BlueScope optimistic despite challenges in domestic market
While pointing to the positive impact of the weaker dollar and lower interest rates on the outlook this financial year, steelmaker BlueScope was wary of signalling a strong earnings upswing, with domestic conditions remaining "challenging".
The steelmaker forecast a December half underlying profit in line with that earned in the second half of the 2013 financial year, indicating a $19.7 million profit. This is before any asset write-downs or taking the impact of currency movements into account, it said.
Addressing Thursday's annual meeting, chairman Ron McNeilly was cautious in indicating when dividends would be resumed, saying only that it would be "as soon as possible".
In the US, earnings remain strong, with Asian trading conditions steady, but with China a little softer. Domestic volumes were slightly better than the June half, managing director Paul O'Malley said, "but generally the Australian market remains challenging", especially with the Australian dollar rising against the US dollar in recent months.
"Recent improvements in residential housing approvals and house price rises are good leading indicators for the performance of the residential construction end-use market," Mr O'Malley said.
"Other segments such as non-residential construction and manufacturing may take longer to respond, with the latter dependant on depreciation of the Australian dollar."
In New Zealand, steel demand remained firm but the stronger currency against the Australian dollar would weigh on earnings along with soft iron sands prices.
The Chinese market was experiencing "soft demand", shareholders were told.
Initial sales of coated steel product had been made to Japanese home appliance manufacturers following the joint venture launched with Japanese group Nippon Steel Sumitomo Metal.