Arrium writedowns sound like OneSteel

Andrew Roberts' time at the helm of Arrium began this week with a $170 million boost from the dollar.

Andrew Roberts' time at the helm of Arrium began this week with a $170 million boost from the dollar.

The steel and iron ore producer is particularly exposed to currency movements, and the slide of the Australian dollar since his appointment in February ensured the profit outlook was noticeably fatter by the time he got his feet under the desk.

But honeymoons don't last forever, and by the end of the week Arrium was sounding a lot like its old pseudonym, OneSteel.

On Thursday evening Arrium revealed $480 million worth of impairments and restructuring costs on its legacy steel, distribution and recycling businesses in Australia and the US.

The announcement was part of efforts to crunch Arrium's steel operations into a single division and was a timely reminder for investors that there is still a struggling steel business beside the group's recent expansion into iron ore exports.

Release of the documents after 6pm on Thursday suggested the company was happy to avoid media attention on the writedowns too.

But despite the curious timing, the investment community seemed to think the writedowns were overdue. Most of the impaired assets have previously been earmarked for sale, and Credit Suisse analyst Michael Slifirski said the impairments were probably triggered by looming transactions.

"The writedown was triggered by near-term market price realisation expectation for the US scrap and domestic pipe and tube assets that have been transferred to 'assets for sale'," he wrote in a research note.

And if Deutsche analyst Emily Behncke is correct, this round of restructuring will not be the last.

"While [the] announcement is a positive move towards restructuring the steel business, we continue to believe there is more to come and believe management will provide further details on the scope and scale of the restructure at its FY13 results on August 20," she wrote.

Investors may not have to wait that long; Mr Roberts will speak to some of them on Monday and will make his first public address at the Melbourne Mining Club on Thursday. The shares rose 3¢ to 83¢ on Friday.

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