Steel Mills
BlueScope Steel Lowers Earnings Estimate for Second Half
Written by Sandy Williams
June 20, 2019
Australian steel producer BlueScope lowered its earnings estimate for FY 2019 based on margins and market conditions. BlueScope now expects an increase in underlying EBIT of 6 percent for the year, down from previous guidance of 10 percent. EBIT for FY 2019 is expected to be around $1.35 billion and $500 million for the second half.
The revised forecast was due to steel margin pressure in North America and softer market conditions for building products in both Asia and North America. Shipment volume and margins are impacted by longer customer lead times at Buildings North America, said BlueScope in its guidance release.
Although sales and operating performance remain strong at North Star BlueScope in Delta, Ohio, HRC steel spreads in the second half of FY 2019 are expected to be approximately $150 per metric ton lower than in the first half, compared to the previous estimate of a $130 per MT decline.
Earnings results are not expected to impact a $700 million expansion at North Star. The company says that plans to add 900,000 to 1,000,000 tons of annual capacity at the minimill are progressing well. BlueScope has commenced a $50 million design and engineering study and will provide updates on the project in August with its FY 2019 earnings results. Air permits have been filed with the Ohio EPA for the expansion that will include a third electric arc furnace and second slab caster at North Star. Construction will take two to three years to complete.
Sandy Williams
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