MELBOURNE, Aug 21 (Reuters) - Australia's Bluescope Steel (BSL)...

MELBOURNE, Aug 21 (Reuters) - Australia's Bluescope Steel (BSL) warned on Monday earnings are set to fall in the current half, hit by import competition and soaring power and gas prices locally and weaker margins in the United States.

At the same time, the country's biggest steel maker flagged its well-respected chief executive, Paul O'Malley, would retire in December. He will be replaced by the head of the company's Australian arm.

Bluescope said underlying earnings were set to drop 20 percent in the current half from the second half of the 2017 financial year to around A$422 million ($334 million), implying a 30 percent drop from a year earlier.

"Productivity improvements ... are not yet fully offsetting the scale of energy cost escalation in FY2018," the company said, as it released results for 2017.

Underlying profit rose 112 percent to A$650.8 million, based mainly on cost-cutting. However the result was below market forecasts of A$682 million, according to Thomson Reuters I/B/E/S.

And its final dividend of 5 cents a share was also below market forecasts for 7 cents.

However Bluescope said it would return a further A$150 million to shareholders through an on-market share buyback.

($1 = 1.2617 Australian dollars)