BlueScope (ASX:BSL) share price on watch after FY21 results

BlueScope just reported a triple digit jump in earnings and a special dividend.

| More on:
Mining worker making frame with his hands and peering through it

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The BlueScope Steel Limited (ASX: BSL) share price could be a mover on Monday after the company released its FY21 results.

There shouldn't be too many surprises in the results after the company released its preliminary unaudited FY21 earnings before interest and tax (EBIT) last month.

At Friday's close, the BlueScope share price was trading at $25.49, up 2.66% for the day.

What might impact the BlueScope share price on Monday?

The BlueScope share price will be in focus today after the company delivered a well-rounded result with triple-digit increases across key financial metrics. Highlights included:

  • Underlying EBIT of $1.72 billion, up 207% on FY20.
  • Reported net profit after tax of $1.19 billion, up 1,222%.
  • Free cash flow of $898 million, up 277%.
  • Net cash of $798 million, up from $305 million at 31 December 2020.
  • Final dividend of 25 cents per share plus a special dividend of 19 cents per share.
  • Buy-back of up to $500 million.

What happened in FY21 for BlueScope?

The BlueScope share price has been a top performer in 2021, rallying 44.9% year to date. Its strong performance has been underpinned by firm steel prices and strong demand from advanced economies.

The company's Australian steel products division, which contributed to $674.3 million in EBIT (around 39%) reported it had experienced the highest domestic dispatch volumes since FY2008, driven by record demand across both residential and non-residential construction segments.

Similarly, BlueScope's North American steelmaking business, North Star, also delivered a record $677.2 million in EBIT (also around 39%) thanks to record steel prices and spreads. The company also pointed to "an improved COVID-19 situation, low interest rates and significant infrastructure program supporting improved optimism and robust economic momentum" as key drivers of its result.

In addition, BlueScope's building products Asia and North America division experienced a strong improvement on the prior half driven by margin expansions in North America and a continued robust performance across South East Asia, China and India. The building products division contributed $333.5 million or 19% to overall EBIT.

What did management say?

BlueScope managing director and CEO Mark Vassella commented on the record performance:

Underlying EBIT for the year was $1.72 billion, tripling that of FY2020. This is an impressive result. All
operating segments performed exceptionally well – driven by strong demand and steel spreads. Earnings momentum built throughout the year, with the Company delivering $1.19 billion in underlying EBIT in the second half.

Vassella shed light on the company's strategic growth plans, highlighting the following:

Our balance sheet strength and cash flows give us confidence to implement a strategy that will see BlueScope:

– Invest for the long-term growth and resilience of the Group.
– Position the business for a low carbon future, with our near-term action underpinned by a five-year climate investment program of up to $150 million.
– Continue to deliver stronger returns to shareholders.

What's next for BlueScope?

Investors will be keeping an eye on the BlueScope share price today after the company said "at the beginning of 1H FY2022, order and dispatch rates in key markets remain robust" while "spot steel spreads in North America are materially higher than both 2H FY2021 and long-term averages".

As a result, the earnings landscape continues to improve for BlueScope. The company forecasts underlying EBIT in 1H FY2022 to be in the range of $1.8 billion to $2.0 billion. By comparison, 1H FY2021 underlying EBIT came in at $531 million.

Despite the outstanding result and positive forecasts, the company flagged that "while in the medium term we see supportive industry and end use demand trends, it is uncertain how long the current robust conditions will be sustained."

Based on the current BlueScope share price, the company has a market capitalisation of around $12.8 billion.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »