BSL/Bluescope

BSL, a highly cyclical steel maker.

The table below shows you several things, one, the result was a beat relative to street (that’s good!) and two, just how volatile those earnings can be (see the EPS declines from the massive S1’22 result).

The US arm is looking quite positive, overall, given the to date lack of impact from prior monetary tightening. Many firms termed out their debt at low rates, and many households enjoy fixed rate mortgages. As such the rate on outstanding (as opposed to marginal) debt is quite modest.

The Aussie arm did cite some weakening towards the end of the half, which might have taken a touch off the markets reception of the result…

…with guidance suggesting a weaker half.

And the NZ business called out a similar dynamic.

This makes sense, given that in our view, the NZ economy is in recession.

Really we’ve been surprised NZ is not weaker or more negative.

And that comment is predicated on macro data that looks like this. PMI’s, retail sales, GDP all fairly grim; that said, some of the survey data is screening better, and that may be reflected in Bluescopes better than expected performance to date.

Still, the 2H FY24 EBIT guided number ($620-$690m) was considerably ahead of street (closer to $600, so the low end of the guided range is above consensus) on a stock that has a strong balance sheet (they are net cash) should be well regarded.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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