Sanjeev Gupta’s InfraBuild posts steep first half profit slide
Sanjeev Gupta’s steel products manufacturing arm InfraBuild has reported a steep slide in first half profits amid a softening in the domestic market.
Profits at Sanjeev Gupta’s Australian steel manufacturing division InfraBuild dropped 75 per cent in the first half of the year, with lower residential activity contributing to a softening in the market.
InfraBuild on Thursday announced it had made a net profit of $40m for the first half, on revenue of $2.5bn. That compares with a first half profit of $160m a year earlier, on revenue of $2.84bn.
The company booked annual profit of $239.6m, indicating its second half profit was $73.9m, showing that the slowdown has increased in pace over the 2023 calendar year.
InfraBuild said on Thursday that the “robust result comes amid continued softening in the domestic steel market from peak-cycle levels, with sales volumes abating due to lower residential activity and price moderation”.
The InfraBuild result mirrors results at BlueScope, which in February reported a 27 per cent decline in first half net profit to $439.3m, with underlying earnings dropping 16 per cent to $718.4m. Sales dropped 8 per cent to $8.54bn.
InfraBuild chief executive Francisco Irazusta said the company continued to deliver on its strategy.
“As part of our work on our ambition to be carbon neutral by 2030, in the half we began piloting with select partners a new steel reinforcing bar made from 100 per cent recycled scrap steel, manufactured with less raw recycled material, that is higher in strength and will deliver lower embodied carbon,” he said.
“We are also progressing plans for the transition of our electric arc furnaces to renewable energy.
“For the half, we have reinvested significant capital expenditure of around $66m back into our operations to enable productivity and operational benefits such as investing in our New South Wales mesh business to provide more competitive products and solutions to our customers, purchasing new equipment and machinery, and upgrading our operating assets, ensuring their optimal performance and reliability, enabling us to deliver the best service for our customers.”
InfraBuild recycles, manufactures and distributes steel products and operates two electric arc furnaces and eight steel manufacturing facilities in Australia.
The company has been a cash generator for Mr Gupta, who picked it up as part of the deal to buy collapsed steelmaker Arrium back in 2017, when Mr Gupta’s GFG Alliance also acquired the Whyalla steelworks and the Tahmoor coking coal operations.
The Whyalla operations are also looking to decarbonise, and in January received a $63.2m federal grant to help fund the switch from coal-based steelmaking to using electricity, with that transition expected to cost hundreds of millions of dollars.