Australia’s largest steel manufacturer, Bluescope Steel, said today that it expects to return to the black with a small net profit in 2009-10 on the back of rising steel prices after reporting a first-half loss of $28 million in half-year to 31 December. The loss was double market expectations and compared to a $407 million profit in the half-year to 31 December 2008.
The company said that after a $61 million loss in the first quarter it made a $28 million profit in the second quarter as it restarted production at its No 5 blast furnace at Port Kembla in NSW. Revenues were $4.1 billion compared to $6.16 billion a year ago. Production increased steadily during the first half-year after output was slashed in the wake of the financial crisis.
Chief executive Paul O'Malley said: “After a tough period across all our businesses, we are pleased to report a more positive trend in demand and pricing and expect a profit in the second half. We expect to deliver a small reported profit for the full year, largely due to continued improvement in domestic/export demand conditions, improved steel prices (and) further cost reduction initiatives.”
Bluescope shares closed down 8 cents (3.1 per cent) at $2.48 as traders were sceptical on the steelmaker’s growth prospects in the face of rising iron ore and coking coal prices and with the prospect of it losing domestic market share to cheaper imports. Mr O’Malley said that raw material prices were, indeed, a concern to the company in the face of increased Chinese demand and warned of volatility in margins for steelmakers.
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