BlueScope makes $1.5 bill profit, but steelworks still not safe

BlueScope has recorded its biggest profit in more than a decade, but it's still not enough to guarantee the long-term future of the Port Kembla steelworks. Picture: Sylvia Liber
BlueScope has recorded its biggest profit in more than a decade, but it's still not enough to guarantee the long-term future of the Port Kembla steelworks. Picture: Sylvia Liber

Despite recording a billion-dollar profit – the best in more than a decade – BlueScope still can't guarantee the future of the Port Kembla steelworks.

On Monday BlueScope announced a massive $1.5 billion profit, which was more than double the result from the last financial year.

CEO Mark Vassella said it was the company’s best full-year result since 2005.

“The results show our strategy is working,” Mr Vassella said.

Part of that strategy was to make cost cuts at Port Kembla to keep the steelworks open during the 2015 steel crisis.

Since then, BlueScope'’s bottom line has been increasingly healthy and its share price has increased sixfold since 2015.

But Mr Vassella said the company’s good health was still not enough to guarantee the gates at Port Kembla would stay open.

“I don’t know that we’ll ever be in a position where we can guarantee the future of that business,” Mr Vassella said.

“The men and women of Port Kembla have done an incredible job to turn that business around but it’s so critical that we maintain our cost competitiveness.

“We’re in a volatile industry, steel’s a tough game and it was only in 2015 that the future of that business and steelmaking was in question.

“The time will come when the cycle turns and we’ll need to tighten our belts again so I can’t say to you the future of that business or quite frankly any of our businesses are guaranteed."

The Australian Steel Products section, which includes the Port Kembla steelworks, delivered a before-tax profit of $587.4 million, up 28 per cent from the last financial year.

The improvement was due to higher sales volumes, better steel spreads (the difference between raw materials and the sale price) and export coke sales.

Mr Vassella said the company was also looking at boosting steel production at its North Star operation in the United States by around 30 per cent.

If that went ahead, it would cost the company at least $700 million to add extra equipment.

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