BlueScope, which is cutting jobs and freezing wages because of a global oversupply of steel, now expects half year earnings to be about 27% better than first thought.
The company announced today that its preliminary unaudited underlying EBIT (earnings before interest and tax) for the six months to December is expected to be $230 million, above the prior guidance of $180 million.
Bluescope shares were up 13% to $4.96 in early trade.
“The stronger performance has been driven largely by earlier delivery of cost reductions, growth in Australian domestic despatches and better margins,” Bluescope told the ASX.
In October last year, Bluescope announced what it called a “game changer” agreement with its employees to cut 500 jobs and freeze wages for three years.
The agreement is a significant part of the company’s $200 million cost cutting target. And it keeps the Port Kembla steelworks south of Sydney from shutting.
BlueScope also has a deal with the NSW government which will save it $60 million in payroll taxes.
In a market update today, BlueScope says it anticipates an impairment charge of $570 million, following a review of external steel and iron ore price forecasts.
However, it also expects to write-up by $700 million the value of its 50% interest in North Star BlueScope Steel.