Soaring prices, record sales rejuvenate New Zealand Steel

Soaring steel prices and a strong domestic building market are revitalising the country's largest steel producer - New Zealand Steel - lifting it to a record half-year profit.

Its net profit for the six months to December 31 of $94 million topped last year's full-year net profit by $28 million.

The result was disclosed yesterday as part of the half-year results of its Australian parent company, BlueScope Steel, which also posted a record result.

The profit was built on record sales of $407 million for the half and, although the stronger dollar took some edge off its performance, New Zealand Steel president Bill Jacob said the strength of the global steel market had more than compensated for it.

He said the company's two North Island mines that supplied ironsand to its Glenbrook steel mill provided a competitive advantage.

"In the face of a global escalation in costs for ironmaking raw materials, our ironsands mines are a real competitive advantage," said Jacob.

China and Japan were strong markets for the ironsand and the byproducts it produced, and would sustain the company's growth into the future.

The company was in a good position to expand the Glenbrook mill and add to its 1500 staff.

"New Zealand Steel's never looked brighter," said American-born Jacob who joined the company in 2003.

"When I first got here I remember people asking, 'Oh, you're still in business?' I think it's more like, not only are we in business, but we're here to grow and prosper. There's a lot of positive things going on."

The company had capitalised on soaring steel prices by growing its customer base in its most optimum export markets.

Locally, the construction boom, productivity gains in its coating operations and new products also played a part.

Bluescope chief executive Kirby Adams said he was pleased with the earnings improvement the New Zealand subsidiary had achieved.

New Zealand Steel is the country's sole producer of flat rolled steel products for the building, manufacturing and agricultural industries.

It was founded in 1968 to convert the rich ironsands of Waikato North Head into modern steel products for the local and export markets. The Glenbrook mill produces 650,000 tonnes of steel a year and incorporates metallic coating and painting operations. About 50 per cent of its steel is exported to Australia, the Pacific Islands, the US and Japan.

Australian company BHP Steel bought a controlling interest in New Zealand Steel in 1992. It was renamed BlueScope Steel when it listed on the Australian Stock Exchange three years ago.

BlueScope Steel yesterday reported a record first-half profit of A$485.1 million for the six months to December 31 - more than double the previous corresponding period.

It doubled its dividend to A18c and approved an off-market share buy-back of up to A$200 million amid a positive outlook for the full year.