BlueScope flags earnings hit from virus

BlueScope Steel has flagged a hit in second-half earnings amid weaker demand and challenging conditions due to the COVID-19 pandemic.

Australia’s biggest steel maker now expects earnings for the six months ending June 30 to come in at about $260 million.

The company had withdrawn its earnings guidance in March following the economic uncertainty caused by the coronavirus crisis but had previously forecast earnings of $302.4m for the second-half of the financial year.

As a result, its full-year earnings before interest and tax are likely to be about $560m, a heavy slide from last year’s earnings of $1.35 billion.

BlueScope had earlier reported a plunge in first-half net profit following falls in steel prices.

On Friday, the company said domestic demand in Australia had remained resilient in the second half but there was weak demand led by automaker shutdowns from mid-March to mid-May at its North Star business in North America.

The company also said it would record an impairment of $200m after reviewing the carrying value of its New Zealand and Pacific Steel business, based on its expectations for lower earnings in the longer term.

The business was also impacted by the compulsory government shutdown of operations during March and April, amid ongoing cost pressures.

BlueScope is currently undertaking a strategic review of its New Zealand assets.

The steelmaker said at this point orders and despatches in Australia remain stable and North Star is also dispatching near full capacity, but warned of a high level of uncertainty due to COVID-19, which could disrupt supply chains and operations and lower demand amid broader macroeconomic weakness.

BlueScope shares were down 1.9 per cent at $11.17 at 10.30am in a muted Australian market.

AAP