BlueScope Navigates Soft Market with $179M Profit, Eyes Growth in 2H FY2025
BlueScope reported a $179 million net profit for 1H FY2025 amid challenging steel market conditions, while announcing a 30 cents per share dividend and a $240 million buy-back plan. The company is banking on cost initiatives and market recovery to boost earnings in the second half.
- 1H FY2025 underlying EBIT of $309 million amid depressed steel spreads
- Net profit after tax down $260 million year-on-year to $179 million
- Interim fully franked dividend of 30 cents per share declared
- On-market buy-back program extended up to $240 million
- 2H FY2025 EBIT guidance improved to $360–430 million, driven by cost savings and market recovery
A Resilient Result in a Tough Market
BlueScope Steel Limited has reported a net profit after tax (NPAT) of $179.1 million for the first half of fiscal 2025, marking a significant $260 million decline from the same period last year. Despite this drop, the company’s underlying EBIT of $309 million underscores a resilient business model navigating through a challenging environment marked by depressed steel spreads in Asia and the US.
Managing Director and CEO Mark Vassella highlighted the strength of BlueScope’s position, noting that while an 8.1% return on invested capital (ROIC) is below their ideal target, it reflects solid performance given the current market softness. The company’s diversified footprint and strategic investments have helped sustain profitability amid subdued demand and pricing pressures.
Capital Management and Shareholder Returns
In line with its commitment to shareholder value, BlueScope declared a fully franked interim dividend of 30 cents per share and extended its on-market buy-back program to allow up to $240 million in shares to be repurchased over the next 12 months. These moves signal confidence in the company’s cash flow generation and balance sheet strength, which closed the half with $88 million in net cash despite a $21 million operating cash outflow.
The company returned $162 million to shareholders in the half, reflecting its objective to distribute at least 50% of free cash flow through dividends and buy-backs. This disciplined capital management approach aims to balance rewarding investors while funding strategic growth initiatives.
Strategic Investments and Growth Initiatives
BlueScope continues to invest heavily in securing and expanding its steelmaking capabilities, including the No.6 Blast Furnace Reline & Upgrade and the Electric Arc Furnace project in New Zealand. The company is also focusing on higher-margin, value-added products like COLORBOND® steel, which saw record volume increases in Australia during the half.
Looking ahead, BlueScope has initiated $200 million in targeted cost and productivity programs expected to deliver significant earnings growth by FY2026. Medium-term growth drivers include North Star debottlenecking and expansion of coated products in the US, alongside ongoing efforts to optimise working capital and realise value from its strategic land portfolio.
Segment Performance and Outlook
Regionally, Australia delivered a 10% increase in underlying EBIT to $131.2 million, supported by stronger spreads and increased domestic demand, particularly in residential construction. North America’s EBIT fell 65% to $182.3 million due to weaker spreads and margin normalisation, while Asia improved slightly to $69.1 million, led by Thailand and Vietnam. New Zealand’s EBIT declined sharply to $3.1 million amid soft construction activity.
For the second half of FY2025, BlueScope expects underlying EBIT to improve to between $360 million and $430 million, driven by a more favourable spread outlook in the US, stronger Australian volumes, and benefits from cost and productivity initiatives. However, this guidance remains subject to fluctuations in market conditions, foreign exchange, and steel pricing.
Sustainability and Safety Progress
On the sustainability front, BlueScope launched its global Refocus on Safety program, aiming to reduce injury rates that remain above long-term averages. The company is also advancing its climate strategy through collaborations on electric smelting technology and emission-reducing projects, reinforcing its commitment to sustainable steelmaking.
Representation of women in the workforce held steady at 25%, and supply chain oversight continues to strengthen, with 167 suppliers assessed under responsible sourcing programs in the half.
Bottom Line?
BlueScope’s disciplined strategy and investments position it to weather current headwinds and capitalize on a potential market rebound in the year ahead.
Questions in the middle?
- How will BlueScope’s cost and productivity initiatives impact margins beyond FY2025?
- What are the risks if steel spreads remain depressed or foreign exchange volatility intensifies?
- How quickly can BlueScope scale its value-added product sales in the US market?