BlueScope Says Profit Falls 13% on Higher Input Costs

By Rebecca Keenan and Madelene Pearson

Aug. 18 (Bloomberg) -- BlueScope Steel Ltd., Australia's largest steelmaker, said full-year profit fell 13 percent because of higher raw material and freight costs.

Net income dropped to A$596 million ($516.4 million), or 79.7 cents a share in the year ended June 30, from A$686 million or 94.6 cents, a year earlier, the Melbourne-based company said today in a statement to the Australian stock exchange.

Steelmakers are battling higher input costs as the price of iron ore, coking coal and energy jumped to records driven by China's demand for raw materials. The cost of making steel will rise by about $210 a metric ton this fiscal year because of the increases, BlueScope said today.

``Strong demand for steel ultimately leads to strong demand for raw materials and given the strong demand I think we're going to see continued high prices for raw materials,'' Managing Director Paul O'Malley, 44, said today in a separate statement.

BlueScope shares have fallen 5.4 percent this year, outperforming the 21 percent decline in the benchmark index. The stock fell 1.3 percent to A$9.13 on the exchange when last traded on Aug. 15.

Underlying profit rose 27 percent to A$816 million, compared with A$643 million a year earlier, the company said.

BlueScope will pay a final dividend of 27 cents per share, up from 26 cents from a year ago, it said.

To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net; Madelene Pearson in Melbourne on mpearson1@bloomberg.net.