BlueScope’s 1H FY2025 Financial Performance Overview
BlueScope Steel has reported a net profit after tax (NPAT) of $179.1 million for the first half of FY2025, a sharp decline of $260.2 million from the same period in FY2024. Despite this downturn, the company’s performance remains resilient. Underlying EBIT for the period stood at $308.8 million, reflecting a profitable result in a challenging market environment, marked by soft steel spreads in both Asia and the US. This indicates that the company’s business model resilience is crucial in navigating these difficult conditions.
BlueScope’s return on invested capital for the period was recorded at 8.1%, a solid result given the context of a weaker steel market, although still below the company’s targeted levels. This performance highlights the pressures from reduced demand and softer spreads but emphasizes the ongoing strength of the company’s business fundamentals.
Key Financial Metrics and Capital Management
The financial highlights for 1H FY2025 include:
•Reported NPAT: $179 million
•Underlying NPAT: $176 million
•Underlying EBIT: $309 million
•ROIC: 8.1%
•Interim dividend (fully franked): 30.0 cents per share
Despite the drop in profits, BlueScope maintains a healthy balance sheet with $88 million in net cash and a continued focus on capital management. This includes a $240 million buy-back program, extended to the next 12 months, demonstrating the company’s confidence in its long-term growth prospects. For 1H FY2025, BlueScope also distributed $162 million to shareholders, reaffirming its commitment to returning capital to investors.
Strategic Focus: High-Margin Products and Growth Initiatives
BlueScope Steel’s strategic focus continues to evolve towards higher-margin, value-added products. In particular, COLORBOND® steel in Australia saw strong volume growth in 1H FY2025. The company is investing in projects such as the No.6 Blast Furnace Reline and Electric Arc Furnace upgrades to secure steelmaking operations in Australia and New Zealand, while also working to grow its best-in-class steel production in the United States.
The company has also taken a focused approach on expanding its presence in value-added products, targeting key growth areas such as coated products in the US and high-performance steel products in Australia. These efforts form part of BlueScope’s strategy to improve the quality of its product portfolio and maintain a competitive edge in an increasingly challenging market.
Cash Flow and Investment for Long-Term Growth
Despite a $21 million cash outflow in 1H FY2025, primarily driven by higher capital expenditure and softer earnings, BlueScope remains committed to investing in its long-term growth. The company’s investments include accelerating the growth of value-added products, optimising operational efficiencies, and exploring strategic land value realisation.
Looking ahead, BlueScope plans to unlock $200-300 million in working capital improvements over the next 18 months. Additionally, its $200 million cost and productivity initiatives are expected to drive substantial earnings growth by FY2026.
Looking Ahead: Growth and Cost Management
The company has targeted $500 million in annual incremental earnings from its growth initiatives over the medium term, including projects like the North Star debottlenecking and ramping up production of value-added products. BlueScope is confident that with these investments and a recovery in steel spread levels, it will be positioned for robust growth in the coming years.
Despite the current market challenges, BlueScope’s strong balance sheet, operational efficiency, and focus on value-added products ensure that the company is well-positioned to deliver growth over the long term.
