Bluescope- Profit coverage

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Bluescope Steel Limited (ASX: BSL), a leader in metal coated and painted steel building products and Australia’s largest steel manufacturer announced FY16 results for the year ending June 30th. Sales revenue expanded from $ 8.6 billion in FY15 to $9.2 billion, a 7 percent increase annually. The reported NPAT of $353.8M was sharply higher at 160 percent year on year and the underlying NPAT spiked to $293.1M, registering a growth of 119 percent from FY15, primarily because of lower costs, favourable impact of a weaker AUD-USD exchange rate and company revaluation after acquiring 100 percent ownership interest in North Star at the end of October 2015. These were partially balanced by lower global steel prices which led to lower domestic and export prices.

 

Chief Executive Paul O’Malley says the firm’s cost-cutting initiative assisted in the turn around after the company accumulated aggregate losses of more than $2 billion between 2011 and 2014, when cheap Chinese steel was flooding global markets and prices of iron ore and metallurgical coal were spiralling upwards.

Late last year, BlueScope slated a restructuring plan with the purpose of cutting costs by $200 million including job losses for about 15 per cent of the 3,000 strong workforce at Port Kembla.

 

 

Key highlights-

  • 89 percent increase in the underlying EBIT to $570.5M from $301.8M
  • Compounded underlying EBIT grew at over 90 per cent PA over the last three years
  • Net assets increased by $246.2M to $ 5 billion
  • Escalation in net debt by 183 percent; from $275.2M to $778M at the end of 2016
  • Australian steel product earnings accelerated more than 70 per cent to $361M in FY16
  • Affirms a dividend of 3c per share

 

Outlook-

The company expects the underlying EBIT in the first half of FY17 to be about 50 percent higher compared to the second half of FY16, based on the following expectations

  • The average AUD-USD rate at 0.75
  • Lower net finance costs
  • Moderately higher underlying tax rate
  • Profit earned from non-controlling interests

 

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