SYDNEY (Thomson Financial) - Australia's largest steel maker, BlueScope Steel Ltd, said Monday that its net profit for the half year to December fell to 115.9 million Australian dollars from 387.8 million dollars as it encountered higher costs and wrote down the carrying value of some underperforming Asian operations.
Underlying operational net profit of 305 million dollars, excluding non-recurring items, was slightly better than market expectations.
BlueScope said it expects better earnings in the second half.
'Directors are expecting an improvement in earnings largely driven by steel price increases based on strong steel demand,' said chief executive Paul O'Malley
'First half underlying operational EBIT (earnings before interest and tax) was down 21 percent on the corresponding half last year, primarily due to raw material cost while a higher Australian dollar also hurt earnings,' he said.
O'Malley said decisions to write down, in value, coating facilities at Suzhou in China by 190 million dollars and a further 35 million dollars against operations in Vietnam impacted on the first-half result.
'These decisions are largely driven by the outlook for coated margins in China and Vietnam remaining very tight, resulting in a reassessment of future cash flows from both of these facilities,' he said.
'Elsewhere in Asia, our Indonesian and Malaysian businesses continued to deliver stable financial performance and both have had very good operational performance. In Thailand, we continue to be affected by soft domestic demand.'
The company will pay an interim dividend of 22 cents a share, up from 21 cents a year earlier.
(1 US dollar = 1.08 Australian dollars)
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