Steel Mills
BlueScope Withdraws Earnings Guidance Due to Global Challenges
Written by Sandy Williams
March 18, 2020
Australian steelmaker BlueScope withdrew its earnings guidance for the second half of FY 2020 based on challenges it foresees related to the COVID-19 global outbreak.
Previously, the company believed earnings would be similar to 1H FY 2020 earnings of $302.4 million. Although group performance to date, including stable performance at North Star BlueScope, has been in line with expectations, unprecedented economic uncertainty related to the spread of the virus and its subsequent disruption to business activity has prompted BlueScope to withdraw its outlook for the second half.
“Over the past few weeks, the increasing rate of COVID-19 transmission across the globe has seen a rapid expansion in the measures taken by governments to slow the rate of infection, with a corresponding decline in sentiment and economic outlook. Most recently we have experienced business interruption due to a national shutdown in Malaysia, and overnight it was announced that a number of automakers in North America would temporarily cease production. It is not yet clear what impact this will have on North Star’s dispatch volumes.”
BlueScope based its forecast on a lower east Asian hot-rolled coil price of $465 per metric ton compared with its assumption of $510 MT for the first half, an average 62% Fe iron ore price of $85/t cfr China that was down from $95/MT and a benchmark hard coking coal price of $160/MT fob Australia that was down from $170/MT. The forecast also assumed U.S. minimill benchmark steel staying reasonably flat at $288/MT in line with the first half, with an exchange rate of U.S.$0.69 to an Australian dollar, said BlueScope. The Australia dollar is now worth around $0.58.
Sandy Williams
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