BlueScope Steel Ltd (ASX: BSL) is experiencing notable selling pressure today, with its share price slipping to AU$19.74, down 3.4% from Friday’s close of AU$20.52. This decline comes as the company’s FY 2024 financial results fall short of market expectations, contrasting with the broader ASX 200 index, which is down only 0.1% at the same time.
The underperformance in BlueScope’s share price follows the release of its full-year financial results, which highlighted several key areas of concern. The company reported a net profit after tax (NPAT) of AU$806 million, representing a 20% decline compared to FY 2023. Underlying earnings before interest and tax (EBIT) also decreased by 17% year-on-year, coming in at AU$1.34 billion. Additionally, net cash dropped significantly to AU$364 million from AU$614 million at the end of December 2023.
One notable positive from the financial report was the increase in the final fully franked dividend, which rose to 30 cents per share from 25 cents per share last year. This dividend increase aligns with BlueScope’s strategy to return value to shareholders, with a total of AU$548 million distributed over the past year. The company has also declared an intention to boost the annual dividend payout to 60 cents per share, up from 55 cents in FY 2024, translating to a fully franked dividend yield of 2.8%.
Despite the overall decline in profits and cash flow, which fell to AU$434 million from AU$909 million in the previous year, BlueScope has been proactive in its financial strategy. The company’s board approved an extension of its share buyback program, allowing for up to AU$270 million to be repurchased over the next 12 months. This move is intended to support the stock price and return additional value to shareholders.
Looking ahead, Citi maintains a buy rating on BlueScope shares with a target price of AU$23.70, suggesting a potential upside of 20% from current levels. This optimistic outlook reflects confidence in BlueScope’s long-term growth potential despite the current financial challenges.
In summary, while BlueScope Steel’s FY 2024 results have led to immediate selling pressure and a decline in share price, the company’s increased dividend payouts and share buyback program are seen as positive measures. Investors and analysts will be closely monitoring how BlueScope navigates its financial pressures and capitalizes on its strategic investments.