BlueScope Raises Profit Outlook to A$1.1B as U.S. Steel Margins Strengthen

BlueScope Steel has lifted its first-half FY2027 underlying EBIT forecast to nearly A$1.1 billion, driven by stronger steel margins at its North Star mill in Ohio. The upgrade highlights the growing contribution of its North American operations after the Australian steelmaker rejected a multibillion-dollar takeover proposal earlier this year.

Published: October 26, 2026
Reporting period: Six months ending December 31, 2026
Original reporting: Australian Financial Review
ScrapMonster listing: Paul Ploumis

SEATTLE (Scrap Monster): Australian steelmaker BlueScope Steel has substantially upgraded its profit expectations following stronger-than-anticipated performance at its North American operations, particularly the North Star steel mill in Ohio.

The company announced on Monday, October 26, that it now expects underlying earnings before interest and tax (EBIT) to approach A$1.1 billion for the six months ending December 31, 2026.

The revised forecast is significantly above its previous guidance range of A$860 million–A$960 million.

Chief executive Tania Archibald attributed the improvement primarily to stronger U.S. steel spreads at North Star, along with better performance in the company's North American buildings and coated-products businesses and Australian steel operations.

The results reflect favourable conditions for domestic U.S. steel producers, including stronger pricing and the trade environment created by the Trump administration's steel tariffs.

BlueScope operates the Port Kembla steelworks in New South Wales and owns the North Star mini-mill in Delta, Ohio, one of the major U.S. flat-rolled steel production facilities.

North Star Leads BlueScope's Earnings Upgrade

BlueScope's North American operations are expected to be the largest contributor to the improvement in group earnings.

The company forecasts regional earnings approximately two-thirds higher than in the second half of FY2026.

Within that business, North Star is expected to deliver earnings approaching 75% above the previous six-month period.

The improvement reflects stronger benchmark steel spreads, solid mill performance and higher-than-anticipated shipment volumes.

BlueScope has also benefited from additional production capacity made available through its North Star debottlenecking project.

The company's Buildings and Coated Products North America division is expected to deliver earnings approximately 50% higher than in the second half of FY2026.

Its Steelscape business has recorded stronger shipment volumes and higher realized selling prices, while BlueScope Buildings has benefited from improved operating margins.

BlueScope's updated outlook reflects the importance of U.S. steelmaking and downstream manufacturing to its wider international operations.

Australian Steel Products Earnings Expected to Nearly Double

BlueScope's stronger outlook is not limited to North America.

The company's Australian Steel Products division is expected to deliver underlying EBIT approaching twice the level recorded during the six months ending June 30, 2026.

The improved forecast reflects resilient domestic demand, stronger shipment volumes and increased sales of higher-value coated and painted steel products.

The company also reported better-than-expected realized margins, despite slightly softer assumptions for benchmark steel spreads.

These developments have added to BlueScope's confidence in its earnings performance across both North American and Australian operations.

Improved Outlook Follows Rejected Takeover Bid

The upgrade comes months after BlueScope rejected takeover approaches from SGH Limited and U.S. steel producer Steel Dynamics.

The proposed transaction would have divided BlueScope's international businesses between the two bidders.

Under the arrangement, SGH would have retained the Australian and Asian operations, while Steel Dynamics would have acquired BlueScope's North American assets, including North Star.

BlueScope's board rejected the proposal, arguing that the offer undervalued the company's assets and future earnings potential.

The improved profit guidance has renewed discussion about the valuation of the company and the contribution of its U.S. operations.

John Ayoub, a portfolio manager at Wilson Asset Management, said the SGH and Steel Dynamics proposal "never fully fleshed out the full value at the time."

He credited the takeover approach with sharpening management's attention on operational performance and delivering value from the company's existing assets.

Meanwhile, RBC Capital Markets analyst Owen Birrell maintained a 12-month share-price target of A$38, citing favourable supply-and-demand conditions in the U.S. steel market.

BlueScope shares rose 2.5% to A$33.16 in early Australian trading on October 26, according to the original report.

The shares remained below their early-August highs above A$35, but were approximately 38% higher for the year at the time of reporting.

Steel Dynamics Reports Strong Profits Amid U.S. Market Conditions

Steel Dynamics, the U.S. partner in the rejected takeover proposal, also reported substantial earnings growth.

The company announced net income of US$756 million for the third quarter ended September 30, 2026, compared with US$404 million in the corresponding period a year earlier.

The increase of approximately 87% was supported by stronger steel prices, increased shipments and improved operating performance.

Steel Dynamics reported record quarterly steel shipments of 3.8 million tons and net sales of US$6.5 billion.

Chief executive Mark Millett pointed to favourable conditions in the U.S. steel industry, including lower steel import volumes relative to historical levels.

The company's shares had climbed to approximately US$241 from around US$164 in late March, according to the Australian Financial Review report.

The improvement in Steel Dynamics' market valuation has also attracted attention because of its previous interest in BlueScope.

However, no renewed takeover agreement has been announced.

Leadership Changes and Shareholder Returns Remain in Focus

Both companies are undergoing leadership transitions.

BlueScope announced that Kristie Keast, chief executive of its North American business, would leave the company at the end of October after approximately four years leading the division.

The company did not specify a reason for her departure.

BlueScope has begun an internal and external search for a permanent replacement, with Sue Stark, President of BlueScope Buildings North America, expected to serve as interim regional leader.

Steel Dynamics is also preparing for a senior management change.

Millett will step down as chief executive on January 1, 2027, becoming executive chairman. Current chief financial officer Theresa Wagler will become president and chief executive.

During the company's October 20 earnings conference call, Wagler emphasized the importance of its existing pipeline of organic growth opportunities over the next one to three years.

BlueScope, meanwhile, has strengthened its shareholder-return commitments following a period of substantial capital expenditure.

The company now targets distributing at least 75% of free cash flow through dividends and share buybacks, and has outlined plans for approximately A$3 per share in shareholder returns during the 2027 calendar year.

The strategy reflects management's expectation that major investments nearing completion will support stronger cash generation.

BlueScope is scheduled to provide a further update on operating conditions at its annual general meeting on November 16, 2026.

The central question for industry participants is whether favourable U.S. steel spreads, higher production volumes and solid demand can sustain the company's stronger earnings performance beyond the current reporting period.

Original reporting: Australian Financial Review.
Courtesy: www.afr.com