BlueScope revises earnings guidance for first half of fiscal 2025

Australia-based steelmaker BlueScope, which also has operations in the U.S., New Zealand and Asia, expects underlying earnings before interest and tax (EBIT) for the first half its 2025 fiscal year to range from AU$270 million to AU$310 million ($177.11 million to $203.35 million), lower than its prior guidance range of AU$350 million to AU$420 million ($229.6 million to $275.5 million), because of range of factors across BlueScope’s operating regions. The company’s 2025 fiscal year runs from July 1, 2024, to June 30, 2025.

"The revised outlook highlights the challenging operating conditions not only facing BlueScope but the broader global steel industry,” BlueScope Managing Director and CEO Mark Vassella says. “These challenges include the continued softness in East Asian spreads off the back of record levels of Chinese steel exports, ongoing cost inflation and a period of pause and uncertainty in the U.S. pending the outcome of the elections and timing of further rate cuts.”

Vassella adds that while these factors affect the company’s near-term performance, he is confident in BlueScope’s resilience.

“BlueScope has a culture of rising to these challenges, and we will continue our work in balancing near-term performance with longer-term sustainable growth and returns," he says.

The company expects its operations in North America, which include North Star BlueScope Steel, BlueScope Recycling and Materials, Buildings North America, BlueScope Coated Products and NS BlueScope North America, to deliver a result slightly below half that of the first half of its 2024 fiscal year.

North Star BlueScope Steel, its electric arc furnace steelmaking operation in Delta, Ohio, has seen a recent moderation in forecast realized spreads relative to prior expectations that have not been offset by expected run-rate volume improvements. As such, the business is expected to deliver a result slightly below one-third of that seen in the second half of its 2024 fiscal year.

Across the Buildings and Coated Products North America segment, customers have been observed deferring orders until the operating environment gains some certainty on election outcomes and the timing of future rate cuts, BlueScope says.

Although an improvement in performance was expected in the half for BlueScope Coated Products, its performance, particularly its heavy gauge business, has deteriorated instead. In response, BlueScope has supplemented management by appointing Chief Technical and Development Officer John Nowlan to lead the business’ turnaround, focusing on operational excellence.

BlueScope is Australia's largest steel manufacturer, employing roughly 7,100 people at approximately 100 sites. While the company’s expectations for stable Australian demand relative to the same period in its 2024 fiscal year remain unchanged, performance at BlueScope’s Australian Steel Products (ASP) business has been affected by softer export coke contribution, which is now expected to be AU$10 million ($6.56 million) lower as global coke prices softened on increased supply and the unfavorable impact of the sustained softness in East Asian steel pricing. For these reasons, ASP now expects to deliver EBIT for the first half of its 2025 fiscal year of approximately two-thirds that of the second half of its 2024 fiscal year.

The company is the only steel producer in New Zealand, with operations including the Waikato North Head iron sands mine and the Pacific Steel long products business. Continued softness in New Zealand’s domestic economy has resulted in a soft demand and pricing environment, BlueScope says. The New Zealand and Pacific Islands (NZPI) segment is expected to deliver a result in line with the second half of the company’s 2024 fiscal year.

In Asia, BlueScope has operations in Thailand, Indonesia, Vietnam, Malaysia, India and China that primarily serve the domestic building and construction industries in each of these countries. The company’s China business performance has been affected by the softening Chinese economy, and the Southeast Asian business has been affected by short-term operational challenges in Thailand, which have since been resolved. The Coated Products Asia (CPA) segment is now expected to deliver a result similar to the second half of its 2024 fiscal year, which totaled 

The revised guidance is subject to spread, foreign exchange and market conditions.

In its 2024 fiscal year results, the company notes that it was driving productivity and performance across its portfolio given the environment of sustained low spreads and cost escalation.

It says progress has been made on productivity improvements and cost savings in the first half of its 2025 fiscal year, however to ensure the ongoing resilience of the business, BlueScope is targeting a further improvement in annualized earnings through the identification and delivery of approximately $200 million in cost and productivity initiatives across the group. The company adds that it will provide updates on progress against this targeted improvement in its regular disclosures to the market.

BlueScope will host its 2024 annual general meeting Nov. 19 at 10 a.m. local time in Wollongong, Australia, and online. More details can be found on BlueScope’s website.