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On 25th February 2019, BlueScope Steel Limited (ASX:BSL) which is in the business of manufacturing the various steel products for industrial and commercial use, has announced its 1HFY19 results. The company seems to have delivered on the expectations of the investors. The reported net profit after tax (NPAT) was seen at $624.3 million in 1HFY19 which increased by 42% from the reported NPAT of $441.2 million in 1HFY18. The underlying NPAT grew even higher by 88% from $327 million in 1HFY18 to $613.5 million In 1HFY19, which was mainly due to lower financing costs and outside equity interest.
Good numbers were also posted on the revenue front. Sales revenue from continuing operations increased by 17% from $5,448.4 million in 1HFY18 to $6,398.1 in 1HFY19 due to higher steel prices across all segments and the favourable translation impacts from a weaker Australian dollar exchange rate.
On the underlying EBITDA front, the company delivered a growth of 49% which stood at $1,055.7 million in 1HFY19 compared to the previous number of $710.2 million PCP. Whereas, the reported EBIT increased by 65% from $510.5 million in 1HFY18 to $840 million in 1HFY19 and underlying EBIT rose from $524.2 million in 1HFY18 to $849.6 million in 1HFY19, an increase of 62%. This increase was due to a higher rise in the steel prices compared to the input cost which resulted in the positive spread (the difference between the steel price and the input cost) for the company.
The net cash position of the company has also improved from the debt of $262.1 million in 1HFY18 to the positive cash of $127.5 million in 1HFY19 and is on the path towards reaching their target of $200M to $400M of net cash.
Positive numbers were also seen in the earnings per share (EPS). The reported EPS increased by 47% from 78.6 cents per share in 1HFY18 to 115.3 cents per share in 1HFY19. Even better performance was seen in the underlying EPS which rose by a massive 94% from 58.3 cents per share in 1HFY18 to 113.3 cents per share in 1HFY19. The company is committed to increasing the shareholdersâ return by distributing at least 50% of free cash flow to shareholders in the form of dividend and buy-backs.
Earlier, the company had announced a buy-back program of $250 million with $43M purchased in 1HFY19 and up to $207M remaining in 2HFY19. Today, it has declared an interim dividend of A$0.06 per ordinary share which will be payable on 2nd April 2019. The ex-date and the record date for the dividend is 1st March 2019 and 4th March 2019 respectively.
Outlook: The company is expecting the underlying EBIT to be around 10% higher for FY19 compared to FY18 which stood at $1,269 million. The second half is expected to be softer than the first half of FY19, subject to spread, FX and market conditions. It also stated the businesses in Asia and North America are getting fit and targeting a $20 million improvement in FY19 and full year run rate of $40 million by FY20.
After the positive result, the BSL stock on ASX rose by more than 6.316% to A$13.13 as of 25th February 2019, from the previous closing of A$12.35. The YTD return for the stock has been around 13.82%.
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