Bluescope share price lifts 5% on record earnings

The company has announced big increases in profits and cash flow.

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Key points

  • The Bluescope share price is higher on Monday amid the release of the company's FY22 results
  • The company announced a 135% increase in NPAT over the FY21 figure
  • It's also declared a final unfranked dividend of 25 cents per share

The Bluescope Steel Ltd (ASX: BSL) share price is higher on Monday after the company impressed investors with its FY22 results.

Shares in the steel producer currently trade hands for $17.74 each, a 5.03% gain, after reaching a high of $18.02 earlier in the session. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.33% at the time of writing.

Let's check the highlights of the company's FY22 results.

What did Bluescope report?

  • Revenue of $19.03 billion, up 47% on FY21
  • Record underlying EBIT of $3.79 billion, up 119% on FY21
  • Net profit after tax (NPAT) of $2.81 billion, up 135.49% on FY21
  • Net cash flow from operating activities of $2.47 billion, up 40% on FY21
  • Final unfranked dividend of 25 cents a share

The company reported significant growth in its top and bottom lines despite facing geopolitical and macroeconomic challenges.

Bluescope benefitted from more favourable steel spreads in FY22 which, in turn, contributed to its higher earnings. 2.5 million tonnes of steel was shipped domestically in FY22 as demand held strong.

The company reported strong earnings before interest and taxes (EBIT) performance across all of its operating segments.

Its North Star segment was up 181% on FY21 to $1.9 billion. Australian Steel Products was also up 92% to $1.29 billion while New Zealand and Pacific Islands recorded a 76% increase to $229 million.

Bluescope also announced it would continue to return value to its investors by expanding its share buy-back program.

It also declared a final unfranked dividend of 25 cents per share. The company says having "exhausted
Australian tax losses in FY2022", it expects to begin to frank dividends in FY23.

What did management say?

In commenting on the results, Bluescope Managing Director and CEO Mark Vassella said:

We saw continued strong demand for our steel products and solutions despite recent macroeconomic and geopolitical volatility. We worked hard to improve our service levels which have been impacted by supply chain and pandemic-related disruptions. It's truly heartening to see our people continue to step up, to serve our customers, and to operate safely and with great resilience. This record result is their record result.

He added:

BlueScope has delivered for shareholders in FY2022. The Company made nearly $1 billion in shareholder returns, with $344 million in dividends and $638 million in on-market buy-backs.

What's next?

The outlook for 1H FY23 is less optimistic, with forecast earnings before interest and taxes (EBIT) of $800 to $900 million. That's well down on the FY22 underlying EBIT figure of $3.79 billion.

The company noted that the commodity spread for HRC [hot-rolled coil] steel is expected to deteriorate significantly in US Midwest and Asian markets.

Bluescope share price snapshot

The Bluescope share price is down 15% year to date. It's underperforming the wider S&P/ASX 200 Materials Index (ASX: XMJ) which is down 3.47% over the same period.

Bluescope has a current market capitalisation of $8.3 billion.

Motley Fool contributor Matthew Farley 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 Scott Phillips.

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