BLUESCOPE REVISES FORECAST OVER US TAX CUTS
AUSTRALIAN companies are set to benefit from landmark tax cuts in the United States which are set to boost the US economy from increased household spending and higher company profits.
The US house of representatives has voted to approve a tax reform package, including slashing the corporate tax rate from 35 per cent to 21 per cent.
BlueScope Steel was among the first Australian companies to address the issues as part of a revised profit forecast yesterday.
BlueScope increased its forecast profit for the six months to December 2017 from $420 million to $460 million, however, this was largely due to higher steel and coke prices.
Bluescope’s incoming managing director Mark Vassella, however, also forecast higher profits ahead because of the new US tax cuts.
“BlueScope expects its US earnings will benefit through a lower federal tax rate, with an anticipated 7 per cent decrease in financial year 2018 and 11 per cent decrease thereafter,” Mr Vassella said. “The benefit will be partly offset by a toll charge on foreign earnings which is not expected to be material,” he added.
Computershare also issued a statement to the Australian Securities Exchange about the impact of the US tax restructuring, which will be both positive and negative for the company.
“While the Act reduces the US corporate tax rate from 35 per cent to 21 per cent it also eliminates or reduces certain tax deductions currently available to Computershare,” the statement said. “Our preliminary assessment of the implications of the Act for Computershare is that there will be a onetime FY18 statutory net profit after tax benefit associated with the reduction.”
However, the company said it was working through other parts of the restructure including the impact from anti-base erosion rules, antihybrid rules and new interest expensive limitation rules.
Ansell shareholders were also advised to expect a long term boost to profit.
“Ansell presently anticipates that this will create an estimated benefit to profit after tax by FY19 of around $US3-5 million per annum.”
However, the company also used the statement to warn of a one-off tax expense of up to $22 million in the current financial year from changes to the tax rates within other countries.
Australian companies are also expected to benefit from increased sales and a forecast boost to the US economy.