The BlueScope Steel Limited (ASX: BSL) share price stormed up the leader board this morning after it posted a 12% profit upgrade.
The BSL share price surged 6.4% to $17.05 in morning trade. This makes it the second best performer on the S&P/ASX 200 Index (Index:^AXJO).
The Service Stream Limited (ASX: SSM) share price is only marginally in front of the BSL share price. The SSM share price jumped 6.7% to $1.85 after it signed a deal with Telstra Corporation Ltd (ASX: TLS).
Profit upgrade boosts the BSL share price
Coming back to BlueScope, management expects first half FY21 earnings before interest and tax (EBIT) to reach around $530 million.
This is ahead of the previous guidance of $475 million and all parts of BlueScope's businesses are performing strongly.
"All operating segments have performed well across the half," said BSL's chief executive Mark Vassella.
"We have seen strong volumes and improving steel spreads in our largest steelmaking business in Australia and the US, along with strong earnings improvements from our other businesses.
"The results are a continued demonstration of BlueScope's operational leverage from our diverse portfolio of businesses."
Firing on all cylinders
The group's Australian Steel Products (ASP) business produced a much better result compared to the previous half. This is due to strong domestic construction and distribution segment demand, particularly for coated and painted product.
Management even went as far as to say it's experiencing the strongest domestic mill sales volumes in a decade as steel spreads continued to strengthen.
It's US North Star division also experienced a rebound. There was a significant increase in benchmark Midwest hot rolled coil prices, above raw material price rises, in recent months.
BlueScope's Building Products Asia & North America segment also recovered from its COVID-19 doldrums.
Small cracks in BlueScope's profit update
But it isn't all good news. The company commented that the earnings surge at its Buildings North America division won't be repeated in the second half of FY21. This is because the first half was bolstered by a $40 million property sale.
Management also added an air of caution as it can't say if the expanding steel spreads that lifted its profits will be sustained.
Volatile macroeconomic and market factors, including the potential of further supply chain and demand disruptions from the pandemic, is convoluting the outlook.
BlueScope will officially release its interim profit results on 22 February, where it will provide further comments on trading conditions.
