BlueScope Steel Limited (ASX: BSL) is drawing attention as it gears up to release its half-year financial results on 17 February 2025. With the steel industry facing evolving market dynamics, investors are keenly watching BlueScope’s performance and future outlook.

What Analysts Expect from BlueScope’s Half-Year Results

According to a research note from Goldman Sachs, BlueScope is projected to report net revenue of $7.83 billion and underlying EBITDA of $606 million. These figures are closely aligned with market consensus estimates of $7.81 billion in revenue and $645 million in EBITDA.

However, these numbers reflect a significant decline from the same period in FY24 when BlueScope posted $8.54 billion in net revenue and $1.02 billion in EBITDA. The key reason behind this downturn is weaker Asian steel spreads, which have affected the company’s Australian steel earnings.

Is the Worst Over for BlueScope?

Goldman Sachs suggests that BlueScope is near the bottom of its earnings cycle, with expectations of a stronger performance in the second half of FY25. Analysts forecast EBIT of $526 million for 2H25, exceeding the consensus estimate of $406 million.

The key drivers behind this expected improvement include:

• A modest recovery in steel spreads
• Higher margins in painted and coated steel products
• A strong balance sheet with the company currently in a net cash position
• An ongoing share buyback program, which could further enhance shareholder value

Is BlueScope Steel a Buy?

Goldman Sachs maintains a buy rating on BlueScope shares, with a price target of $26.70. This suggests a potential 21% upside from current levels. Despite recent earnings pressure, the company’s valuation remains attractive, trading at 0.7x its net asset value and around 5x its next twelve months EBITDA—which is at the lower end of its 15-year historical range.

A key highlight is BlueScope’s high-margin painted and coated steel business, which accounts for approximately 40-50% of its total steel production. This segment delivers premium pricing and profitability, positioning the company ahead of its U.S. peers.

For investors seeking exposure to the Australian steel sector, BlueScope’s valuation and expected earnings recovery make it an interesting proposition. However, monitoring the company’s guidance and market conditions will be crucial in the months ahead.

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