Rising electricity costs hit BlueScope Steel’s profit

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Rising electricity costs hit BlueScope Steel’s profit

Big emitter BlueScope Steel has warned of tough conditions as it absorbs higher electricity costs and stalling demand from China’s electric car giants.

The steel producer on Monday reported a net profit of $805.7 million for the year to June 30, down from $1 billion a year earlier.

In Australia, underlying earnings fell 30 per cent to $376.9 million on softer building and construction activity and higher costs as housing approvals contracted and a backlog of orders was worked through.

But managing director Mark Vassella said underlying group earnings of $1.34 billion represented a “solid performance” amid economic and industry volatility.

He said strength in ******* States steelmaking had offset the impact of low ****** steel prices on the *********** and New Zealand steelmaking businesses.

Performance in China was softer on lower despatch volumes, particularly from weak demand from electric vehicle manufacturers.

BlueScope warned of a “convergence of macroeconomic challenges” and forecast underlying earnings in the first half of 2025 of $350 million to $420 million amid “sustained low spreads and cost escalation”.

“Inflationary pressures, including higher electricity costs, add to the challenges,” the company said.

A range of green steel projects continue, including a collaboration with Rio Tinto and BHP, as well as the *********** direct reduced iron options study known as Project IronFlame.

BlueScope said it achieved a 12.2 per cent reduction in total steelmaking emissions intensity during the year, against a 2018 baseline, which kept it on track for 2030 targets.

This was driven by the ramp-up of the North Star expansion in the US Midwest, along with operating and process efficiencies at Glenbrook and Port Kembla Steelworks.

The company declared a final dividend of 30 cents per share and extended a share buy-back program, with the remaining $270 million to be completed over the next 12 months.

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