* FY16 profit soars 119 pct
* Expects to cut costs further in FY17
* Shares jump to more than five-year high (Adds CEO comments)
By Sonali Paul
SYDNEY, Aug 22 (Reuters) - Australia's BlueScope Steel Ltd more than doubled its annual profit thanks to sharp cost cuts, higher sales, and the takeover of North Star in the United States, and said it expects strong earnings growth in the current half year.
BlueScope, focused on growing in Asia while slashing costs at its Australian, New Zealand and U.S. steel plants, has engineered a huge turnaround since last year, when it averted closure of its Port Kembla steel mill.
"We're making really good progress, but there's still some ways to go there," O'Malley told reporters on a conference call on Monday, referring to efforts to make its three plants competitive in a heavily oversupplied global steel market.
BlueScope's shares jumped as much as 8.5 percent to their highest since May 2011.
Underlying annual profit for the year to June 30 rose to A$293.1 million ($223 million) from A$134.1 million a year earlier, in line with market forecasts, largely thanks to A$235 million in cost cuts in Australia.
BlueScope announced a flat final dividend of 3 cents despite the strong profit growth, as it wants to use cash to help pay down debt and invest in expanding in Asia.
Cheap Chinese exports combined with tough U.S. anti-dumping duties have kept steel markets outside the United States heavily oversupplied, and O'Malley said the glut is likely to persist, even as inefficient mills in China shut down to curb pollution.
"I think we should plan for global oversupply occurring for some time, which is why ... we've got to make sure we've got the balance sheet that can survive any shocks whether they come or not," he said.
BlueScope expects underlying earnings before interest and tax in the current half year to rise to around A$510 million, about 50 percent more than in the six months to June.
Its prospects are in sharp contrast to Australian peer Arrium, which has gone into administration. O'Malley played down the chances BlueScope would bid for any Arrium assets.
In Thailand, the company is awaiting approval from its Japanese partner, Nippon Steel & Sumitomo Metal Corp, to add a third metal coating line and painting capacity to meet growing demand for its roofing and wall products.
In India, where after 10 years its joint venture with Tata Steel is finally turning a profit, it is considering expanding painting capacity.
$1 = 1.3156 Australian dollars Reporting by Sonali Paul, additional reporting by Tom Westbrook, editing by Richard Pullin