Australian steelmaker BlueScope Steel has posted a net profit of A$96.5 million for the financial year 2019-20 ended on June 30, decreasing by 91 percent compared to a net profit of A$1.01 billion in the previous financial year. The company attributed the sharp decrease in its net profit to the lower underlying EBIT and an A$197 million write-down of the New Zealand Steel and Pacific Islands assets model. The company’s sales revenues in the given period decreased by ten percent year on year to A$11.28 billion ($8.48 billion), due to lower selling prices and shipment volumes.
Meanwhile, BlueScope’s underlying EBIT in the given year declined 58 percent, year-on-year, to A$564 million ($74.4 million) due to lower steel spreads and higher costs. Managing Director and CEO of BlueScope, Mark Vassella said that it was a strong result in view of the coronavirus pandemic and the decline in steel spreads.
Vasella also stated that if New Zealand unit could not achieve A$30-50 million each year from its operations, the business may shift to external supply of products and primary steelmaking operations at Glenbrook may cease.
As for the first half of the financial year of 2020-2021, the company expects weaker steel spreads in North America and Asia compared to the second half of the financial year of 2019-2020, while it anticipates orders and shipments in Australia to remain stable. The company said that North Star’s dispatch will be at almost full capacity in the same period. However, BlueScope drew attention to a high level of uncertainty in the current environment due to the coronavirus-related risks which could disrupt demand, supply chains and operations, combined with broader macroeconomic weakness dampening demand. So, the company said that it is not providing specific underlying EBIT guidance for the first half of the financial year 2020-21.