BlueScope Steel said it expects booming new home building in Australia and the weaker Australian dollar to drive earnings growth through 2015 as the steel giant rewarded shareholders with their first dividend in four years.
The steel giant on Monday reported a 62 per cent jump in underlying half-year profit to $79.6 million as the fall in the Australian dollar against the US dollar and stronger steel margins boosted profits.
BlueScope chairman Graham Kraehe said the result showed the group's turnaround has been successful.
"Strategic investments in Australian and international growth markets are already translating into earnings performance," he said.
BlueScope declared a franked interim dividend of 3¢ per share, the company's first dividend since it declared an interim dividend of 2¢ in February 2011.
Group sales for the six months ended December 31 rose 9 per cent to $4.35 billion due to contributions from recent acquisitions, stronger volumes in North America and the more favourable exchange rate.
The company said it expects earnings before interest and tax in the second half of the year to be up to 20 per cent stronger than the $113.3 million underlying EBIT reported in the second half of 2013-14.
Underlying EBIT for the current half rose $33.3 million to $169.7 million, buoyed by a big turnaround in the Australian Steel Products division.
Stronger residential home building in Australian is bolstering demand for BlueScope's Colorbond steel products although weaker mining and engineering demand weighed on sales of hot rolled coil.
BlueScope's iron sands mining and export operation in New Zealand was weaker due to the collapse in iron ore prices. The company has been investing to expand its iron sands capacity, the operation is EBIT and cash break-even at $US60 a tonne iron ore prices.
The group expects weaker iron ore prices to weigh on the iron sands business gooing forward.
BlueScope new home building and the weaker dollar will continue to boost earnings but recent falls in Asian and US spot steel prices will crimp group margins.
"In the medium term, BlueScope is very well positioned to capture growth in the markets of each of its fie segments," BlueScope chief executive Paul O'Malley said
Source: The Sydney Morning Herald
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