BlueScope Steel's (ASX:BSL) recent degradation of operating activities due to Australian energy costs, the performance of US coated products, and North Star conversion costs is a "concern" and requires greater remedial action, Jarden Research said in a Nov.20 note.
The company slashed its underlying earnings before interest and tax (EBIT) guidance for the first half of fiscal 2025 to AU$270 million to AU$310 million from the previous forecast of AU$350 million to AU$420 million.
The move was made amid challenging operating conditions including lower steel prices and softer demand amid record steel exports from China.
The steel supplier and manufacturer disclosed a target of roughly AU$200 million of cost and productivity initiatives across the group but has not disclosed details on costs, timings, and areas impacted.
"Greater remedial action required, in our view," Jarden Research said.
Jarden believes the Australian Steel Products division needs a more significant cost reduction due to "lower-for-longer" Asian steel spreads.
The investment firm maintained BlueScope Steel's neutral rating and AU$21.90 target price.
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