On 3 December 2018, BlueScope Steel Limited (ASX: BSL) announced that the group is going to begin a new buy-back event of up to $250 Mn via on-market trade. Following the release of this news, the share price of the company increased by 11.754 percent as on 3 December 2018.
As per the Managing Director and Chief Executive Officer of the company Mr. Mark Vassella, as the company is approaching its goal of net cash on the balance sheet of $200 million to $400 million, this announcement of share buy-back forms part of its FY2019 capital management program.
The company also released its NS BlueScope Vietnam presentation in which the company provided the macroeconomic overview of Vietnam and highlighted the company’s financial growth drivers, performance and strategies in Vietnam. Currently, in the Vietnam region, the company is providing a wide range of products and brands to suit end markets across the building and construction sector. During the financial year 2018, the company’s demand in the project segment remained strong. However, the margins were impacted due to the competition with imports mainly from China, and new coating entrants. Further, the volume for FY 2018 was 11 percent lower than FY 2017, due to lower exports as a result of the trade restrictions.
The company also released its NS BlueScope Thailand presentation in which the company reported that the higher margin project segment in Thailand region performed well, albeit overall demand continued to be softer due to the political climate resulting in lower private and foreign direct investment. The retail segment was impacted by the competitive environment with import volumes expanding placing pressure on margins and the volume/mix trade-off. Further, the business continued to roll-out the authorized dealer retail channel and invest in consumer brand and connect with local builders.
In the company’s ASEAN region presentation, the company informed about the compelling opportunity which is rising in ASEAN regions on the back of large and growing populations in these regions and growing levels of wealth in these regions. The company reported that margins across all the southeast Asian countries are tight in FY 2018. Further, there is softness in the higher margin project segment, including the impact of political uncertainty in some nations. In North America, the company witnessed strong volume and margin performance in improving demand and price environment. The company also reported that its businesses in North America, India, China, and Vietnam are performing well with robust demand and margins.
Recently the company confirmed its FY 2019 guidance according to which the company’s underlying earnings before interest and tax in the first half of FY 2019 will be around 10 percent higher than the second half of FY 2018 (which was $745.0 million), subject to spread, FX and market conditions.
In the last six months, the share price of the company decreased by 33.15 percent as on 30 November 2018. BSL’s shares traded at $12.550 with a market capitalization of circa $6.03 billion as on 3 December 2018 (AEST 4:00 PM).
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