BlueScope’s $439M Impairment Signals Risks in North American Turnaround

FY2025 Financial Performance

BlueScope Steel Limited reported a challenging financial year for FY2025, with sales revenue falling 4% to $16.25 billion and underlying earnings before interest and tax (EBIT) plunging 45% to $738 million. The company attributed this decline primarily to softer steel spreads and lower selling prices across its key markets, including Australia, North America, and Asia.

The reported net profit after tax (NPAT) suffered an even steeper fall of 90%, down to $83.8 million, heavily impacted by a $439 million impairment charge related to its BlueScope Coated Products (BCP) business in North America. This impairment reflects operational inefficiencies, lower volumes from foundational customer contracts, and the effects of shifting US trade policies that have delayed the ramp-up of BCP’s branded product offerings.

Balance Sheet Strength and Capital Management

Despite the earnings headwinds, BlueScope maintained a robust balance sheet, finishing the year with a modest net debt position of $28 million and liquidity of $2.8 billion, which includes $778 million held in the NS BlueScope Coated Products joint venture. The company returned $293 million to shareholders through dividends and on-market buy-backs during FY2025.

The Board declared a 50% franked final dividend of 30 cents per share, complementing the fully franked interim dividend paid earlier in the year. Additionally, the buy-back program was extended to allow up to $240 million of shares to be repurchased over the next 12 months, reflecting a disciplined approach to capital allocation amid ongoing macroeconomic uncertainty.

Operational Highlights and Strategic Initiatives

BlueScope’s multi-domestic business model showed resilience, with North Star BlueScope Steel in Ohio delivering over $500 million in underlying EBIT, supported by debottlenecking investments. Australian operations saw solid demand for branded products like COLORBOND® and TRUECORE® steels, while Asia experienced mixed results with steady performance in Southeast Asia but softness in China.

The company is actively pursuing cost and productivity improvements, achieving $130 million in net savings in FY2025 and targeting over $200 million in FY2026. Longer-term growth initiatives aim to add $500 million in annual earnings by 2030, driven by organic growth, capital projects such as the 6BF reline at Port Kembla, and realisation of value from a 1,200-hectare portfolio of surplus and adjacent landholdings.

Safety, Sustainability, and Governance

Safety remains a priority with ongoing implementation of the global “Refocus on Safety” program, although the total recordable injury frequency rate (TRIFR) of 8.5 remains above the company’s long-term target. On sustainability, BlueScope achieved a 14% reduction in steelmaking greenhouse gas emissions intensity since FY2018, in line with its 2030 targets, and progressed key decarbonisation projects including Project NeoSmelt and the Electric Arc Furnace installation at Glenbrook, New Zealand.

Governance updates include the retirement of long-serving director Ewen Crouch AM and the appointment of US-based Cheri Phyfer to strengthen North American expertise. New executive appointments in legal, sustainability, and property development roles underscore the company’s focus on strategic priorities and value realisation.

Outlook and Market Conditions

Looking ahead to the first half of FY2026, BlueScope expects underlying EBIT in the range of $550 million to $620 million, assuming stable to improving steel spreads and foreign exchange rates. The company anticipates moderate recovery in Australian construction activity and improved spreads in the US, while continuing to manage cost, capital, and capability levers amid mixed macroeconomic conditions.

While the impairment of BCP highlights ongoing integration and market challenges, BlueScope remains confident in the medium to long-term prospects of its North American coated products business and its broader multi-domestic strategy.