Australia’s largest steel maker BlueScope has had a 91 per cent dive in full-year profit after a $197 million write-down of its New Zealand and Pacific Islands operations.
BlueScope reported net profit after tax of $96.5 million, but maintained the same shareholder dividend as this time last year of eight cents per share, unfranked.
The company in July warned of the write-down for New Zealand and the Pacific Islands, based on projected lower earnings.
This regional arm had a $95.7 million decline in sales revenue because of lower steel prices, the forced closure for four weeks due to New Zealand’s COVID-19 measures, and an inability to cut costs.
Management has reviewed operations and is expected to make changes, including redundancies, which will save up to $50 million.
Its warned that if its plan does not achieve these savings, it may close steelmaking operations in Glenbrook, New Zealand.
The virus also impacted other regions. Demand for building materials fell, along with prices. In the US, major car makers who use BlueScope materials stopped production for about eight weeks.
In Australia, domestic sales volume was up three per cent on the 2019 full-year figure. However the 5 per cent ($289.4 million) drop in revenue was due to weaker prices.
The revamp of the New Zealand and Pacific Islands operations, as well as the $1 billion expansion of its North Star steel mill in the US, are top priorities this financial year.
The company said there was a high level of uncertainty in its outlook due to the virus and could not offer earnings guidance.
Its shares were higher by 1.57 per cent to $12.26 at 1540 AEST.