Individual Report to undertake a Financial Analysis on a public listed company “BlueScope Steel Ltd”

Observation by teacher on this report, kindly see this feedback and make correction and improve the report.

There are small errors throughout that will save you marks if corrected.

Also be careful of your use of capitals Please ensure your executive summary includes the main findings and conclusions of your report.

The introduction refers to the economic report of the company, is this what you have used to complete the assignment or have you used the financial report? Kindly use Financial report.

The background could contain more detail about the history of the company and that of the industry.

Financial analysis – I have not calculated or looked at the formulas you have used. I like that you have used tables as this makes it clear to the reader the ratios that are being discussed. Please use excel sheet

In the liquidity ratio, you mention a comparison to competitors, however there is no data to support this.

By comparing ratios to competitors or industry benchmarks adds value to your analysis, so I would encourage you to do this in other areas as well.

You do not appear to have conducted an analysis on Market Performance. It will also improve your report if you are able to link multiple ratios to support your conclusions.

You can add more references if needed.

Contents

2. Executives summary 3

3. Introduction 4

4. BlueScope Steel limited and Business Background 5

4.1 BlueScope Steel limited Background 5

4.2 Business Background 5

5.0 Financial report analysis 6

5.1 Profitability 6

5.2 Efficiency of Operation 8

5.3 Liquidity 9

5.4 Gearing 10

6. Cash flow 10

7.0 Other Information 11

As an investor, would you invest money in Bluescope Steel? 12

Major Change -Changes in Gender diversity 12

8. Conclusion 13

9. Appendices 14

Appendix A: Ratio calculations 14

A.1 Profitability 14

A.2 Efficiency of operation 14

A.3 Liquidity 15

A.4 Gearing 15

Appendix B: Financial statements 16

Appendix C : Investment Decision Supporting Articles 18

Appendix D. Changes in Gender Diversity 21

References 22

2. Executives summary

The key objective of this report is to undertake a financial analysis about the stability and the financial health of the BlueScope Steel limited since it observes the financial performance of the company fo the year 2018 and 2019. The report covered data from most recent two years 2018 and 2019, intending to find the performance, profitability, asset, liquidity, capital structure and market performance of the BlueScope steel limited and discussion regarding the current position in the market. The financial position of the BlueScope Steel limited is determined through the incorporation of multiple effective tools.

BlueScope limited has a solid foundation for growth, with different business elements in the world’s current growth economy. From their global partnership, BlueScope Steel limited has prospered with the widely diverse markets. They established a joint venture in India (Bluescope conglomerate) that has opened new market opportunities in Asia. These are some of the strategic managerial decisions that have contributed significantly to the organizational success despite operating in highly competitive market.

BlueScope Steel’s limited strengths are its global networks that comprise 100 facilities within 18 countries, with employees of up to 16,000. This corporation and systems gather great products of BlueScope brands, such as Clean COLORBOND®, COLORBOND®, and ZINCALUME® steels, LYSAGHT® steel building products, and Butler® and Varco Pruden® engineered buildings(BlueScope, 2019).Australian Securities Exchange (ASX)officially listed the BlueScope Steel limited onJuly 15, 2002, as a publicly-traded company(BlueScope, 2019). Besides the firms does not only target Australian and Indian market but the global setting.

3. Introduction

The BlueScope Steel Limited is an Australian flat product steel manufacturer and sources the materials from different countries comprising of New Zealand, Pacific Islands, North America, and Asia. The firm demerged from BHP Billiton in 2002 as BHP stell but in 2003 the name changed to BlueScope steel limited. The organization’s headquarters are based at 120 Collins Street, Melbourne, Victoria. Since 2003, the organization has achieved outstanding milestone in the Australian steel industry, a factor that has resulted to launching other branches such as the Indian Bluescope conglomerate. As a result, this report anticipates reviewing and critically analyzing the financial performance fosucing on the past two financial years. The financial analysis report objective is find out the economic health and stability of the BlueScope Steel limited. Therefore, this is to be done by observing the organization economic report from past period, which is the 2018 and 2019 financial years, and compared with the fiscal years to determine the financial stability of the company in the current year.

This analysis will feature a little history of the company partnership networks which is a key indicator of performance. Then this will be followed by thorough investigation of the institution liquidity, gearing ratios, profitability, and Efficiency. There will also be some information concerning the Account ratios that will also help to examine the performance of the BlueScope Steel limited and finally will provide recommendations that will help to improve the performance and operation of the company. Furthermore, there will be a conclusion that will also give some important information about the company from the analysis done.

4. BlueScope Steel limited and Business Background

4.1 BlueScope Steel limited Background

BlueScope Steel Limited is a worldwide dominator in premium branded and painted steel products. The company is rated amoung the biggest producers of coated and painted steel products globally (IBISWorld, 2019). BlueScope Steel limited great strengths are in the building and construction markets. The factor that the building and contruction industry is substantially growing facilitated by modern technology has proven to be a key strength and opportunity for the BlueScope Steel Limited.

BlueScope Steel limited has five businesses: Australia Steel Products, Building North America, Building Products Asia, North America, New Zealand, and the Pacific Islands, and North Star BlueScope Steel.The different businesses are involved in diverse operations such as delivery of the raw materials to the plants while other are precisely involved in production and supplies (BlueScope, 2019). The report only deals with the business in Australia, which pursue in flat steel commodities such as; cold rolled coil, hot-rolled coil, slab, plate, and value-added metallic coated and painted steel solutions(BlueScope, 2019).BlueScope Steellimited yearly manufacturing capacity is approximately 2.0 million tonnes of raw Steel that produces hot-rolled coil, plate products, and slabs.

4.2 Business Background

BlueScope Steel limited finds itself primarily within the Australia manufacturing and construction market that produces a highly ranked standard steel product. The group company has been showing positive performance in the EBIT due to the higher-margin partly offset by lower dispatch volumes and higher cost(EBIT, 2019). This performance is a positive impacton other manufacturing companies, but this is a positive impact on the group. A productive manufacturing sector is always an important component when it comes to the growing economy(Syverson, 2010).The future success and viability of the group on its productivity and competitiveness(Silva, 2013).

BlueScope Steel Limited is a manufacturing industry that featured in the top ten manufacturing industries with a worth of $11.5 billion in Australia (IBISWorlds, 2019). The report is a lodge with ASIC for the financial year. The top competitors consist of the JWS steel, Olympic steel, JFE holdings and RHP technology. Although the competition is stiff, BlueScope’s management is keen to formulate strategic decisions aiming to maximize on the strengths and make good use of opportunities while eliminating the risks and improving weaknesses.

5.0 Financial report analysis

The data from BlueScope Steel limited financial report for the years 2018 and 2019 is examined in this section. Moreover, the data can be used as points for trend analysis and economical rates.

5.1 Profitability

Profitability Ratios helps to measure on the whole profitability of the organization (Asogwa & Onyekwelu, 2019). Higher profitability ratios indicate positive returns and performance of the company (Haddad A, Shibly & Haddad R, 2020 ). These ratios consider directs costs as well as indirect costs. Bluescope Steel has some positive and some declining profitability ratios for 2019 and 2018. However, the one the whole, the ratios show a decreasing trend indicating diminishing profitability. This is a serious issue which the management must not overlook and take adequate steps to enhance profitability

From the calculations of rates that which is stated in Appendix A.1, is as follows;

Year	2019	2018
Return on equity	14.51%	25.10%
Return on assets	9.11%	15.82%
Net profit margin	10.40%	12.02%

Profit ratio shows decreased from 12.02% to 10.40% in the year 2018 and 2019 consecutively, as shown above, this is the same for Return in Equity (REO) from 25.10% to 14.51%. In 2018, an investment of $1 from a stakeholder would reward 25.10 cents, whereas in the year 2019 would pay 14.51 cents, which is somehow discouraging to the stakeholders. From the above ROE,the output indicates that BlueScope Steel Limited does not maximize the return they get from every dollar invested in the company, which then leads to the decline of its profitability and Efficiency, which makes it less worthy to the stakeholders.

Furthermore, the cost of 1 dollar worth on assets investment by the BlueScope Steel limited is also reducing. In 2018, the BlueScope Steel limited could achieve a recovery of 15.82 cents, and in 2019 there was a return of only 9.11 cents. This calculation of return on assets (ROA) is also shown in the appendix below. The decline in ROA has mainly resulted from the decrease in EBIT figures. BlueScope Steel Limited is therefore recommended to reduce overhead cost and operation cycles to use their assets more efficiently.

As mentioned in the above table , it is clear that the net profit margin has also fluctuated from the year 2018 and 2019 by 2.38%, indicating that there is inconsistency in the rate of sales to profit over the given time. 12.02 centswas recovered from every dollar in sales in 2018, while there was a decrease of 2.38 cents in 2019. With this decrease, it is clear that there is a decrease in additional cost and return of goods sold for the BlueScope Steel limited (BlueScope Corporate.(n.d.).

From the above figure, the company’s net worth is that the profitability ratio decreases for the 2019 reporting period. 2.38% sank in the profit margin, which is very alarming to the company’s financial health.

5.2 Efficiency of Operation

Efficiency Ratios helps the management with information on how the company is managing its assets and liabilities (Haddad A, Shibly & Haddad R, 2020 ). The management can know about individual efficiencies of assets like inventory, cash and receivables and overall efficiency like total assets, equity etc

In this section, the calculation is well illustrated in Appendix A.2, and the figure below shows the summary.

Year	2019	2018
Asset turnover	107.50%	105.45%

In regard to percentage of the asset turnover by BlueScope Steel limited’s report, sales grew from 2018 to 2019, and the mean of the total assets and the comparable trajectory. Managing a constant growth in assets turnover during the two years shows positive growth in the enforcement of assets to develop revenue. A stable and steady growth rate is a great guage of the consistency and efficiency of operations (Reynolds, 2007). Moreover, BlueScope Steel limited can continue to increase assets profits if the constant pace is correctly maintained.