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BlueScope Steel anticipates strong December half-year results

BlueScope Steel (ASX:BSL) has announced that its December half-year results are expected to surpass the company’s earlier forecasts, as outlined in its October 20 guidance.

In an update released before the annual meeting on Tuesday, the company stated that, “given the recent significant increase in US benchmark spreads,” it anticipates its underlying earnings before interest and tax (EBIT) for the first half of FY2024 to be towards the upper end of the $620 to $670 million range.

Since the October update, BlueScope’s shares have risen by nearly 15%, with an additional half a percent increase recorded on Tuesday after the meeting.

The company indicated that results from its Australian, New Zealand, and Asian operations are likely to align with the October estimates, remaining relatively stable compared to the second half of 2022-23.

While the US market has seen improvement in recent weeks, BlueScope acknowledges that results from its growing operations there will still be below those of the previous year but better than initially projected in the October 20 update.

In North America, BlueScope expects a result moderately lower than that of the June half of 2022-23, with North Star electric arc and associated businesses anticipated to perform significantly better due to the recent increase in US benchmark spreads.

For Buildings and Coated Products North America, BlueScope predicts a result approximately three-quarters of the second half of FY2023, with margins easing slightly following a period of notable strength.

The delay of a project sale mentioned in the October 20 update has been offset by slightly stronger performance in other segments.

In Australia, BlueScope expects the business to deliver results similar to the second half of 2023, in line with the October update, citing strong underlying domestic demand across key end-use segments.

After 18 months of research, analysis, and community engagement, BlueScope has completed the Master Plan process for the development of a vision for the 200 hectares of landholdings adjacent to the Port Kembla Steelworks. As part of this plan, the company has signed a Memorandum of Understanding with TAFE NSW to explore the opportunity for a ‘Super TAFE’ on the site.

In Asia, BlueScope’s expectations remain relatively unchanged since the guidance provided in August, with an anticipated slightly better result than the second half of FY2023. While the China business is expected to benefit from the typical favorable seasonality of the December half, the ASEAN region is expected to deliver a slightly weaker result. The India business is also expected to have a slightly lower result than the second half of FY2023.

In New Zealand and the Pacific, BlueScope’s expectations for the business remain consistent with the August outlook, projecting a first-half FY2024 result similar to the second half of FY2023, with stable dispatch volumes attributed to solid activity levels across end-use segments.

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