FILE PHOTO: Slabs of steel are cut by machine at the BlueScope steelworks, Port Kembla, Australia February 9, 2024. REUTERS/Lewis Jackson/File Photo

By John Biju and Byron Kaye

(Reuters) -Australian steel producer Bluescope said annual profit plummeted 90%, blaming a "maze" of tariffs imposed by U.S. President Donald Trump for lower demand and a hefty writedown on the value of its U.S. metal coatings unit.

Shares in the company slid 5%, though Bluescope reiterated its position that it stands to benefit from higher prices due to its interests in the U.S., and forecast growth in first-half profit for the current financial year.

Underperformance from BlueScope Coated Products, a U.S. business it bought for $500 million three years ago, led to an impairment charge of A$438.9 million ($285 million).

But even without the writedown, underlying profit for the year to end-June halved to A$420.8 million, missing a Visible Alpha consensus estimate of A$466.4 million.

Total net profit slumped to A$83.8 million from A$805.7 million.

"It is a bit of a maze," CEO Mark Vassella told journalists on a call, referring to U.S. tariffs, which he said sometimes were announced but did not materialise.

"There's lots of movement, there's lots of volatility and variability. It's had some impact on demand as people just try and understand what the implications are before they make commitments or bets on inventory."

BlueScope has said it considers itself a net beneficiary of the tariffs because it ships a small amount of steel from Australia to the U.S. relative to what it produces in the United States.

But on Monday, Vassella said the coatings business also sources some raw product from Australia and New Zealand, incurring tariffs.

"What we're now doing is thinking about alternatives for substrate supply," he said, using the term for base material.

BlueScope's North America division, its biggest earner, posted underlying earnings of A$514.4 million for the year, down 45%, mostly due to lower selling prices.

"With impairment of US coated products business (there is) a recognition that there's no quick fix here," Citi analysts wrote in a client note.

Noting that its main U.S. business is starting to see an improvement in profit margins as a result of tariffs driving prices up, the company forecast underlying operating earnings for the first half of 2026 between A$550 million and A$620 million, above last year's A$309 million.

The midpoint of the range, however, fell short of a Visible Alpha consensus of A$618 million.

BlueScope declared a final dividend of 30 Australian cents per share, in line with last year.

($1 = 1.5352 Australian dollars)

(Reporting by John Biju in Bengaluru and Byron Kaye in Sydney; Editing by Sherry Jacob-Phillips and Edwina Gibbs)