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BlueScope Steel arrows up after the company confirmed its earnings guidance for the first half of Fiscal 2019 at its Annual General Meeting held today.

Steel manufacturer BlueScope stated in its FY18 results that the company expects 1H FY2019 underlying EBIT to be approximately 10 percent higher than the 2H FY2018’s earnings of $745.0 million.Â

At the company’s Annual General Meeting BlueScope Chairman Mr. John Bevan told its investors that the company has delivered underlying earnings before interest and tax (EBIT) of more than $1.1 billion in each of the past two years, driven by the recent cost-saving initiatives completed in Australasia and the acquisition of remaining 50 percent interest in North Star.

Mr. Bevan further stated that BlueScope had returned nearly $850 million to its shareholders since the 2017 financial year. This reflects the company’s transformation strategies that have generated enough cash to return a significant amount of funds to its shareholders through dividends and buy-backs.

BlueScope’s Managing Director and CEO Mr. Mark Vassella told that the company is in progress of examining the expansion of North Star business in Ohio with an addition of at least 600,000 to 900,000 metric tonnes per annum of steel making capacity.

Thailand, Indonesia and to some extent Malaysia are reportedly expected to deliver lower results in 1H FY2019 compared to the previous half year. The interpretation has been drawn on the tightening of margins and softness in the projects segment in ASEAN which has been currently witnessed by the company.

Mr. Vassells confirmed that there are several growth opportunities across the company’s portfolio in diverse markets including India, the US, ASEAN, China, Australia and New Zealand.

On the geographical front of New Zealand and Pacific, the company has experienced the strengthening of steel prices however the benefits have been offset by headwinds from higher raw material costs, specifically coal. Further, the company continues to eye robust demand for steel in residential construction and infrastructure across New Zealand and Pacific region, but it has been facing cost blow-outs driven by higher energy costs due to New Zealand gas and electricity supply issues.

In line with BlueScope’s strategy to grow its coated and painted steel business, NS BlueScope Malaysia has inked an agreement with YKGI Holdings Berhad to acquire their manufacturing facility in Klang, Malaysia. The purchase consideration was agreed at $42 million. The management advised that asset will provide a cost-effective supply source for cold rolled feed and offer future growth potential via additional coating and painting capacity.

On the day of its Annual General Meeting, BlueScope Steel Limited (ASX: BSL) is surging higher with stock price up by 3.089% to trade at $12.515 on 23 November 2018. Currently, the stock is trading at a PE of 4.310 x with the market capitalization of $6.52 billion. But over the past one year, the stock has witnessed a negative performance change of 12.03%.


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