Tuesday 23 August 2016 by Company updates

BlueScope more than doubles full year profit on cost improvements


BlueScope full year results were impressive with net profit after tax up 119% to $570.5m. The 2018 and 2021 bonds continue to rally with the 2018 bonds expected to be called on 1 November 2016. The current price of the bond is a little over the call price and active traders may want to consider moving now

A strong result was flagged in the company’s previous guidance, with a summary of the key points below:

  • Total revenue was increased by 7% to $9.2bn. Impressively, while revenue growth was moderate the company was able to achieve very strong growth in earnings through cost improvements. Underlying EBIT improved by 89% to $570.5m, with the second half EBIT up 260% to $340.4m. Underlying net profit after tax improved by 119% to $293.1m
  • The company’s guidance shows continued improvement in earnings, with BlueScope expecting 1H17 underlying EBIT to be around 50% higher than 2H16 which was $340.4M
  • Importantly, BlueScope has been able to reduce leverage (net debt to underlying EBITDA) to below 1.0x following the acquisition of North Star last year. Over the 6 months to 30 June 2016, BlueScope was able to reduce net debt by 43% to $778m which was mainly driven by strong operating cashflow. The figures below show the improvement in leverage and net debt following the acquisition of North Star in December 2015. BlueScope will continue to reduce leverage and target net debt sustainably lower than 1.0x underlying EBITDA

Source: BlueScope

The BlueScope US dollar bonds are currently indicatively offered at the following yields to worst:

  • 2018 bond: is pulling to the 1 November 2016 call date @ USD101.781 and currently trading at a little over $102
  • 2021 bond: 3.22% per annum (to the 15 May 2018 call date @ USD103.25)

A link to the results is available here.External link - opens in a new window


Please contact your FIIG representative for further information on the BlueScope US dollar bonds. Prices quoted are accurate as at 23 August 2016, but subject to change. Available to wholesale investors at a minimum face value of USD10,000.