BlueScope’s 1H FY2026 EBIT Set Between $550M and $620M Amid Mixed Results
BlueScope confirms its first-half FY2026 earnings guidance at the lower end of expectations, highlighting a mix of regional challenges and growth initiatives as it navigates cost pressures and market shifts.
- 1H FY2026 EBIT expected at bottom of $550–$620 million range
- Australian market shows moderate improvement despite cost pressures
- North America led by North Star delivers strong gains
- Asia stable with ongoing joint venture sale in India
- New Zealand faces challenges ahead of EAF project commissioning
BlueScope’s Earnings Outlook, Cautious but Constructive
At its 2025 Annual General Meeting, BlueScope Steel reaffirmed its earnings guidance for the first half of fiscal 2026, projecting underlying earnings before interest and tax (EBIT) at the lower end of the $550 to $620 million range. This cautious stance reflects a complex operating environment marked by mixed macroeconomic signals and regional disparities.
Chief Executive Mr Vassella emphasised the company’s focus on controllable levers such as cost management, capital discipline, and capability enhancement. He highlighted ongoing efforts to boost earnings both in the near term and through to 2030, including initiatives aimed at delivering an additional $500 million in annual earnings and unlocking value from a substantial portfolio of surplus landholdings.
Regional Performance, A Tale of Contrasts
In Australia, BlueScope’s steel products segment is expected to post a moderately improved result compared to the previous half, buoyed by a one-off profit from a partial land sale at West Dapto and a retrospective GST credit. However, the business continues to grapple with cost escalation and softer pricing in both domestic and export markets, even as building demand strengthens.
North America stands out as a bright spot, with the North Star facility anticipated to deliver earnings nearly 50% higher than the prior half, supported by full utilisation and successful debottlenecking projects. Conversely, other North American operations face margin pressures due to softer steel pricing, tempering overall gains in the region.
Asia’s coated products segment remains steady, with strong performance in Southeast Asia and seasonal improvements in China. Meanwhile, BlueScope’s India operations maintain profitability amid integration of new supply agreements. Notably, the company is progressing with the sale of its 50% stake in the Tata BlueScope Steel joint venture, expected to conclude in the second half of FY2026.
In New Zealand and the Pacific Islands, the outlook is more subdued. The segment is forecast to match the previous half’s results despite initial breakeven expectations. Persistent cost pressures, operational disruptions, and pricing challenges have weighed on performance ahead of the commissioning of a new electric arc furnace (EAF) project, which is on track and expected to enhance future operational efficiency.
Strategic Outlook and Market Positioning
BlueScope’s balanced approach, managing near-term headwinds while investing in medium-term growth, reflects a resilient business model supported by a strong balance sheet and a committed workforce of 16,500 employees. The company’s strategic focus on productivity, capital allocation, and unlocking land value signals confidence in its ability to navigate volatility and position itself for sustainable growth.
Investors will be watching closely how these regional dynamics unfold and whether BlueScope can successfully execute its growth initiatives amid ongoing cost and pricing pressures.
Bottom Line?
BlueScope’s cautious guidance underscores the challenge of balancing current market pressures with ambitious growth plans.
Questions in the middle?
- How will BlueScope’s cost and productivity initiatives impact margins in the coming quarters?
- What are the implications of the Tata BlueScope Steel joint venture sale for future earnings?
- Can the EAF project in New Zealand materially improve performance in a low-cycle environment?
