BlueScope Steel Posts Weakest Annual Profit In Four Years

SEATTLE (Scrap Monster): BlueScope Steel just reported its weakest annual profit in four years, with earnings taking a 22% hit to A$860.7 million due to falling steel prices and rising costs.

What does this mean?

BlueScope Steel, spun off from BHP in 2002, fell short of Visible Alpha’s earnings estimate of A$915.9 million, reaching only A$860.7 million – the lowest figures since 2018, pandemic year excluded. This drop is attributed to bottom-of-cycle steel prices coupled with sluggish construction activity and soaring operational costs. Domestic dispatches suffered as building and construction activities declined. The firm expects this trend to continue, with forecasted earnings for the first half of fiscal year 2025 between A$350 million and A$420 million, significantly lower than the previous year's A$718.4 million and below the consensus estimate of A$503.7 million. Analysts at Jarden also pointed out the fiscal year 2024 miss and downgraded the fiscal year 2025 estimates. Despite this, BlueScope increased its final dividend to 30 Australian cents per share and aims to distribute 60 cents annually.

Why should I care?

For markets: Steel sector hits hard times.

BlueScope’s performance reflects broader issues in the steel industry, struggling with weak regional pricing and soft construction demand. Investors should take note: other players in the sector might face similar challenges, impacting future earnings and market positions.

The bigger picture: Economic ripples.

This downturn in steel profits underscores global economic concerns, such as slower infrastructure spending and increased costs. The steel industry serves as a bellwether for economic health, and continued difficulties here could signal deeper issues across multiple sectors.

Courtesy: www.finimize.com