BlueScope Steel in ‘stronger position’

BlueScope Steel CEO Paul O’Malley.BlueScope Steel’s struggling Australian businesses had “turned the corner” despite the company’s second consecutive billion-dollar loss, chief executive officer Paul O’Malley said yesterday.

The steelmaker confirmed a $1.04 billion net loss after tax for its financial year, a slight improvement on the previous year.

Shareholders will not receive a final dividend, however the company is confident in a stronger position in future, and expects underlying earnings to near a break-even point by year end.

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Last year, BlueScope slashed steel production in Australia, quit the export market and cut about 1000 jobs, most of them at Port Kembla.

Yesterday it said it had beaten debt reduction targets and completed the Australian restructure, while its Australian businesses were expected to become earnings positive in 2012-13.

Mr O’Malley said exiting the export business was “absolutely the right decision”.

“We set ourselves some very challenging targets to implement that restructure, restructure our business and position ourselves for growth, and we’ve effectively hit just about every single one of those targets,” he said.

“And I think we did it in a way that was very respectful to those employees that we had to displace.”

BlueScope’s billion-dollar loss included $288 million in redundancy and restructuring costs, made up partly of payouts from Port Kembla, while its underlying loss for the year was $238 million.

The company’s share price has rallied in the last week from historic lows after it announced a joint venture with Nippon Steel.

The deal is expected to net BlueScope about $540 million – enough to effectively balance out the company’s debt – in the first three months of next year.

In Australia, ongoing challenges included the strong dollar, energy costs and weak demand.

“We need to make sure that we find every possible opportunity we can to improve productivity,” Mr O’Malley said, adding that the company had completed “most of the significant restructures that we need to”.

Almost half of BlueScope’s anticipated $300 million 2012-13 capital expenditure would be spent in Australia, he said.

BlueScope’s shares closed yesterday at 39.5 cents.

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