BlueScope Steel has reported a $530 million net loss after tax (NLAT) for the first half FY2012, including restructuring costs of $260 million, impairment of deferred tax assets ($184 million) and income advanced under the Federal Government’s Steel Transformation Plan (STP) ($46 million).

 

This compares with a $55 million reported NLAT in the previous corresponding period.

 

Underlying NLAT for the half was $129 million, which includes year end net realisable value (NRV) adjustments of $53 million. Excluding NRVs, the result was $76 million,  compared with $47 million for the prior corresponding period.

 

BlueScope Steel’s Managing Director and CEO, Mr Paul O’Malley said the Company was on track to deliver a full year working capital release of $400-500 million and had initiatives for further debt reduction.

 

The company has deferred the recognition of a tax asset totalling $184 million in respect of tax losses generated during the half year, largely due to export losses and restructuring costs.

 

Mr O’Malley said  a pleasing aspect of the result was the reduction in net debt beyond the impact of the capital raising.

 

"Since the onset of the GFC, BlueScope has acted to overcome the effects of poor global economic conditions and steel industry overcapacity and set the foundation for future business improvement. These include:

  • A cost reduction program that achieved $696 million of cumulative cost savings (relative to our FY2008 cost base) through to June 2011;
  • Restructuring the Asian business, which has since delivered consistent profits and lays the foundation for further growth;
  • Restructuring our North American business, by consolidating the Buildings business and implementing a targeted profit improvement program, resulting in a step improvement in profitability in the first half FY2012;
  • Restructuring the Australian business by closing No.6 Blast Furnace and associated assets;
  • Launching the global Building Solutions business with a strong growth focus
  • Initiating a major performance improvement program for the Australian Distribution and Solutions business
  • Secured advance payment of $100 million STP funding in January 2012.

 

"At 31 December 2011 net debt was $796 million, a reduction of $759 million since October 31 2011 including a working capital reduction of $357 million.

 

“We expect an additional reduction in working capital in the second half, noting in Q3 there will be a seasonal increase in working capital and further payments associated with the restructure of the Australian business. The current total cost of the Australian restructure is still in the range of $430-450 million, of which $350-370 million is expected to be paid in FY2012," Mr O’Malley said.

 

Mr O’Malley said "the operational restructure, with associated plant closures in Australia, significantly reduces our exposure to the loss-making export market. The complex restructure has been implemented by our team very effectively and in a very tight timeframe. This is a positive step in turning around the performance of the Australian business and lays the foundation for a return to profitability."