Bluescope on track for stronger 2nd half

Bluescope Steel says it's on track for a 2008 second half stronger than the first half, on the back of continuing strong demand and higher global steel prices.

Bluescope says its current expectation for 4th quarter net profit was for a result similar to the company's first half.

At a presentation to analysts, Bluescope Managing Director and CEO, Paul O'Malley, said the company was "on track for a stronger second half ... barring any unforeseen events".

"Unaudited underlying Net Profit After Tax for FY08 - third quarter was $169 million," Mr O'Malley said.

"Our current expectation for NPAT for FY08 - fourth quarter is for NPAT of a similar order of magnitude to the FY08 first half result of $305 million."

Mr O'Malley said Bluescope also expected a "good start" to the 2009 fiscal year, "assuming global steel prices hold", and "notwithstanding the substantial increases in iron ore, coal and scrap prices, effective from 1 July 2008".

He said the expected earnings improvement was due largely to continued strong demand and higher global steel prices, although Bluescope's coated businesses would be challenged by higher feed costs, particularly in the fourth quarter.

"Operationally and on safety measures, the performance across all our businesses continues to be outstanding," Mr O'Malley said.

"In addition, despite the IMSA Steel Corp acquisition having taken our gearing to around 40 per cent in February this year, we have a strong balance sheet and with stronger second half results, we now expect to be within our optimal gearing range of between 30 to 35 per cent by 30 June 08."

In Asia, Mr O'Malley said, Bluescope had lifted earnings, particularly in Thailand, while in North America, the IMSA acquisition, particularly the Steelscape business, already was exceeding expectations.

But the dollar was dragging earnings down, Mr O'Malley said.

"The continued stronger Australia dollar is having a negative effect on earnings and unfortunately this trend is likely to continue."

Bluescope also provided an update on the its Blueprint strategy, saying it was ahead of schedule on delivering its targeted $200 million working capital reduction, originally scheduled for June 30, 2009, with approximately half of that benefit expected to be realised a year early, by June 30, 2008.