NZ Steel limits fall in annual earnings on cheaper coal prices, iron sand exports

Monday 19th August 2013

Australian steelmaker BlueScope Steel's New Zealand unit was able to limit a decline in annual earnings with cheaper coal costs and bigger export volumes of iron sands.

The New Zealand and Pacific segment, which operates the Glenbrook steel mill, reported earnings before interest and tax of A$42.5 million in the 12 months ended June 30, from A$64.7 million a year earlier. Sales to external customers fell 9.4 percent to A$570 million, and intersegment revenue fell 12 percent to A$111 million.

The weaker earnings were put down to lower iron sands prices, and falling international prices combined with a stronger kiwi dollar. That was partially offset by lower coal purchase prices and higher iron sand export volumes, it said. The unit reaped A$20 million in gains on its raw material costs in the second half of the financial year, according to presentation notes published on the ASX.

Higher energy costs and the resilient New Zealand dollar were blamed for weaker earnings in 2012. NZ Steel recently renegotiated its coal contract with ailing state-owned miner Solid Energy at a lower price and for a smaller volume.

BlueScope reported an annual loss of A$84.1 million in the year from a loss of A$1.04 billion in 2012, quadrupling earnings before interest, tax, depreciation and amortisation to A$418.3 million even as sales fell 15 percent to A$7.29 billion.

Group chief executive Paul O'Malley said the New Zealand unit is making progress on growing iron sands exports and that domestic steel markets were improving.

NZ Steel produced 254,900 tonnes of domestic steel and 323,100 tonnes of export steel, keeping volumes flat on the year. Export iron sand volumes climbed 49 percent to 1.7 million tonnes.

BlueScope's ASX-listed shares gained 1.1 percent to A$5.47 in trading on Friday.

BusinessDesk.co.nz

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