Australia's BlueScope steel reports 24 percent rise in profits-Biz World

Australia's largest steelmaker BlueScope Steel on Monday reported a 24 percent rise in first-half profits and said it expected full-year earnings to exceed those of last year.

BlueScope Steel Ltd said stronger volumes and higher prices combined with unprecedented global demand for steel products pushed net profit for the six months to December to 388 million dollars (308 million US) from 312 a year earlier.

Forecasts had been for an interim profit 360 million dollars.

The interim net profit was also above the full-year net profit of 337.6 million dollars reported for the year to June 2006.

In that fiscal year, BlueScope's profit plunged 66 percent due to lower prices for slab, hot rolled coil and coated steel as well as higher raw material costs.

BlueScope chief executive Kirby Adams said all business segments were profitable in the latest half and that revenue in the first half rose 16 percent to a record 4.528 billion dollars.

"The key factors for the earnings improvement were higher sales volumes, higher steel prices internationally and a higher spread for North Star BlueScope Steel, partly offset by higher metal coating costs (principally zinc) and higher raw material costs," Adams said.

Adams said while global demand for steel products was at record levels, growth in steel production in China was slowing and further rationalisation was expected as Beijing steps up its closure of uneconomic mills.

"Strong economic performance and significant investments in capital goods and infrastructure, particularly in emerging economies, is driving (global) demand for steel to over 100 million metric tons per month," he said.

Adams said the group did not expect its second-half financial result to be as strong as the first-half due in part to moderately lower prices globally as well as market uncertainty in Thailand and a strengthening Australian dollar.

"Despite these issues, we expect the full-year financial results to be a significant improvement over the previous year and another step forward in the growth of BlueScope Steel," Adams said.