BlueScope Steel has sharply lifted its payout and announced a $250 million share buyback after more than doubling full-year net profit.
Australia’s largest steelmaker is also studying an expansion of its North Star facility in the US that could see it invest up to $US700 million ($A954 million) over two to three years, amid a protectionist tariff policy by US President Trump’s administration on steel and aluminium imports.
The company unveiled net profit of $1.57 billion for the 12 months ended June 30, a 119 per cent increase from a year ago.
The result was boosted by one-off gains totalling $743.1 million, relating to tax offsets and the reversal of last year’s Australian steel products plant and equipment impairments.
It posted a nine per cent rise in revenue to $11.49 billion.
Chief executive Mark Vassella said strong demand and improved profit margins had resulted in the company’s best half since December 2008.
“We have a simple and sustainable strategy across a complex and diverse business that is working,” he said in a statement.
“Our businesses are generating strong cash earnings. The balance sheet is in good shape.”
Underlying profit after tax, which strips out the effect of one-off items, rose a steady 27 per cent to $826 million.
The bulk of this was contributed by the Australian Steel products division, where underlying earnings before interest and tax jumped 28 per cent, while the North Star steel operations also reported a 6 per cent rise in underlying earnings as demand from US auto and construction industries continued to be robust.
For the first-half of 2018/19, BlueScope is forecasting a 10 per cent jump in underlying earnings from the $745 million booked in the second-half of 2017/18.
The North Star expansion, if approved, would add between 600,000 to 900,000 tonnes to the plant’s current production of 2.1 million tonnes, Mr Vassella said.
BlueScope said it will pay a final dividend of eight cents per share, up from five cents paid a year ago. It will also launch a $250 million share buyback in the first half of 2018/19.
By 1430 AEST, BlueScope shares were down 17 cents, or 0.95 per cent, to $17.71.
BLUESCOPE DOUBLES 2017/18 FULL-YEAR PROFIT:
* Net profit of $1.57b vs $0.72b a year earlier
* Revenue of $11.5b, up 9pct
* Unfranked final dividend of 8 cents vs 5 cents