Hills Holdings has offloaded its steel assets, Fielders and Orrcon, to BlueScope Steel Limited for $80 million, after sales costs.
The Adelaide-based group had forecast the sale of the assets as it restructures its business.
It will use the cash to acquire assets more suited to its new business model.
“These transactions represent one of the major remaining steps in the restructuring of Hills,” Hills Managing Director and CEO Ted Pretty said. “We are confident that the future of these businesses will be more secure under the stewardship of BlueScope which is a leading and global specialist in steel products.”
In a statement to the stock exchange today, Hills said the impact on its 2013 pre-tax result was not expected to be material, “given that the assets are held for sale and carried at fair value at 30 June 2013 in line with our previous announcements”.
“Proceeds from the divestments will be used to fund future acquisitions and capital management initiatives in line with the strategy to focus on its existing Electronics/Communications and Home divisions as outlined to the market over the last nine months.
“The transactions are subject to customary terms and conditions precedent including ACCC approval.”
Bluescope, meanwhile, has posted a significant improvement in its financial performance with a net loss of $84.1 million for the 2012/13 financial year.
That compares to its $1.04 billion loss in 2011/2012.
The steel maker recorded an underlying profit of $29.7 million for the current year, a turnaround from the $237.5 million loss it posted for the previous 12 months.
BlueScope attributed the improvement to lower material costs and benefits flowing from it business restructure.
BlueScope says it expects to deliver a profitable first half result for the current financial year even though the outlook for domestic demand remains uncertain.
Chairmen Graham Kraehe on Monday said an internal restructure of the business had helped improve its financial position.
“BlueScope’s financial position has been strengthened and the company is well placed to benefit from any recovery in the Australian economy and has the ability to grow in key overseas markets,” he said in a statement.
BlueScope chief executive Paul O’Malley said integrating the two Hills Holdings assets with Bluescope’s existing businesses would cost $15 million.
“These businesses are close to BlueScope’s core Australian operations,” he said.
“Our objective is to improve the efficiency with which we can serve Australian customers by further lowering costs through the integration of these businesses with our existing operations.”