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Australian steel company BlueScope Steel Ltd. today reported a $530 million net loss after tax (NLAT) for the first half FY2012, including significant one-off restructuring costs of $260 million, an impairment of deferred tax assets of$184 million and income advanced under the Federal Government’s Steel Transformation Plan (STP) of $46 million. The 1H FY2012 NLAT is 9.6 times larger than the 1H FY2011 NLAT of $55 million.
The WSJ is reporting that the company has hired JP Morgan to sell its North American assets, which the company has alluded to liquidating in the past.
The company alluded to further growth at its Delta, Ohio Northstar-Bluescope joint venture (with Cargill) but did not give an update to previously disclosed potential to raise the plant’s capacity from 2.1mtpy to 2.5mtpy with the addition of a second caster.
Underlying NLAT Almost Triples Y-O-Y
Underlying NLAT for the half also grew dramatically year-over-year, totaling $129 million, which includes year-end net realizable value (NRV) adjustments of $53 million. Excluding NRVs, the result was $76 million. This is 2.7 times the underlying NLAT of $47 million for the prior corresponding period in 1H FY2011.
BlueScope Plans Debt Reduction
Company executives say it is on track to deliver a full year working capital release of $400-500 million and has initiatives for further debt reduction. The company has deferred the recognition of a tax asset totaling $184 million in respect of tax losses generated during the half year, largely due to export losses and restructuring costs. BlueScope has deferred the recognition of any further tax asset for the Australian tax group until a return to taxable profits has been demonstrated. Australian tax losses are able to be carried forward indefinitely.
As of December 31, 2011, net debt was $796 million, a reduction of $759 million since October 31 2011 including a working capital reduction of $357 million. BlueScope expects an additional reduction in working capital in the second half, noting in Q3 FY2012 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
2H Outlook Includes Lower NLAT
For 2H FY2012, BlueScope expects a slightly lower underlying Net Loss After Tax (excluding period end net realizable values (NRVs) and/or impairments, subject to spread, currency exchange rates and market conditions, compared with the 1H FY2012 result, including expectation of a return to a profitable underlying run rate by the end of FY2012.
Source: BlueScope Steel, Wall Street Journal
