The BlueScope Steel Limited (ASX: BSL) share price is charging higher on Monday morning.
At the time of writing, the steel giant's shares are up 8% to $24.21.
This follows the release of the company's half year results.
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BlueScope share price jumps on half year results
- Underlying EBIT down 57% to $309 million
- Reported net profit after tax down 59% to $179 million
- Net cash outflow of $21 million
- Net cash down 76% to $88 million
- Fully franked 30 cents per share interim dividend
What happened during the half?
For the six months ended 31 December, BlueScope reported a sizeable profit decline with its net profit after tax dropping by $260.2 million to $179.1 million.
This was driven by weakness in North America where its North Star business delivered a significantly softer result compared to the prior half. This was predominantly due to materially weaker benchmark spreads.
In addition, the BlueScope Coated Products performance deteriorated during the half, delivering a loss due to lower asset utilisation on softer volumes. A turnaround program has been refocused on its immediate improvement.
Despite the company's poor performance and cash burn, it still decided to reward shareholders with a dividend. The BlueScope board declared a fully franked interim dividend of 30 cents per share. This is up 20% on the prior corresponding period.
The board has also approved an extension of its buy-back program to allow it to be used over the next 12 months.
Management commentary
BlueScope's managing director and CEO, Mark Vassella, acknowledged that it was a difficult half. He said:
Underlying EBIT for the half was $308.8 million, a profitable result despite the depressed spread environment in which it was delivered, which highlights the need for business model resilience. While an 8.1% return on invested capital is not at the level we would like to see, it is a solid result in this climate of soft steel spreads in Asia and the US and soft demand conditions for our operations outside the US.
Importantly, this shows the business is in a much stronger place than a decade ago, and with the actions being taken to bolster near-term performance, the Company is well positioned to benefit from a recovery in these key external earnings drivers.
Outlook
The Company expects underlying EBIT in second half of FY 2025 to be in the range of $360 million to $430 million. This reflects an improvement in the spread outlook in the US, stronger domestic volumes in Australia, and the benefits from the group-wide cost and productivity program.
Though, it warns that these expectations are subject to spread, foreign exchange, and market conditions.
