Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

BlueScope (BSL) Downgrades Earnings But Commits to Share Buyback

BlueScope Steel Limited (ASX: BSL) has released a market update this morning, reducing earnings forecasts but committing to an extension of the current share buyback.

About BlueScope

BlueScope is the steel producer which spun out of BHP in 2002 and has operations in Australia and throughout the Oceanic region. It’s perhaps best-known for its Colourbond range of products.

Earnings Forecasts

BlueScope announced FY19 underlying EBIT is expected to be approximately $1,350 million, representing a 6% increase on FY18 EBIT (click here to learn what EBIT is). Prior guidance was for an increase of around 10%.

BlueScope says despite North Star sales volumes and operating performance remaining strong, benchmark steel spreads for second half FY19 are now expected to be around US$150/tonne lower than 1H19, compared to the previous estimate of US$130/tonne lower.

In the Building Products sector, Asia and North America markets have been softer than anticipated, while North America margins have also fallen.

Other business sectors have performed in-line with expectations.

Extension of Buyback

BlueScope announced a $250 million on-market share buyback in December 2018 which is now nearing completion. This has been extended and BlueScope will now buy back up to a further $250 million, primarily during 1H20.

Managing Director and CEO Mark Vassella said, “With the transformed business continuing to generate strong cash flow, we are able to pursue a mix of returns to shareholders and investing for future growth.

“We remain committed to our clearly stated financial principles and disciplined approach to capital allocation.”

Summary

While the earnings downgrade will likely weigh on the share price, the extension of the share buyback could help to minimise any loss. This earnings downgrade is a good example of why I try to avoid price-taking businesses that can be hurt by fluctuating commodity prices.

I’d rather invest in one of the businesses mentioned in the free report below.

[ls_content_block id=”14945″ para=”paragraphs”]

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content