BlueScope smashes profit and announces a share buyback

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BlueScope Steel, which has slashed wages and cut costs to compete on the world market, lifted first half profit by 79% to $359.1 million and launched a share buyback.

Underlying profit was up 203% to $360 million and revenue 17% higher to $5.19 billion on improving steel prices.

“We are now seeing the benefits of our strategic initiatives flowing through to the bottom line,” says CEO Paul O’Malley.

“There are positive trading conditions across most of our businesses and BlueScope has been generating strong cash flow.”

Net debt has been cut to $531.3 million, down $842.1 million from 12 months ago.

The company declared a fully franked interim dividend of 4 cents per share. The board of directors also approved an on-market share buy-back of up to $150 million.

“BlueScope’s strategy is delivering results, with growth in earnings across our entire geographic footprint,” says O’Malley. “We have many growth opportunities in front of us.”

The company’s current focus is to further grow in Asia, which is seeing a rapid rise in the wealth of the middle class.

BlueScope Steel expects second half underlying EBIT about 50% higher than the $340.4 million during same six months last year.

The steel maker’s business has been improving since October 2015 when it announced what it called a game changer agreement with its employees to cut 500 jobs and freeze wages for three years.

The agreement was a significant part of the company’s $200 million cost cutting target and kept the Port Kembla steelworks south of Sydney from shutting.

Bluescope shares have been surging since the election of Donald Trump as US president. The company’s US business could benefit from promised infrastructure work under the new president.

Its shares last traded at $12.19, a 12 month high and a long way from $5.15 a year ago.

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