Bluescope announces profit, warns 1/4 billion in cost cuts needed

BlueScope has swung back into profit, but has warned significant costs needed to be cut across its Australian and New Zealand operations.

Business Insider and others report that a full-year net profit of $136.3 million for the financial year was achieved by the steelmaker. This follows a net loss of $82.4 million the prior year.

However, CEO Paul O’Malley said that the decrease in global steel prices and Chinese demand, as well as increase in global production, were all creating a squeeze.

"At these prices, it would be more competitive to externally source steel substrate then to continue to operate our Australian and New Zealand steelmaking operations – unless we deliver a game-changing approach to costs to improve their competitiveness," said O’Malley in a statement.

Fairfax reports that the company is seeking to save $200 million in Australia by June 2017 and $NZ 50 million.

The repetition of the need to deliver game-changing savings will do little to ease speculation around the future of Port Kembla’s steelworks.

In June The Illawarra Mercury reported that the company told workers at the site it needed to operate more efficiently or shutting the blast furnace would be considered.

BlueScope denied a decision on the facility's future had been made, but “game-changing” production cost cuts were necessary.