BSL Bluescope Steel Limited

Australian steelmaker OneSteel Ltd. (OST.AU) said Tuesday its full-year net profits fell 11% on year to A$230 million, and it has launched a review of its steel products business amid a challenging environment made worse by a high Australian dollar.

OneSteel's iron ore and coal production partly shielded it from the impact of economic factors hitting its larger rival BlueScope Steel Ltd. (BSL.AU). However, the company warned Australian steel prices will likely remain under pressure in the near term.

On the underlying basis preferred by equity analysts, which excludes one-off and accounting items, net profits came to A$235 million in the 12 months to the end of June, the company said in preliminary annual results. A Dow Jones Newswires poll of five analysts had suggested an average figure of A$236.2 million.

OneSteel declared an unfranked final dividend of 4 cents, compared to 6.4 Australian cents expected by the analysts and 6 cents declared at annual results last year.

OneSteel and BlueScope were each spun off from the world's largest miner BHP Billiton Ltd. (BHP) at the start of the last decade, but while BlueScope's more advanced steel mill caused it to outperform in the early part of the decade OneSteel has since crept ahead as rising raw materials costs and the strength of the Australian dollar have hit its rival.

BlueScope last week announced a A$900 million writedown to its businesses and flagged a possible closure of its export business, which has been made uncompetitive by a currency which in recent months has risen above parity with the U.S. dollar for the first time in 28 years.

The two companies operate Australia's only blast furnaces. The emissions-intensive steel sector is to be largely protected from the effects of Canberra's carbon pricing regime starting in 2012 thanks to a A$300 million package announced last month.

 
   -By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com 
 

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