BlueScope, North Star Earnings Slump in 1H Fiscal ’23

BlueScope Steel said earnings at its North Star operations in Delta, Ohio, tumbled on lower steel prices in the six months of its fiscal year 2023.

The Australian steelmaker reported underlying ebitda (earnings before interest, taxes, depreciation, and amortization) of $173.4 million in its 1H FY2023 at North Star, down 81% from $925.3 million last year, on sales revenue that fell 39% to $1.10 billion.

In June of last year, the first coil was produced from the $770-million expansion project. Currently, around 2 million tonnes (2.2 million short tons) of hot-rolled coil are produced annually, with the expansion adding 850,000 tonnes of capacity per year, the company said in a statement. The 18-month ramp-up from August 2022 to full run rate is “well underway,” BlueScope added.

Note that North Star’s financial metrics are reported in US dollars. BlueScope Steel, which is based in Melbourne, reports complete financial results in Australian dollars (AUD).

“Demand for North Star’s products remained robust in the half as the business again operated at full capacity,” Mark Scicluna, acting CFO, said in an earnings presentation with investors. He added that this includes an incremental 60,000 tonnes from the expansion project.

The company said that at full capacity, North Star will represent approximately 5% of total annual US flat steelmaking production.

During the half, BlueScope said the supply of hot-briquetted iron (HBI) for North Star continued under the multi-year contract with Cleveland-Cliffs from the latter’s Toledo, Ohio, HBI plant.

Likewise, BlueScope’s overall earnings slumped in its 1H 2023. (See earnings box for details.)

The company attributed lower revenue primarily to lower global steel prices and higher raw material costs.

In its Buildings and Coated Products North America (BCPNA) segment, BlueScope reported ebit of AUS $160.6 million ($111.0 million) in the six months ended Dec. 31, up 497% from AUS $26.9 million a year earlier on sales revenue that rose 70% to AUS $1.27 billion.

BCPNA combines the Buildings North America (BNA), BlueScope Properties Group (BPG), and BlueScope Coated Products (BCP) businesses.

BCP was established via its $500-million acquisition of Coil Coatings in 2022. It is now the second largest metal painter in the US.

BNA’s higher earnings were driven by orders with higher steel prices that were subsequently produced and shipped following the significant softening of steel costs.

BlueScope Recycling was established through the acquisition of the ferrous scrap steel recycling business of MetalX in December 2021. In August 2022, BlueScope acquired an additional ferrous scrap processing business in Mansfield, Ohio, for approximately $80 million.

The company said that BlueScope Recycling supplied 30% of North Star’s scrap requirements in its fiscal 1H 2023.

By Ethan Bernard, ethan@steelmarketupdate.com