BlueScope Steel Posts First-Half Loss, Cuts Debt

BlueScope Steel, Australia's largest steelmaker, posted a net loss before restructuring charges in line with market forecasts as it overhauled its Australian business, and slashed hefty debt levels and said its second-half loss should be smaller.

BlueScope, which last year pulled out of the export market and cut half of its steel-making capacity, posted a net loss including restructuring charges of A$530 million ($570 million) in the six months to Dec. 31.

Rolls of steel
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Rolls of steel

Its share price has collapsed over the past 12 months from near A$2 per share to below A$0.40.

BlueScope said its first-half profit before restructuring charges and a government advance was A$76 million ($82 million).

That was in line with market forecasts of a net loss before one-offs of A$74 million, according to a Reuters survey of five analysts, and compared with a loss of A$55 million a year ago.

In December, the steelmaker received A$100 million in government funds to offset the impact of new carbon taxes due to start this year.

"Since the onset of the global financial crisis, BlueScope has acted to overcome the effects of poor global economic conditions and steel industry overcapacity and set the foundation for future business improvement," said BlueScope Managing Director Paul O'Malley.

Weak sales and higher costs in the Australian market led to an earnings loss of A$182 million in the coated and industrial products segment.

O'Malley said net debt was A$796 million at Dec. 31, a reduction of A$759 million from Oct. 31.

For the second half, he forecast a slightly lower underlying net loss after tax, compared with the first half.

A recent report by Ernst & Young said Australian steelmakers will continue to face tough competition from Asian rivals, but compared to European or U.S. steelmakers they had a more active domestic market with big infrastructure and resource projects.

BlueScope and its major domestic rival, Onesteel, were spun out of mining and metals giant BHP Billiton between 2000 and 2002 after the Anglo-Australian group BHP struggled to make money in steel.