BlueScope tips more tough times

CONTINUED soft domestic demand for steel has prompted BlueScope to warn that it may be at least another year before it returns firmly to the black, with a further loss likely in the December half.

Managing director Paul O’Malley told Thursday’s annual shareholder meeting that the foreshadowed loss was before taking into account foreign exchange influences and market conditions.

The company has not made a full-year forecast, and securities analysts are forecasting a small profit for the second half, which could allow the company to end up marginally in the black for the full year.

This optimism hinges on finalising early next year a joint venture with Nippon Steel, which covers much of BlueScope’s Asian operations. It will free up another $540 million to help reduce debt.

In the year to June, BlueScope lost $1.04 billion, little changed from the $1.05 billion loss struck a year earlier, as the company continues to battle the adverse effects of a strong Australian dollar, which has forced it to slash production and lay off staff.

Domestically, BlueScope said it expected a ”neutral to negative” contribution to earnings before interest, tax depreciation and amortisation in the December half, with a ”positive contribution” in the second half.

In New Zealand, iron sands exports have been hit by lower product prices, while in the United States the North Star joint venture has seen softer margins than it enjoyed in the second half of the financial year, it said.

Shareholders were told that the year ahead remained one of ”transformation and turnaround”.

BlueScope is to form a joint venture with Nippon Steel, which will encompass all of its Asian operations outside China and India.

The company survived a second ”strike” vote by shareholders over its executive remuneration package, following a series of changes, which include cutting salaries, while lifting the deferred equity component. Shareholders rejected the report at last year’s vote.

As a result, Mr O’Malley’s salary was halved during the year, falling to $2 million from $4.1 million a year earlier.

The original release of this article first appeared on the website of Hangzhou Night Net.

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