Bluescope withdraws 2H 2019-20 profit guidance

Australian steel producer Bluescope Steel today withdrew its profit guidance for the second half of the 2019-20 fiscal year to 30 June because of the widening impact of the coronavirus pandemic that is affecting its global operations.

"We have experienced business interruption due to a national shutdown in Malaysia, and overnight it was announced that a number of auto makers in North America would temporarily cease production," said Bluescope chief executive Mark Vassella. It is unclear what impact this will have on Bluescope's North Star's despatch volumes, he said.

US-based auto producers Ford, General Motors and Fiat-Chrysler said yesterday they will shut down all of their North American operations through to the end of March in response to the growing coronavirus pandemic.

BlueScope on 24 February had forecast a 2019-20 second-half profit before interest and tax of around A$300mn ($168mn).

The unaudited group performance during the 2019-20 second half to date has been in line with expectations, Bluescope said. Demand in Australia has remained robust, led by building sector and distribution channel demand. North Star despatch volume and spreads have remained stable, with performance across the building products and New Zealand and Pacific Steel segments in-line with expectations. The firm's Chinese operations are ramping up in line with the return of business activity across the country.

The second-half profit forecast was based on a lower east Asian hot-rolled coil price of $465/t compared with its assumption of $510/t for the first half, an average 62pc Fe iron ore price of $85/t cfr China that was down from $95/t and a benchmark hard coking coal price of $160/t fob Australia that was down from $170/t. It also assumes a US mini-mill benchmark steel spread staying reasonably flat at $288/t in line with the first half, with an exchange rate of US$0.69 to an Australian dollar. The Australia dollar is now worth around $0.58.

By Kevin Morrison

source: Argus Media