BlueScope in profit plunge, redundancies flagged with NZ restructure
BlueScope’s full-year profit has plunged dramatically, but sales of its Truecore and Colorbond products in Australia remain solid.
Manufacturing
Don't miss out on the headlines from Manufacturing. Followed categories will be added to My News.
Steelmaker BlueScope has posted a big plunge in full-year earnings, including a $197 million writedown of its New Zealand and Pacific Islands business, which is set to shed jobs under a proposed restructure.
The company’s reported net profit for 2019-20 was $96.5 million, down from $1.015 billion last financial year.
The underlying result compared more favourably at $353 million, down from $966 million previously.
S&P Global Ratings said New Zealand’s six-week, mandated COVID-19 shutdown hampered the NZPI division, which would likely focus on higher-margin coated steel products after a restructure.
BlueScope last month flagged it was reviewing the business and now says a planned reconfiguration costing up to $50 million could result in substantial redundancies.
“While we are confident we can deliver on this plan, in the event that the improvements are not achieved, the business may shift to external supply of products, and primary steelmaking operations at Glenbrook may cease,” chief executive Mark Vassella said.
The ratings agency said BlueScope’s $3.1 billion liquidity buffer could easily absorb the cost of a restructure, help the company weather an uncertain market environment and advance the expansion of its North Star mill in the US, which operated at 90 per cent capacity despite two-month automaker shutdowns.
Mr Vassella said the expansion project was moving at a slower pace to preserve cashflow during the pandemic, with commissioning slated for the second half of 2021-22.
Steelmaking capacity was falling in the US, reinforcing BlueScope’s belief it was a wise investment in the long term, he said.
The company’s Australian arm suffered a 43 per cent fall in underlying earnings before interest and tax, driven by weaker regional steel prices and higher raw material costs, but sales inched 3 per cent higher amid strong demand.
Macquarie Research noted domestic residential construction markets remained solid despite the pandemic, boosting sales of Truecore building frames and Colorbond roofing, walling and fencing systems.
BlueScope paid a final dividend of 8 cents per share, in line with last year.
Originally published as BlueScope in profit plunge, redundancies flagged with NZ restructure