BlueScope (ASX:BSL) share price on watch after FY21 results

BlueScope just reported a triple digit jump in earnings and a special dividend.

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The BlueScope Steel Limited (ASX: BSL) share price could be a mover on Monday after the company released its FY21 results.

There shouldn’t be too many surprises in the results after the company released its preliminary unaudited FY21 earnings before interest and tax (EBIT) last month.

At Friday’s close, the BlueScope share price was trading at $25.49, up 2.66% for the day.

What might impact the BlueScope share price on Monday?

The BlueScope share price will be in focus today after the company delivered a well-rounded result with triple-digit increases across key financial metrics. Highlights included:

  • Underlying EBIT of $1.72 billion, up 207% on FY20.
  • Reported net profit after tax of $1.19 billion, up 1,222%.
  • Free cash flow of $898 million, up 277%.
  • Net cash of $798 million, up from $305 million at 31 December 2020.
  • Final dividend of 25 cents per share plus a special dividend of 19 cents per share.
  • Buy-back of up to $500 million.

What happened in FY21 for BlueScope?

The BlueScope share price has been a top performer in 2021, rallying 44.9% year to date. Its strong performance has been underpinned by firm steel prices and strong demand from advanced economies.

The company’s Australian steel products division, which contributed to $674.3 million in EBIT (around 39%) reported it had experienced the highest domestic dispatch volumes since FY2008, driven by record demand across both residential and non-residential construction segments.

Similarly, BlueScope’s North American steelmaking business, North Star, also delivered a record $677.2 million in EBIT (also around 39%) thanks to record steel prices and spreads. The company also pointed to “an improved COVID-19 situation, low interest rates and significant infrastructure program supporting improved optimism and robust economic momentum” as key drivers of its result.

In addition, BlueScope’s building products Asia and North America division experienced a strong improvement on the prior half driven by margin expansions in North America and a continued robust performance across South East Asia, China and India. The building products division contributed $333.5 million or 19% to overall EBIT.

What did management say?

BlueScope managing director and CEO Mark Vassella commented on the record performance:

Underlying EBIT for the year was $1.72 billion, tripling that of FY2020. This is an impressive result. All
operating segments performed exceptionally well – driven by strong demand and steel spreads. Earnings momentum built throughout the year, with the Company delivering $1.19 billion in underlying EBIT in the second half.

Vassella shed light on the company’s strategic growth plans, highlighting the following:

Our balance sheet strength and cash flows give us confidence to implement a strategy that will see BlueScope:

– Invest for the long-term growth and resilience of the Group.
– Position the business for a low carbon future, with our near-term action underpinned by a five-year climate investment program of up to $150 million.
– Continue to deliver stronger returns to shareholders.

What’s next for BlueScope?

Investors will be keeping an eye on the BlueScope share price today after the company said “at the beginning of 1H FY2022, order and dispatch rates in key markets remain robust” while “spot steel spreads in North America are materially higher than both 2H FY2021 and long-term averages”.

As a result, the earnings landscape continues to improve for BlueScope. The company forecasts underlying EBIT in 1H FY2022 to be in the range of $1.8 billion to $2.0 billion. By comparison, 1H FY2021 underlying EBIT came in at $531 million.

Despite the outstanding result and positive forecasts, the company flagged that “while in the medium term we see supportive industry and end use demand trends, it is uncertain how long the current robust conditions will be sustained.”

Based on the current BlueScope share price, the company has a market capitalisation of around $12.8 billion.

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Motley Fool contributor Kerry Sun 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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