Australian steelmaker BlueScope Steel expects tough trading conditions in the first half of fiscal year 2010-11, predicting that its results will break even despite a challenging market.
Speaking at the company's Annual General Meeting in Melbourne, Bluescope chairman Graham Kraehe said that export hot rolled coil prices have remained flat while raw material costs have increased to very high levels and the Australian dollar has become stronger, accompanied by softer local industrial demand, resulting in tough trading conditions and dampening the company's performance expectations for the first half. Kraehe advised shareholders to expect the first fiscal half to be challenging.
"In contrast, our China and ASEAN operations contributed record profits in 2010," Kraehe said, adding that the company seeks to expand further in these growing economies.
Commenting on the company's outlook, managing director and CEO Paul O'Malley said that the company now expects a breakeven net profit for the first half, perhaps even a small net loss.
O'Malley said, "The company expects another solid performance from its Asian businesses... Growth in the US market remains weak. We have an outstanding business footprint in the United States and we are very well leveraged to the upside in the world's largest economy. New Zealand business is tracking well and expected to make a solid contribution. But our Australian business continues to face pressure from compressed margins."