BlueScope Steel reported a $66 million loss yesterday, but is confident the relighting of Port Kembla's No 5 blast furnace this week will help it return to profitability.The steelmaker is eager to get the blast furnace operating at full capacity next month because it is taking more orders than it can fill.Managing director and chief executive Paul O'Malley reported a net loss after tax of $66 million for the 2008-09 financial year and an underlying net profit after tax of $56 million, down 93 per cent.
SLIDESHOW: BlueSCope No 5 blast furnace relineIt was the company's first full year loss since July 2002, but he was confident the tide had started to turn."Definitely, we are seeing an improvement in demand in the domestic Australian business, perhaps a little bit faster than we were expecting," he said."We have absolutely seen increased demand in our export market and our core customers are keen for us at the moment to provide them more steel than we can actually make. "We are looking forward to bringing No 5 blast furnace back on line. The sooner we do that the sooner we will return to profitability."No 5 blast furnace would not be up and running "at any reasonable level" until September, he said, "so this is still going to be a bit of a tough six months".Mr O'Malley said steel demand started to turn around in March."We are actually seeing August better than the last three or four months. It is probably at a level of demand that is slightly better than what we were actually expecting."The last financial year had started strongly, he said, with hot rolled coil prices exceeding $1200 a tonne. However, as sales volumes and prices started to decline late last year, BlueScope had undertaken major initiatives, such as introducing a cost savings program, adjusting production to balance against demand and inventory and moving the No 5 reline forward.BlueScope had moved quickly and successfully to reduce costs and delivered $295 million in savings.The company would continue its cost reduction initiatives, but Mr O'Malley said it now had a very strong foundation."The global liquidation steel sale is now over. We are seeing restocking underway," he said. "We are cautious about the demand recovery, but ... our customers are taking all of the steel that we can produce and No 6 blast furnace is running flat out and No 5 blast furnace will actually be relit sometime this week."Mr O'Malley warned the market was coming off a very low base after steel prices fell as low as $480 a tonne, and now were "ticking above" $600 a tonne.Australian and New Zealand Steel Manufacturing Businesses chief executive Noel Cornish said despite the most difficult year in BlueScope's seven-year history there were still many local highlights such as the No 5 blast furnace reline and sinter plant upgrade."The successful completion of both these projects is a great credit to the thousands of mostly local people who worked on them and a great testament to the heavy industry capability that exists in the Illawarra," he said. "While commentary about the global financial crisis is taking on a more optimistic flavour lately, business conditions for steelmakers around the world, including ourselves, remain difficult. We will need to continue to take a frugal approach to containing costs for the foreseeable future."Novus Capital stockbroker Doug Symes said BlueScope had done a remarkable job curbing costs, but it was hard to predict the future with any certainty."So much depends on what happens with interest rates ... we are not as far out of the woods as some would suggest."
