The market may be pushing higher on Tuesday, but the same cannot be said for one ASX 200 stock.
That stock is steel products giant BlueScope Steel Limited (ASX: BSL), which is tumbling deep into the red this morning.
At the time of writing, the company's shares are down 8% to $19.54.
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Why is this ASX 200 stock sinking?
Investors have been hitting the sell button this morning after BlueScope released a trading update.
As you might have guessed, it wasn't a good update. Management notes that challenging operating conditions mean that it expects to fall well short of its guidance in the first half of FY 2025.
According to the release, BlueScope now expects underlying earnings before interest and tax (EBIT) for the half to be in the range of $270 million to $310 million. This is below its previous guidance range of $350 million to $420 million.
The ASX 200 stock blamed the downgrade on a range of factors across BlueScope's regions. This includes the North America region now expected to deliver a result around 50% lower than the second half of FY 2024.
Management advised that its North Star business has seen a recent moderation in forecast realised spreads relative to prior expectations. These have not been offset by expected run-rate volume improvements.
In addition, across the Buildings and Coated Products North America segment, its customers have been observed deferring orders until the operating environment gains some certainty on US election outcomes and the timing of future rate cuts.
And while in Australia expectations for stable domestic demand compared to the second half remain unchanged, performance at Australian Steel Products (ASP) has been impacted.
The ASX 200 stock's CEO, Mark Vassella, commented:
The revised outlook highlights the challenging operating conditions not only facing BlueScope, but the broader global steel industry. These challenges include the continued softness in East Asian spreads off the back of record levels of Chinese steel exports, ongoing cost inflation and a period of pause and uncertainty in the US pending the outcome of the elections and timing of further rate cuts.
Whilst these pressures are impacting performance in the near-term, we are confident in BlueScope's resilience, underpinned by a robust balance sheet, diversified business model and strong operating disciplines. BlueScope has a culture of rising to these challenges, and we will continue our work in balancing near-term performance with longer-term sustainable growth and returns.
