BlueScope expected to announce big profit on Monday

Bottom line: BlueScope is expected to announce a half-year profit of more than $600 million on Monday. Picture: Sylvia Liber
Bottom line: BlueScope is expected to announce a half-year profit of more than $600 million on Monday. Picture: Sylvia Liber

BlueScope is expected to announce another half-year profit of more than $500 million on Monday morning.

That would be the fourth straight half-year before-tax result that passed the $500 million mark.

On Monday morning, the steelmaker will be announcing its results for the 2017-18 financial year.

In the first half of that financial year, the steelmaker recorded a before-tax profit of $516.8 million.

After tax the bottom line was $441.2 million.

At the time CEO Mark Vassella said the company expected a before-tax profit of $606 million for the second half of this financial year.

However, in May this year Mr Vassella told the Australian Stock Exchange that figure would be revised upwards to around $680 million.

“Following continued strong steel spreads in North America that increase is mainly due to stronger performance at our North Star mini-mill in Ohio in higher realised steel spreads,” Mr Vassella said.

A spread is the difference between the cost of raw materials and the sale price of the finished product.

A “moderately better” performance than expected from the Australian Steel Products division – which includes the Port Kembla steelworks – was also a factor in the upgraded profit target, Mr Vassella said.

“Our other businesses are performing well, and generally in-line with our expectations set out in February,” Mr Vassalla said.

In the first half-year profit following the cutbacks made in the 2015 steel crisis to keep the Port Kembla steelworks open, BlueScope recorded a $353.8 million net profit.

Every half-year since has seen the profits increase, as the effects from the 2015 cost reductions flowed through to the bottom line.

The news of an increased profit comes at a time when Port Kembla workers are negotiating a new pay deal.

At its heart, the workers want the return of conditions that were given up in 2015, a call that may become even louder in the wake of Monday’s expected profit announcement.

The union has flagged possible strike action.

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