BlueScope Steel: Nation’s biggest steelmaker rolls out big profit lift
BlueScope Steel has rejected a takeover bid it says undervalues the company - and its latest results appear to back up that argument.
Australia’s biggest steelmaker says it’s preparing to splash the cash this year and has told investors it is targeting a $3-a-share return.
BlueScope Steel said the bumper payout would comprise a $1-a-share special dividend, annual dividends of $1.30 a share, and an increase in its on-market buyback to $310 million — equal to 70c a share.
The pledge came as the company on Monday reported half-year net profit of $391 million — a 118 per cent rise on a year earlier — just weeks after it rejected a takeover bid.
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By continuing you agree to our Terms and Privacy Policy.“Underlying EBIT for the half was $558m, on stronger US spreads, higher volumes across key markets and solid cost performance,” said managing director and chief executive Tania Archibald.
“This result is a clear demonstration of the strength and diversity of our portfolio during a period of sustained low Asian steel spreads.
The result was underpinned by a 4 per cent lift in sales revenue to $8.2 billion, setting the group up for an 81 per cent increase in underlying earnings before interest and tax to $557.5m.
Ms Archibald said BlueScope saw high volumes across its key markets.
“BlueScope is approaching an inflection point,” she said.
“The current $2 billion investment program is entering the final phase and the company is poised to deliver materially stronger cash flows. As the investment phase ramps down, the delivery phase ramps up.”
BlueScope owns the Port Kembla steelworks in southern NSW and the North Star operation in the US, which uses scrap to produce hot-rolled steel at low cost, and has assets in New Zealand and Asia.
In January, the company rejected a $13.2b approach from the Stokes family-controlled SGH and Steel Dynamics of the US, which at the time equated to $30 a share.
The would-be predators later signalled their offer had effectively fallen to $29 a share after BlueScope announced it would hand back $438m to shareholders.
SGH chief executive Ryan Stokes last week said the proposal was full and fair, though he was comfortable about moving on if BlueScope shareholders didn’t see it that way.
BlueScope is forecasting its second-half underlying earnings before interest and tax to be between $620m and $700m — an improvement on the first half.
It declared a dividend for the six months ended December 31 of 65¢ a share.
Originally published on The Nightly
