The New Zealand and Pacific Steel division of BlueScope Steel Ltd (ASX: BSL) had a strong December half year primarily from productivity and cost improvement initiatives.
Australia’s largest steelmaker, which fully owns New Zealand Steel, also said that the improved performance of tripling the underlying EBIT over the corresponding December half, also came from higher realised selling prices for steel products.
The improved EBIT for NZ and Pacific Steel was $A41 million (NZ44.02 M).
BlueScope also said the NZ steelmaking operations made good headway on productivity initiatives and cost savings. However, there was further work required to determine whether the Glenbrook operations can be “internationally competitive and profitable through the cycles.”
BlueScope announced a $A441.2 M ($NZ473.77 M) net profit after tax for the six months, representing the first half of FY2018, and projected a stronger outlook for the second half. The strong performance took in one-off benefits amounting to $A84.2 M, to give a 23% lift on the corresponding half.
In a company presentation, BlueScope said New Zealand and Pacific Steel had strong domestic demand through ongoing strong building activity and robust infrastructure demand, particularly in road works.
Raw material costs rose on higher coal and coating metal prices in NZ.
The outlook for the NZ-Pacific operations for the current half take in an expectation of stronger results on regional steel prices, but an expectation of an $A10 M impact from lower vanadium margins.
The financials showed BlueScope had net debt of $A262 M ($NZ281.3 M) and liquidity of $A2 billion ($NZ2.14 M).
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