BlueScope Steel, flush with cash thanks to soaring steel prices, announced a doubling of its half-year net profit to a record $485 million on Monday and unveiled plans for a $200 million off-market buyback.



The company, which has already returned more than $800 million to shareholders in dividends, special dividends and buybacks since its listing in July 2002, also said it expected its second-half net profit to be similar to the first-half result.

"Global demand for our quality products is strong, product pricing remains healthy and our operations are running well, even as we are stepping up our discretionary repair and maintenance activity," BlueScope chief executive Kirby Adams said in a statement accompanying the results.

Alongside the off-market buyback, the company also increased its interim ordinary dividend by 50 per cent to 18¢.

The result exceeded market expectations of around $450 million and appeared to validate investors' recent enthusiasm for the stock. BlueScope Steel's share price which has virtually doubled in the past year.

BlueScope's interim report kicks off a week of results for Australia's listed steel industry companies. Still to report are long products manufacturers OneSteel and Smorgon Steel and scrap metal player Sims Group.

The steel industry's fortunes are being underpinned by industry rationalisation and consolidation, China's strong economic growth and a continuing increase in world steel consumption.

Mr Adams said on Monday that the process of consolidation still had some way to go, while the Chinese economy would continue to prosper.

"While a slowdown in the Australian residential dwelling sector has occurred, sales of BlueScope Steel's high-quality coated, painted, rollformed and plate products remain strong," he added.

"Industrial and commercial building activity continues at a healthy pace and heavy engineering projects are encouraging."

Mr Adams cited a number of issues facing the company in the second half - including industrial disruption at its Western Port plant, the potential restructuring of the packaging products business, a stronger Australian dollar and higher raw material and scrap costs.

"Notwithstanding these issues, we expect the second half net profit to be similar to this very strong first half result. We are anticipating a record net profit for the full year."

The $485 million half-year net profit was more than double the $227 million result in the previous corresponding period and was achieved despite higher steel feed and raw material costs and a stronger $A.

Under the terms of the share buyback, stock will be repurchased at a minimum discount of 5 per cent to the volume weighted average price of the shares until the closing date of the offer on April 8.