BlueScope Steel rides Trump tariff train to bumper US profits

SEATTLE (Scrap Monster): BlueScope Steel has ratcheted up its profit expectations following a stellar performance at its United States business, in an update that vindicates the company’s decision to knock back a $14.2 billion takeover bid earlier this year.

Australia’s top steel maker operates the Port Kembla steelworks in NSW and owns the fifth-largest steel plant in the US, the North Star mill in Ohio. It has benefited from the Trump administration’s tariff policies, which heavily tilted the playing field in favour of local producers.

Chief executive Tania Archibald on Monday said the company expected underlying earnings before interest and tax to be “approaching $1.1 billion” for the six months ending December 31, 2026, well above the previous guidance range of between $860 million and $960 million.

“The increase is primarily driven by stronger than anticipated earnings from North Star on stronger US steel spreads, along with improved performance at buildings and coated products in North America and Australian steel products,” she said.

BlueScope shares gained 2.5 per cent in early trading to $33.16. The shares had eased off peaks above $35 in early August, but the stock was still up about 38 per cent so far this year.

The company announced last week that the head of its North America division, Kristie Keast, would leave at the end of October after four years in the role. No reason was given for her departure and the company started a search process that would consider internal and external candidates to replace her.

Keast oversaw strong performance in the business, with North American profits in the first half of the 2026-27 financial year expected to be about two-thirds higher than the second half of 2025-26.

The group’s Australian steel products business was expected to deliver earnings before interest and tax almost double that of the June half, driven by solid demand for its coated and painted products and better margins than previously forecast.

BlueScope earlier this year rejected an improved $14.2 billion bid to acquire the company from the Stokes family-controlled conglomerate SGH Limited and its Nasdaq-listed bidding partner Steel Dynamics. SGH would have kept the Australian and Asian division, while Steel Dynamics would own the North American operations if their bid was successful.

Wilson Asset Management portfolio manager John Ayoub said the SGH and Steel Dynamics bid “never fully fleshed out the full value at the time”.

“What it did, however, was get the business more focused on what needed to be done. They are executing exceedingly well and have made the most of the market tailwinds,” Ayoub said.

RBC Capital Markets analyst Owen Birrell had a 12-month price target of $38 on the stock and said the US steel market had “very favourable supply and demand conditions”.

Steel Dynamics last week announced that its profits for the three months to September 30 jumped 87 per cent to $US756 million ($1.08 billion) compared with a year earlier. Chairman and chief executive Mark Millett said imports were well below historical levels. Its share price surged to $US241, from about $US164 in late March, meaning its firepower for any renewed takeover push had been bolstered.

But Millett, who was one of the key drivers of the BlueScope takeover tilt, is bowing out as chief executive on January 1, with chief financial officer Theresa Wagler taking over. Wagler reinforced in a conference call with investors on October 20 that her focus was on organic growth.

“We have a clear pipeline of organic growth opportunities of differing sizes, and the team right now is in the process of prioritising those over the next one to three-year timeframe,” Wagler said.

Millett said the US steel industry was supported by “an increasingly mercantilistic global trade environment that should help maintain a more level playing field through continued and appropriate trade enforcement mechanisms”.

BlueScope shored up its takeover defences with a promise to significantly lift dividend payouts, arguing it had gone through a heavy investment phase over the past few years and shareholders would now be able to reap the rewards.

Courtesy: www.afr.com