BlueScope Reports 7% Revenue Drop and 57% EBIT Decline in 1H FY2025

Half-Year Financial Performance

BlueScope Steel Limited (ASX: BSL) released its half-year financial results for the six months ended 31 December 2024, reporting a significant contraction in profitability amid challenging market conditions. Sales revenue from continuing operations fell 7% to $7.9 billion, primarily driven by lower steel selling prices despite resilient despatch volumes.

The company’s underlying net profit after tax (NPAT) plunged 63% to $176.4 million, reflecting a 57% drop in underlying EBIT to $308.8 million. This decline was attributed to compressed steel spreads, higher conversion and labour costs, and inflationary pressures across its global operations.

Dividend and Capital Management

Despite the earnings downturn, BlueScope’s board declared a fully franked interim dividend of 30 cents per share, a 20% increase from the prior corresponding period. This move underscores management’s commitment to returning capital to shareholders even amid a tougher earnings environment. The company also extended its on-market share buy-back program, allowing up to $240 million of shares to be repurchased over the next 12 months, providing flexibility to enhance earnings per share and manage capital efficiently.

Segmental Insights and Operational Highlights

BlueScope’s diversified footprint spans Australia, North America, Asia, and New Zealand. The Australian Steel Products segment saw a 4% decline in domestic sales volumes and a 49% drop in underlying EBIT, pressured by lower spreads and higher costs. North Star BlueScope Steel in the US experienced a 67% EBIT decline despite higher dispatches, reflecting weaker spreads and destocking ahead of the US presidential election. The Buildings and Coated Products North America segment also faced margin compression and lower volumes.

In Asia, the Coated Products segment reported a 28% EBIT decrease, impacted by softer prices and operational challenges, particularly in China where construction activity remained subdued. New Zealand & Pacific Islands experienced an 88% EBIT decline due to lower prices and volumes amid a soft domestic market.

Strategic Growth and Sustainability Initiatives

BlueScope continues to invest in growth and transformation initiatives, targeting an annual EBIT uplift of approximately $500 million by 2030 through cost productivity programs, portfolio growth, and property realisation. Notable projects include the No.6 Blast Furnace upgrade at Port Kembla, the Electric Arc Furnace installation at Glenbrook, and expansion efforts in North America and Asia.

The company also advanced its sustainability agenda, releasing its second Climate Action Report and progressing decarbonisation pathways. Investments in carbon reduction technologies and operational improvements align with BlueScope’s net zero emissions goal by 2050, although the company acknowledges uncertainties around future technology and policy developments.

Outlook and Market Conditions

Looking ahead to the second half of FY2025, BlueScope expects underlying EBIT to improve to a range of $360 million to $430 million, supported by a more favourable steel spread outlook in the US, stronger domestic volumes in Australia, and benefits from ongoing cost and productivity initiatives. However, the outlook remains subject to volatility in commodity prices, foreign exchange rates, and global economic conditions.

BlueScope maintained its investment grade credit ratings from S&P Global Ratings and Moody’s, ending the half with a net cash position of $88 million and liquidity of $2.9 billion, including joint venture cash balances.