The BlueScope Steel Limited (ASX: BSL) share price is getting attention on Wednesday morning following its latest announcement.
Shares in the big-name steel producer are swelling by 2%, trading at $18.30 per share in the process. Although, earlier in the session, the company’s shares hit an intraday high of $19.24. For context, it is a rather green morning on the ASX. The S&P/ASX 200 Index (ASX: XJO) is trading 1.05% higher within the first hour of the morning bell.
Second half looks more solid
Working in a commoditised business, much of BlueScope’s financial success comes down to the market price of steel. Today, the $8 billion steel manufacturer has informed investors that this time prices are working in its favour.
According to the release, shareholders are in for a better than previously expected result for the second half of FY2022. The company has lifted its forecast for underlying earnings before interest and tax (EBIT) to between $1.375 billion to $1.475 billion. Whereas, the prior guidance was for $1.2 billion to $1.35 billion.
The guidance revision represents an approximate 15% lift to the lower range and around 9% increase to the higher end. This improvement is likely behind the strong BlueScope share price today. However, BlueScope caveated this guidance by noting it was subject to spread, foreign exchange, and market conditions.
Importantly, the reason for the upgrade is the stronger outlook laying ahead for the company’s North Star and North America coated business. Meanwhile, the other areas of BlueScope’s operations remain in line with prior guidance.
Commenting on the update, BlueScope managing director and CEO Mark Vassella said:
Throughout recent macroeconomic and geopolitical volatility, BlueScope has continued to demonstrate strength and resilience in its business performance.
In the current strong demand environment, the entire BlueScope team is working as hard as they can to improve our service levels, which have been impacted by supply chain and pandemic-related disruptions.
The company’s full-year results are expected to be released on 15 August 2022.
BlueScope share price recap
The BlueScope Steel share price is down 16.5% since the beginning of the year, despite steel prices being slightly higher.
It appears the market is cautious about valuing BlueScope based on its current earnings. The reason for this observation is the company currently trades on a price-to-earnings (P/E) ratio of 3.6 times. Comparatively, the metals and mining industry carries an average P/E of 10.4 times.