BlueScope’s profits double

BlueScope's latest results show the pain of the 2015 steel crisis is paying off, said retiring company CEO Paul O'Malley
BlueScope's latest results show the pain of the 2015 steel crisis is paying off, said retiring company CEO Paul O'Malley

BlueScope’s fortunes continue to improve, with the steelmaker on Monday announcing a 102 per cent boost in profits.

But CEO Paul O’Malley said looming energy price rises could cause problems for the steelmaker.

BlueScope’s profits for the last financial year were $715.9 million, which is up 102 per cent on the previous year.

Mr O’Malley said the result was an indicator that the steel crises of 2015 – which included job cuts and wage freezes – was worth it

“The Australian steelmaking business has done an excellent job in boosting profitability and the business delivered good results, supporting the 2015 decision to continue operations at Port Kembla,” Mr O’Malley said.

“However, we must not be complacent in our pursuit of continued productivity improvements.

“We need to deliver returns necessary to support a decision in 10 to 15 years to reline the blast furnace.”

The Australian Steel Products sector – which includes Port Kembla – recorded a 27 per increase in profits up to $459.4 million.

However, he said rising energy prices could undo a lot of the good work.

“Combined gas and electricity costs for the company’s major manufacturing sites at Port Kembla, Springhill and Western Port are forecast to increase 75 per cent between FY2016 and FY2018, to an estimated $145 million in FY2018,” Mr O’Malley said.

“We are very concerned about tightening of supply in the gas and electricity markets, and have highlighted our concerns to government and regulators, including our views about the need for greater supply of gas to domestic customers and incentives to ensure baseload generation is maintained at least at existing levels.” 

Mr O’Malley – who led the company through the 2015 crisis – will also announce his retirement effective on December 31, 2017.

“I’ve enjoyed 12 very tough but inspiring years at BlueScope – 10 as its CEO,” Mr O’Malley said.

“The company has a clear strategy for growth. The team of 15,000 people across 17 countries is hard at work implementing that strategy. This means BlueScope’s world-leading brands, products and manufacturing plants, its great customer base and its very good balance sheet, underpin the future potential growth for BlueScope.”

Bluescope’s Australia and New Zealand CEO Mark Vassella will take over the top job from January 1, 2018.

Mr Vassella started out as a BHP cadet in Newcastle in the early 1980s and moved through the ranks, said company chairman John Bevan.

“Mark has been a key part of the development of our strategy and in Australia and New Zealand has led our 8000 strong workforce in manufacturing and distribution through a major restructure of the business,” Mr Bevan said.

“He has overseen the return of the Australian business to profitability, and was instrumental in the 2015 decision to continue operations at Port Kembla in Australia, and at Glenbrook in New Zealand.”