Australia’s second largest steelmaker said the statutory net loss after tax included a $130 million writedown of the LiteSteel Technologies businesses in the United States and Australia.
Underlying net profit after tax from continuing operations for the first half was $78 million and in line with previous guidance of $55-75 million for the first half 2012.
The result excludes the $130 million writedown of LiteSteel, $16 million in transaction costs associated with the purchase of WPG Resources’ iron ore assets in South Australia, $14 million in restructuring costs and $9 million in tax benefits from the previous year.
Sales revenue for the period was $3.7 billion, up 15% from $3.2 billion in the previous corresponding period while underlying operating cash flow came in at $216 million compared to $163 million a year earlier.
Underlying earnings before interest and tax was $156 million, down from $224 million a year earlier.
OneSteel’s mining business contributed $171 million EBIT for the half while mining consumables contributed $65 million of EBIT.
“The benefit of our growth focus on our mining and mining consumables businesses is clearly evident in our results, with these businesses now comprising approximately 40 per cent of total revenues and both businesses delivering significant contributions for the half,” OneSteel managing director and chief executive officer Geoff Plummer said.
However, Plummer said the company’s steel businesses faced a weak market leading to both its manufacturing and distribution businesses reporting EBIT losses.
“Notwithstanding the weak market, we have remained focused on addressing these losses through improved cost and operational performance and expect a significantly better second half as a result,” he said.
Plummer also said the board has decided to assess the benefits of changing the company name to reflect the company’s mining and mining consumables businesses.
“This work is currently underway,” he said.
Looking ahead, Plummer expects iron ore demand from China to remain strong in the short term which will underpin high prices.
OneSteel expects to sell around 6 million tonnes of iron ore this year and expects iron ore sales to lift to around 11Mt once its Peculiar Knob mine is in full production with first sales tipped in the fourth quarter of this calendar year.
Last year, OneSteel purchased of WPG Resources’ iron ore assets in South Australia including the Peculiar Knob project, as well as the Buzzard, Hawks Nest, Mt Brady and Windy Valley tenements for $320 million.
In terms of the mining consumables business, OneSteel expects strong growth particularly in its grinding media markets in the Americas.
The company also expects volumes from its Australian steel businesses to increase around 5% against the previous half year on increased infrastructure and mining work.
This story first appeared on ILN's sister publication ConstructionIndustryNews.net.
