BlueScope has seen a 79 per cent surge in its half-year profit.
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The steelmaker on Monday logged a July-December profit of $359.1 million.
That’s up $159 million – or 79 per cent – on the $200.1 million the company made on the same period in the previous financial year.
The bottom line for the second half of this financial year is also tipped to improve with BlueScope looking at a better result than at the back half of the 2016 financial year.
“The strong growth was generated through delivery of productivity and cost improvements, sales growth, improved steel spreads and the benefit of the North Star acquisition,” said CEO Paul O’Malley.
... the goal going forward is 'to at least offset cost escalation with further productivity improvements'.
“We are now seeing the benefits of our strategic initiatives flowing through to the bottom line.
“There are positive trading conditions across most of our businesses and BlueScope has been generating strong cash flow.”
Mr O’Malley said the Australian steelmaking arm delivered good results “supporting the 2015 decision to continue operations at Port Kembla”.
The bigger picture regarding Port Kembla’s future is unchanged – it needed to continue performing well to justify a reline of the blast furnace in 10 to 15 years time.
“We must not be complacent in our pursuit of continued productivity improvements,” Mr O’Malley said.
The steelmaker made $150 million in cost saving in the Australian business through to December – which flowed on from cuts made in 2015 in order to keep the Port Kembla steelworks open.
It expects to log the same amount in the second half of the financial year.
The cost saving target for the coming financial year is “at least $300 million” and the goal going forward is “to at least offset cost escalation with further productivity improvements”.
The CEO said he expected BlueScope’s profits to improve in the second half of the 2017 financial year, as compared to the 2016 period.
In the back end of the 2016 financial year, the steelmaker recorded a $340.3 million gross profit.
In the six months from January BlueScope expects to improve on that figure by 50 per cent – which would mean an estimated second-half pre-tax profit of $510 million.