Bluescope Steel has shifted its focus to pursuing growth opportunities from restructuring its operations after heavy write-offs and losses over the past four years, which included closing one of its two blast furnaces.
"The major restructuring is done and (is) being implemented," the company's managing director, Paul O'Malley, told journalists when discussing the group's first half performance.
BlueScope Steel RAW Video
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BlueScope Steel RAW Video
BlueScope Steel CEO and Managing Director Paul O'Malley comments on their half year results and outlook.
In the six months to December, Bluescope posted a net loss of $12 million, while forecasting a small profit for the second half, which holds the prospect of a break even performance for the full year.
"We expect to be profitable at this very low point in the market," Mr O'Malley said of the group once the restructuring is completed.
"We have to change our focus to increase sales, increase new product implementation."
Bluescope will launch its new generation zincalum product mid-year, after a 20-year research and development program which is expected to underwrite the near term fortunes of the company's coated sheet products division. It is spending $60 million to alter production lines so it can begin manufacturing the new product.
As well, a final decision is to be made by the end of the year on the expansion option to be pursued at its half-owned venture, North Star Steel in the US.
The partners are considering a $400 million program to either boost capacity or to install a direct reduction iron unit, which would help lower costs.
The venture produces around 2 million tonnes of steel annually, which is well above its rated capacity of 1.5 million tonnes, with just 400 employees.
'Small' profit flagged
Bluescope this morning said it was experiencing stronger demand in the US but weaker demand in China after flagging a break-even profit for the year to June.
The manufacturer’s loss in the six months to December 31 was an improvement from a $530 million loss in the same period in the previous year.
BlueScope shares jumped 12.5 per cent to $4.24.
"We are seeing better activity in the US ... but China is probably a little softer," the managing director, Mr Paul O'Malley told analysts.
"There is a lot of growth in South East Asia. We have to get our skates on to get that."
The previous corresponding period’s loss was a result of massive restructuring within the business, including job cuts, aimed at overcoming the impact of the high Australian dollar and strong competition from overseas.
BlueScope’s underlying net profit in the six months to December, which excludes one-off charges, was $10 million, up from a loss of $136 million in the previous corresponding period.
The company this morning said it expected continued improvement in its underlying profit in the second half of the financial year, forecasting a small profit for the period.
Additionally, the company has just won its first order in Russia for a prefabricated steel building, which it is to supply out of the US, he said.
A revival of demand in China "will depend on credit easing, and I think that is on the cards," Mr O'Malley said.
After the closure of one of its steel blast furnaces at Port Kembla, along with cutting processing capacity at the steel works and also at Western Port in Victoria, Bluescope is hoping to return to the black.
"For the first time in four years we're looking at reporting a profit," Mr O'Malley said. "We have turned the business around. The foundation is there for growth."