Why the BlueScope (ASX:BSL) share price hit a record high today

The steel producer is poised to impress investors this earnings season…

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The BlueScope Steel Limited (ASX: BSL) share price is on the move today following the steel producer's business update.

At the time of writing, BlueScope shares are up 2.59% to $23.55. It's worth noting the company's share price hit a record high of $24.05 during market open.

Three workers jump in the air at a steel factory.

Image source: Getty Images

How did BlueScope perform in FY21?

Investors appear buoyed by the company's latest news to the ASX, sending the BlueScope share price into uncharted territory.

According to its release, BlueScope is expecting a record second-half result for the six months ending 30 June 2021.

The group expects preliminary unaudited FY21 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be around $1.72 billion. The second half is estimated to contribute roughly $1.19 billion to the strong result. This compares to a prior guidance of $1 billion to $1.08 billion for EBITDA.

BlueScope highlighted two of the biggest contributing factors to its performance since its late April market update. They included:

  • An increase in hot-rolled coil (HRC) steel prices in the United States Midwest benchmark, surpassing forecasts and positively impacting realised spreads at North Star and the North American coated business; and
  • A stronger than expected demand and realised spreads in Australia and New Zealand.

The company noted Australian Steel Products (ASP) jumped roughly 60% compared to H1 FY21. It revealed demand for domestic construction, distribution and manufacturing continued to surge, particularly for coated and painted products.

BlueScope stated that at North Star, realised spreads were significantly stronger. This led to a preliminary second-half record of underlying earnings before interest and taxes (EBIT) of approximately $600 million.

The Building Products Asia and North America segment also grew, up 20% on H1 FY21. Again, this was predominantly from the North American coated business and increased steel prices.

New Zealand and Pacific Islands' performance improved by 25% on the prior period. Strong domestic demand and higher realised steel prices more than offset the higher energy costs encountered.

Management commentary

BlueScope managing director and CEO Mark Vassella said:

This is an outstanding result – our best underlying EBIT performance since demerger in 2002. The business has gone from strength to strength in the second half of FY21 and all operating segments have delivered significantly better results than FY20.

The results reflect the positive macroeconomic environment with strong demand for our products, and the quality of our diverse portfolio. While the COVID challenge remains, our performance is a great tribute to the professionalism and dedication of the entire BlueScope team who have operated with great resilience through the pandemic.

BlueScope is planning to release its audited full-year FY21 financial results on 16 August 2021.

About the BlueScope share price

Looking at the past 12 months, BlueScope shares have continued their impressive run to post an all-time high of $24.05 today. The company's share price has come a long way from when it was trading for as little as $8 last year.

On valuation grounds, BlueScope has a market capitalisation of $11.5 billion, making it the 43rd largest company on the ASX.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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