BlueScope Steel Limited (ASX: BSL) – which was spun-off from BHP Billiton Limited (ASX: BHP) in 2002 – has today reported an underlying net profit after tax of $79.6 million, which represents a 62% improvement on the prior corresponding period.
Key facts and figures
- Net debt now stands at just $408 million which represents gearing of just 8%
- Fully franked interim dividend of three cents per share has been declared
BlueScope Steel operates across five divisions:
- Australian Steel Products – underlying earnings before interest and tax (EBIT) jumped 365% to $64.7 million thanks to lower raw material costs and higher domestic residential building activity.
- New Zealand Steel & Pacific Steel – underlying EBIT fell 93% to $2.6 million due to lower iron sands prices and volumes.
- Building Products (Asia and North America) – underlying EBIT slipped 6% to $47.8 million with weaker performances experienced in North America and many Asian countries offset by uplift in India and Indonesia.
- Global Building Solutions – underlying EBIT slipped 6% in this division resulting in an underlying EBIT of $19.3 million.
- Hot Rolled Products – underlying EBIT of $67.1 million, rallied 38% with North America a standout performer.
Outlook
Management stated that they expect the group to achieve up to a 20% increase in underlying EBIT compared with the prior period. These expectations are based upon (amongst others) positive residential building activity and a better performance from the US business.
With the share price being sold down around 9% on Monday after the results release to $5.07, the stock is now nursing a loss of just under 14% over the past year. At these levels, BlueScope's shares are trading below their stated net tangible asset backing of $6.43 – given the discount, value investors may be tempted to take a closer look at the underlying assets, industry structure and long-term earnings potential of the company.
