The profit upgrade suggests the future of the iconic plant in Wollongong, an hour south of Sydney, has been secured just months after a line-ball decision to keep producing raw steel at the site.
BlueScope said in August it needed to cut $200 million of costs from the plant or the remaining No. 5 blast furnace would be mothballed, endangering 5000 direct and indirect jobs.
BlueScope also secured a payroll tax holiday from the state of NSW. The Baird government agreed to defer $60 million in state payroll taxes over three years in a bid to prevent BlueScope from shutting the blast furnace.
"The stronger performance has been driven largely by earlier delivery of cost reductions, growth in Australian domestic dispatches and better margins," the company said.
Stronger demand for BlueScope's higher-margin Colorbond and Zincalume products, driven by the east coast housing boom, and a recovery in steel spreads are also boosting earnings.
BlueScope shares surged 14 per cent to $4.99 at 1.30pm AEDT on Friday.
Perpetual portfolio manager Vince Pezzullo said the Port Kembla steelworks had embarked on a process of continuous improvement to stay internationally competitive.
"We are at the bottom of the steel cycle in North America. In Australia it is all about costs," he said.
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