NZ Steel earnings down on higher zinc and maintenance costs

By NZPA

Monday 26th February 2007

New Zealand Steel earnings have been hit by higher costs for coating metal costs, particularly zinc, and for maintenance on the primary plant kiln.

The company, which operates a mill at Glenbrook south of Auckland, is part of Australia's largest steelmaker BlueScope Steel which puts the New Zealand results together with those from operations in the Pacific.

Figures out today show that New Zealand and Pacific Islands Products had sales revenue up 1% to $A364 million ($NZ411.9 million), for the six months to December.

But earnings before interest and tax (ebit) were down 35% to $A43 million from $A66 million in the same six months a year earlier.

Another factor affecting the result, apart from the higher zinc and maintenance costs, was unfavourable movements by the NZ dollar against the US dollar, BlueScope said. Those factors were partly offset by a strong New Zealand economy increasing domestic demand, and improved export prices.

Slab production was down 4% to 293,000 tonnes, largely due to equipment reliability issues and accretion build-up in kilns. The kiln problem had since been resolved.

BlueScope, which has operations in Asia and the US, as well as Australia and the Pacific, posted a 24% higher net profit of $A387.8 million for the six months to December 31, 2006, compared to $A312 million a year earlier.

BlueScope said earnings improved on higher prices at home and abroad, improved sales volumes and a better sales mix, partly offset by higher raw material costs and higher metal coating costs, mainly for zinc.

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