BlueScope Steel is predicting another loss-making year in fiscal 2013 after posting its second consecutive $1 billion loss.
The struggling steelmaker forecast an improved financial performance with an underlying net loss approaching break-even, conditional on market conditions.
The horror fiscal 2012 is over, but many of the problems Australia’s largest steelmaker faced last year still exist, including weak steel demand in a poor Australian construction market, a high dollar and high operating costs.
A major component of the net loss of $1.04 billion included write-downs and restructure charges.
Excluding those, it still recorded an underlying net loss of $237.5 million, with the price of raw materials such as iron ore and coking coal needed for steelmaking wiping out the weak price of steel.
Shareholders will not get a dividend for a second consecutive year.
Chief executive Paul O’Malley said the restructure, which has included job losses and the closure of operations such as its steel export business, was over and the Australian businesses had turned the corner.
However the two million tonne a year-plus Australian domestic steel division is still a vital part of the business and faces the problem this year of excess steel capacity in Asia and the dumping of cheap imports it cannot compete with.
“On top of that, the big factor is soft domestic demand, we’ve seen flat demand now over the last four halves and a drop-off in building-construction demand particularly in the last six months,” Mr O’Malley told reporters.
Mr O’Malley, who has foregone a salary rise and bonus, defended the company, saying it had hit all of its cost targets, was the world’s pre-eminent producer of steel building products and hoped to double revenues there in three years.
The Australian businesses combined lost almost $1 billion, but would be earnings positive in 2012/13, he said.
The New Zealand and Asian businesses and North American hot rolled product businesses made profits.
The recently announced $1.36 billion joint venture with Japanese giant Nippon in its higher value coated steel products business, will give BlueScope $US540 million ($A519.66 million) and cover most of its debt.
Morningstar analyst Matthew Hodge said the Nippon deal gave the company a “get out of jail free card” but they had to use that money to make investments that generate profit, cashflow and allow them to pay dividends.
The company employs 17,000 people and has four divisions comprising building products, global building solutions, Australia and New Zealand and US North Star BlueScope Steel.
Monday’s forecast result was a slight improvement from the previous year’s $1.05 billion loss but the underlying loss last year was only $107.5 million.
BlueScope shares closed 0.5 cent down at 39.5 cents.
