BlueScope announced it is taking pre-emptive steps to bolster its financial strength in a period of global economic uncertainty caused by the spread of COVID-19.
BlueScope managing director and chief executive officer, Mark Vassella said, “We are drawing on all our resources, experience and expertise to keep our employees, customers and communities safe and to look after their health and wellbeing. We are also taking direct action to maintain the financial strength of our business.
Operational update
“In most countries in which we operate, to date steelmaking, including its supply chain, has been viewed as an essential service and allowed to continue to operate safely. In line with advice from medical experts, we have implemented comprehensive hygiene measures at all operating sites, removal of all non-essential personnel, strict distancing protocols and regular health checks. BlueScope’s sites have low employee density, with a high degree of automation enabling sites to be operated with minimum employees in attendance. However, in certain jurisdictions our operations have temporarily closed in line with government shutdowns.”
Operations in Malaysia and India have temporarily closed. Operations at the New Zealand Steel have shut down for four weeks, adhering to government orders. Key equipment is being maintained to ensure longevity and safety.
“Elsewhere in Asia, as flagged three weeks ago, our China operations are ramping up in line with the progressive resumption of business activity across the country.
Direct action to position BlueScope to navigate COVID-19
“Financially, we remain in a strong position to withstand these uncertain times. Unaudited Group performance in the March quarter was in line with our expectations. However, no one yet knows the depth and duration of the impact of COVID-19, so BlueScope is adopting a prudent approach to the operational and financial settings that we can control,” Vassella said.
The company is driving four direct interventions. Effective immediately, BlueScope has:
•Rescheduled the North Star expansion project. Construction and installation programs are being rescheduled for the next six months to minimize cash spend while preserving flexibility to resume the full scope of project activities when conditions improve. 2H FY2020 project spending is expected to be approximately $90 to 100 million. For 1H FY2021 spending is anticipated to be approximately $180 million which is at the low end of the previously advised annualized range.
•Reduced all non-essential capital expenditure.
•Ceased non-essential operational spending.
•Cancelled the on-market share buy-back program. BlueScope has bought $34.4 million of shares since February as part of the extension to the buy-back of up to $100 million during 2H FY2020. BlueScope has now cancelled the program and is unlikely to initiate further buy-backs until there is a demonstrable improvement in business conditions across its key markets.
Published in the May 2020 Edition