Energy of an early closure of its Eraring coal-fired power station in New South Wales, and the proposed takeover of AGL Energy by a consortium including tech billionaire Mike Cannon-Brookes to close coal-fired power plants earlier than expected, brought more uncertainty, he said.
“All we’re asking for is an orderly transition. None of us are deniers,” Vassella said. “It’s not obvious to me that there is a solution that would get us (Australia) through some of these closures. It probably made me a little more nervous,” he said.
The company will pay its biggest dividend in the first half and step up a share buyback program of another $700 million as it is flooded with cash, even though it has a total of $1.9 billion in investment plans. expansion nearing completion or in feasibility study.
Vassella said demand during the middle of December was very strong, even though there were significant disruptions to supply chains and shipping caused by COVID-19. In Australia, where the group’s flagship product for housing construction is Colorbond roofing, it has just raised prices by 6 to 8%, starting this month.
“We imposed price increases,” he said.
BlueScope said net income after tax was $1.64 billion, an increase of $1.31 billion from the prior December half. It will pay its more than 70,000 shareholders a non-franked interim dividend of 25¢ per share.
Underlying earnings before interest and taxes reached a record $2.2 billion for the six months ended Dec. 31, an increase of $1.67 billion from a year earlier.
Mr Vassella said the group was heading towards a full feasibility study for a potential reline of one of the blast furnaces at its Port Kembla steelworks in New South Wales, and the cost had risen to £1bn. dollars, down from a previous bracket of between $700 and $800. million.
He said the higher cost estimate stemmed from an expanded scope, including environmental improvements, and more accurate costing of the work required.
He intends to reline the No. 6 blast furnace at Port Kembla, which is currently mothballed, saying it is the safest course of action as green steel technologies are not not yet fully commercially viable and may not be until the 2040s.
“This project is designed to build a bridge to a low-carbon future,” he said.
The group’s North Star steel mill in Ohio in the United States was again the star in the December half, generating an EBIT of $1.23 billion. A more than $1 billion expansion of this plant is in its final stages and will be operational by the middle of the year. Inflation in the United States and the acceleration of the project’s deployment mean that the final cost is approximately 10% higher than the initial forecast.
Australian operations increased EBIT by 165% to $688 million.
BlueScope has also been on the path to an acquisition to bolster its North American operations, announcing in early November that it would pay $240 million ($324 million) for a scrap metal recycling business in the United States, which is already one of the main suppliers of raw materials. for the North Star steel mill in Ohio.
MetalX operates two scrap facilities in Indiana and Ohio, and will help provide security of supply and competitiveness at the North Star facility, currently in the final stages of a $1 billion expansion. BlueScope has rebranded this business as BlueScope Recycling.
BlueScope was spun off from BHP in 2002 to become a stand-alone steel company.