???Investors have savaged BlueScope Steel shares after it flagged competition and power prices would hurt its profit at the same time as announcing long-serving chief executive Paul O'Malley would retire.
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In early trading on Monday, BlueScope shares fell 18 per cent to $11.57 in response to the news released as part of the company's full-year result.
BlueScope said underlying earnings were set to drop 20 per cent in the current half from the second half of the 2017 financial year to around $422 million, implying a 30 per cent drop from a year earlier.
"Productivity improvements ... are not yet fully offsetting the scale of energy cost escalation in FY2018," the company said, as it released results for 2017.
Mr O'Malley said a "sharp increase" in energy costs risked undoing the work BlueScope had done in pursuing cost and productivity gains, pointing to issues such as the sudden shutdown of Hazelwood power station in Victoria as one of the reasons for higher electricity prices.
"We are very concerned about the tightening of supply in the gas and electricity markets, and have highlighted our concerns to government and regulators, including our views about the need for greater supply of gas to domestic customers and incentives to ensure baseload generation is maintained at existing levels," he said.
The company is forecasting that energy prices - combining gas and electricity - will increase 75 per cent between the 2016 and 2018 financial years to an estimated $145 million.
In a presentation to investors, the company warns that baseload energy supply is in "crisis" and that current renewable energy technology is not able to replace it.
Underlying profit rose 112 per cent to $650.8 million, based mainly on cost-cutting. However, the result was below market forecasts of $682 million.
Its final dividend of 5 cents a share was also below market forecasts for 7 cents.
However, BlueScope said it would return a further $150 million to shareholders through an on-market share buyback.
Mr O'Malley will be replaced by the head of the company's Australian arm, Mark Vassella.
The company also revealed that it is under investigation by the Australian Competition and Consumer Commission for potential cartel conduct.
The company said the investigation related to the supply of steel products in Australia and "involved a small number of BlueScope employees".
It said that ACCC investigation was ongoing and that BlueScope was co-operating with the regulator.
with Reuters
