Shares in Bluescope Steel jumped in morning trade.
A short time ago, they were up 6.7% to $14.25.
Ord Minnett, in a reporting season review of BlueScope Steel, raised its recommendation to accumulate from hold and the target price to $15 from $13.
The move was driven by Bluescope’s cost savings and the potential for further efficiency gains, tax benefits and up to $2 billion in capital management over the next five years.
“The company has $2.5 billion in tax losses which can be used to offset Australian income,” says Ord Minnett in a note to clients.
The steel maker’s business has been turning around 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 cost cutting targets and kept the Port Kembla steelworks south of Sydney from shutting.
In 2016, BlueScope doubled full year underlying profit to $293.1 million. Sales were up 8% to $9.18 billion and the statutory net profit was up 160% to $353.8 million.
It’s due to release its 2017 year results on August 21.
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