BlueScope’s $438M Dividend Signals Shift as Capex Set to Drop $500M in FY27
BlueScope announces a $1.00 per share unfranked special dividend, returning $438 million to shareholders from recent asset sales and working capital releases. The steelmaker signals a robust cash flow outlook with a planned capex reduction in FY2027.
- Special dividend of $1.00 per share totaling $438 million
- Proceeds from Tata BlueScope JV sale and West Dapto land sale
- Working capital release of approximately $200 million over FY2025-26
- Capex expected to reduce by at least $500 million in FY2027
- Dividend unfranked and no dividend reinvestment plan active
BlueScope Returns Surplus Cash to Shareholders
BlueScope Steel Limited has announced a special dividend of $1.00 per share, amounting to a total payout of $438 million. This unfranked dividend reflects the company’s intention to return surplus cash generated from recent strategic asset sales and working capital realisations back to its shareholders.
The cash surplus stems primarily from three key initiatives, the sale of BlueScope’s 50% stake in the Tata BlueScope joint venture for $167 million, the sale of 33 hectares of land at West Dapto for $76 million, and the ongoing realisation of residual projects within the BlueScope Properties Group, which has released around $200 million in working capital across FY2025 and FY2026.
Capital Management Strategy and Future Outlook
BlueScope’s board has opted for an unfranked special dividend rather than an on-market buy-back, citing current corporate activity and regulatory constraints. This move aligns with the company’s established capital management framework, which balances shareholder returns with long-term growth investments.
Mark Vassella, BlueScope’s Managing Director and CEO, emphasised the company’s strong cash generation capabilities and the anticipated strengthening of earnings as the current capital investment program nears completion. The company expects a significant reduction in capital expenditure by at least $500 million in FY2027 compared to FY2026, which should further boost free cash flow over the next 12 to 18 months.
Balancing Growth and Shareholder Returns
BlueScope maintains a disciplined approach to capital management, targeting the distribution of at least 50% of earned free cash flow to shareholders through dividends and buy-backs. Since FY2017, the company has invested over $3.7 billion in growth projects while returning more than $3.8 billion to shareholders, underscoring its commitment to balancing growth with shareholder value.
The special dividend will be paid on 24 February 2026, with shares trading ex-dividend from 20 January 2026. Notably, the dividend is unfranked for Australian tax purposes and declared as conduit foreign income, with no New Zealand imputation credits attached. BlueScope’s dividend reinvestment plan will not be active for this payment.
Bottom Line?
BlueScope’s special dividend marks a confident step in returning value amid a strategic pivot to stronger cash flow and disciplined capital management.
Questions in the middle?
- How will investors respond to the unfranked nature of the special dividend?
- What impact will the FY2027 capex reduction have on BlueScope’s long-term growth trajectory?
- Could BlueScope resume on-market buy-backs once regulatory conditions permit?
