The Steel Index depicts that the steel manufacturer has diminished the export price of hot-rolled coil steel of China to approximately 40 per cent over the past year.
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The move comes as the company announced a profit of $A136.3m for the year to June 30, up from a loss of $A82.4m a year ago when the company was hit with one-off restructuring costs and writedowns.
Full-year EBIT came to $301.8m. The steelmaker of Australia plans to inform its investors about the progress of the review in November during its annual shareholder meeting.
Despite the gloomy outlook, outgoing chairman Graham Kraehe said the result was the company’s best profit performance since the impact of the GFC on the steel sector in 2009. That assumes breakeven mining costs could be brought from the “mid US$60s per tonne” to the mid-US$50s per tonne in the current financial year.
Chief executive Paul O’Malley said there have been dramatic recent changes in the global steel industry.
BlueScope is targeting $200 million in cost savings in Australia by June 2017 and $NZ50 million ($45.9 million) in cost savings from its New Zealand business.
The company is reviewing the ongoing viability of steelmaking in Australia and New Zealand.
BlueScope Steel Ltd. warned it may shutter its Australian and New Zealand steelmaking operations after prices plunged amid increased exports from China.
BlueScope hopes to address much of the cost cutting through a new enterprise bargaining agreement that is now being negotiated.
Despite the challenges Mr O’Malley said BlueScope’s objective was to maintain steelmaking at Port Kembla and Glenbrook – allowing the company to keep more people employed in the Illawarra and the Waikato, and retain exposure to the upside of improving margins without incurring significant restructure costs.
BlueScope now employs around 2,000 workers at its Port Kembla blast furnace, with another 1,500 contracting jobs dependent on it in the Illawarra. “We either deliver AU$250 million of cash cost reduction – and that will require multi-stakeholder contribution – or we will need to withdraw from steel supply”, he said.
A fully-franked dividend of 3 cents per share has been declared.
Mr O’Malley hailed the federal coalition’s abolition of the carbon tax, which its overseas competitors did not pay, and said he’d had positive talks with NSW premier Mike Baird.
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In spite of the return to profit, BlueScope said the operating environment for global steel remains tough and that it will focus on growth of premium branded businesses.
