The BlueScope Steel Limited (ASX: BSL) share price is soaring higher today after the company provided a business update regarding the impact of the coronavirus on its operations.
Withdrawal of H2 FY20 outlook
BlueScope Steel has announced today that it has withdrawn its outlook guidance for the second half of 2020 due to the high level of environmental and economic uncertainty pertaining to the global coronavirus pandemic. The company had previously stated in its half-year FY2020 results release in late February that it anticipated second-half underlying earnings before interest and tax (EBIT) to be similar to H1FY20.
With regards to how the company has been performing in the current half-year, BlueScope commented that so far, its unaudited financial performance has been in line with company expectations.
The company noted that demand in Australia remains solid, driven by demand in the building sector and its distribution channels.
Dispatch volume and spreads for BlueScope's North Star division have remained stable through this half year so far, and the Building Products and New Zealand & Pacific Steel segments have performed in line with company expectations.
BlueScope also noted that it is scaling up its operations in China as business activity across the wider Chinese economy is progressively being resumed after previous disruptions that occurred at the peak of the coronavirus outbreak in the region.
Disruptions in Malaysia, US automakers shut down
BlueScope did, however, comment that it has seen disruption to its business operations in Malaysia due to a national shut down. Also, overnight, several North American automakers announced they would be temporarily ceasing production in their factories, which no doubt is going to have a significant impact on the steelmaker over the next few months in that market.
With regards to its North Star division in North America, BlueScope commented that it is uncertain as to the impact that the current crisis will have on its dispatch volumes.
On a positive note, BlueScope highlighted its strong balance sheet, with net debt at the end of last year of only $47 million. The steelmaker also noted that it has $358 million of net cash on its books and total liquidity of $2.5 billion.
BlueScope Managing Director and CEO, Mark Vassella, commented: "In recent years BlueScope has put a lot of work into transforming the business and is well equipped to operate in this challenging environment."
"We are in a strong position to withstand these uncertain times and for when the virus risk recedes and economies rebound," he added.
