BlueScope’s expected half-yearly earnings boost of more than $50 million is a “really good result”, according to the man in charge of the Australian arm of the company.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
But the Port Kembla steelworks is still in the red.
On Monday BlueScope issued a revised half-yearly estimate of around $270 million, up from the $209 million estimate in February
A statement from BlueScope said the recent job losses at the Port Kembla steelworks had contributed to the better-than-expected result.
“The stronger performance has been driven largely by earlier delivery of targeted cost reductions, higher steel and iron ore prices, better than anticipated Australian domestic despatches and better than expected margins in the international businesses,” according to the statement.
BlueScope’s General Manager of Manufacturing John Nowlan said the Australian part of the business “significantly contributed to the profit upgrade”.
Despite the $61 million uptick, the Port Kembla steelworks is running at a loss.
“Our target and challenge for the Port Kembla Steelworks remains the same – to be cash break-even at the bottom of the cycle,” Mr Nowlan said.
“This means we must be competitive against imported hot rolled coil costs and be cash break-even when the market is at its worst. We are closing the gap but we are still not there.
“Therefore, it is important to build on the positive momentum. We can’t afford to take our foot off the accelerator in pursuit of our cost reduction targets.”
In August BlueScope CEO Paul O’Malley announced $200 million in annual savings needed to be found in the Australian business.
If the savings could not be found, then the only other option on the table was to close down the steelworks.
In the end workers voted in favour of pay and job cuts in order to contribute their share to the savings target.
South Coast Labour Council secretary Arthur Rorris said the $61 million result was positive as the region needed BlueScope to be profitable.
But he said BlueScope needed to remember the “sacrifices” workers made.
"We should not forget that what happened last year is not the new business model,” Mr Rorris said.
“This was a one-off in an exceptional situation in the interests of both our community and the Australian steel industry, that’s why those sacrifices were made.”
“They were not made as part of a new order in terms of workers sacrifices going straight into the pockets of their business owners.”