Monday, August 21, 2006

BlueScope Steel Llimited - Review of results

Bluescope Steel Ltd released their results today. (ASX:BSL)

All I can say is ouch. The results on first glimpse look rotten. It can't be good that their first slide on presentations is that they have reduced injuries. This is not shareholders main concern( although it is good they reduce this figure). Shareholders are interested in money.

The concensus on estimates this year were around 66c for EPS. They have come in much lower than this at 48c ( after restructuring costs). This is significantly down. Cashflow was doewn 98%. Not a good figure. This was after cap-ex. They have kep the dividend constant to try and entice shareholders not to sell.

The gearing of the company has significantly increased to 39%. Which is bad in the rising interest rate climate.

The costs of this company are rising and they are getting static sales. They need to be able to add the costs when onselling to the customer but are finding compeititon is undercutting them. This is not a good share to be involved in.

We need to see them take control of the company and start to deliver a steady increase in growth of profit and sales. At this stage they are a bluechip which may not exist in another 20-50 years. Definately not a share I want to hold for the longer term.

Buy Price : Do not Buy is my recommendation. (based on long term risks). Management has not shown they can handle the company and until this is done this share should be Avoided.

This may be a good share for trading though .... as it could be volitile in the near term.

Good Luck Investing.

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