BlueScope Steel Hits 3-Year High on Strong Profit Beat
Shares of Australia’s BlueScope Steel soared to a more than three-year high on February 17, 2024, after the steelmaker’s half-year results exceeded market expectations, supported by strong performance in its Australian steel products division and promising commentary on the potential impact of U.S. tariffs on steel imports. The stock surged as much as 12.3%, hitting a peak of A$25.100, its highest level since August 31, 2021. This marked BlueScope’s largest intraday gain since October 2020, while the broader ASX200 index saw a 0.6% dip at the same time.
BlueScope reported an underlying net profit after tax of A$176 million ($112.01 million), surpassing Visible Alpha’s consensus of A$171 million and UBS’s estimate of A$170 million. UBS analysts attributed the better-than-expected result to a particularly strong performance from its Australian steel products (ASP) division, which delivered an underlying earnings before interest and tax (EBIT) of A$131 million, above market forecasts. CEO Mark Vassella offered an optimistic view on the potential benefits from U.S. President Donald Trump’s recent announcement of tariffs on steel imports. Vassella indicated that any increase in steel prices, as seen in previous tariff-related moves, would likely boost BlueScope’s profitability. Steel prices have already risen by 20% since the announcement, suggesting a potentially significant positive impact on the company’s earnings.
The North American market remains a crucial revenue generator for BlueScope, contributing nearly 44% of its total sales in fiscal 2024. This market’s performance, especially in the second half of the fiscal year, is expected to remain strong, with BlueScope forecasting underlying EBIT for the second half of the year to range from A$360 million to A$430 million, a solid increase from the A$309 million achieved in the first half. In addition to the solid earnings results, BlueScope announced an interim dividend of 30 Australian cents per share, further boosting investor sentiment. The company’s strong performance and its expectation of continued growth in North America indicate a bright outlook, bolstered by favourable market conditions and strategic positioning in key markets.
