BlueScope Steel (ASX: BSL) shares tank on 1H FY2023 earnings, weak guidance - Kalkine Media

February 20, 2023 04:25 PM AEDT | By Neha Simpy
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Highlights:

  • BlueScope Steel Limited (ASX: BSL) announced its half-yearly fiscal report on Monday, post which shares declined on ASX.
  • In 1H FY2023, the company’s reported NPAT / (NLAT) fell 64% to AU$598.9 million.
  • For 2H FY2023, it anticipates underlying EBIT to fall in the range of AU$480-550 million.

Provider of innovative steel products and materials BlueScope Steel Limited (ASX: BSL) released its six-month fiscal report ended 31 December 2022 and outlook for 2HFY23 on Monday, 20 February 2023. Post this, the BSL stock saw a downtrend and ended nearly 10% lower at AU$17.84 per share.

Company Name Market Price
(AU$)
Market Cap
(AU$)
Yearly Return
(%)
Dividend Yield
(%)
PE Ratio
(x)
YTD
(%)
52W High
(%)
52W Low
(%)
BLUESCOPE FPO [BSL] 17.84 8.317B 4.15 2.53 3.48 17.70 22.43 14.74

*Data powered by Morningstar®. Data delayed 20 minutes unless otherwise indicated. Read More
as of 20/02/2023, 04:26:04 PM AEDT

During 1H FY2023, lower global steel prices impacted its sales revenue from continuing operations, which stood at AU$9,323.8 million, down 1% from 1H FY2022’s AU$9,418.7 million. Reported NPAT / (NLAT) of the company plunged 64% to AU$598.9 million versus AU$1,643.5 million in the prior corresponding period, mainly due to lower underlying EBIT. Reported earnings per share of BSL also fell 61% to 128.2 cents from 329.1 cents in pcp.

Further, in 1H FY2023, underlying EBITDA came in at AU$1,172.2 million, down 52% from AU$2,461.0 million in pcp. Underlying EBIT was AU$851.1 million, plummeting 61% from AU$2,204.1 million in 1H FY2022 due to softer steel spreads and lower volumes (particularly at Australian Steel Products and New Zealand & Pacific Islands), combined with higher costs.

On 31 December 2022, the company held a cash balance of AU$1,918.4, increasing from AU$1,902.9 in pcp.

BlueScope Steel’s 1H FY2023 segmental performance

During 1H FY2023, sales revenue from Australian Steel Products rose 3% to AU$4,089.7 million from AU$3,963.0 million in pcp primarily due to higher realised domestic selling prices.

North Star, one of the most efficient steel mills in North America, in 1H FY2023, noted sales revenue US$1,633.6 million falling 33% from US$2,436.5 million. It was mainly due to significantly lower realised selling prices, which declined in line with Midwest benchmark hot rolled coil prices.  

Buildings and Coated Products North America sales revenue was 70% up to US$1,269.3 million. While Building Products Asia and North America sales revenue fell 2% to US$ 2,117.7 million,

New Zealand & Pacific Islands sales revenue in 1H FY2023 declined 11% to NZ$461.7 million because of lower despatch volumes and the unfavourable translation impact of a weaker New Zealand dollar partially offset by higher realised selling prices.

BlueScope Steel’s 1HFY2023 dividend

In 1H FY2023, the company declared a 100% franked dividend of 25.0 cents per share. Its current capital management policy is to dispense a minimum of 50% of free cash flow to stakeholders in the manner of steady dividend distribution and buy-back programmes.

The 1H FY2023 dividend will be paid on 28 March this year. BSL stock goes ex-dividend on 24 February for the dividend mentioned above, and 27 February is the record date for the same.  

Around AU$120 million of stock was purchased via a buy-back programme in the first half of FY2023. On Monday (today) BlueScope Steel board gave its nod for extending the buy-back programme, for the remaining amount up to AU$380 million to be purchased over the next one year.

BlueScope Steel’s 2HFY2023 outlook

For 2H FY2023, the company anticipates underlying EBIT to fall between AU$480 million and AU$550 million. Lower steel spread in Asian and Midwest are likely to impact its earnings in the second half of the current fiscal, the company said.

From its different segments, BlueScope Steel anticipates results around a third lower than 1H FY2023 from Australian Steel Products, while result expectations from North Star are nearly half of 1H FY2023.


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