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OneSteel cuts profit guidance for FY11

OneSteel cuts profit guidance for FY11

Steel manufacturer and distributor OneSteel (ASX:OST) has downgraded its earnings guidance for FY11 by roughly $38 million due to market pressures and reduced production.

The company has advised it now expects its second-half profit to be broadly in line with the first half result of $116 million, which would mean profit for FY11 of around $232 million.

Prior to Tuesday, the company had been forecasting profit for the full year of $270 million, which excluding contributions from a recently acquired mining consumables business would have been in line with FY10.

But the appreciation of the Australian dollar and its impact on steel and iron ore margins - coupled with weather-related impacts on iron ore operations and probably shipments - have led the company to lower this forecast.

With the output disruptions, the company is forecasting iron ore sales volumes of around 6 million tonnes for the financial year.

But the company said there is still significant uncertainty as to how factors including the exchange rate, steel prices or demand for the commodity will impact earnings.

OST shares fell 5.16% in Tuesday's trading to $2.020.

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Tags steelAustralian dollarOneSteelGuidanceASX:OST

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