Bluescope Steel Limited · ASX:BSL
Bluescope Steel — H1 2025 Earnings Presentation
40 slides from Bluescope Steel's earnings presentation, Feb 17, 2025
Slide 1: 1H FY2025 Financial Results Presentation
1H FY2025 Financial Results Presentation Mark Vassella Managing Director and Chief Executive Officer David Fallu Chief Financial Officer 17 February 2025 BlueScope Steel Limited. ASX Code: BSL Pictured: ABN: 16 000 011 058 BBW House in Geelong, VIC, Level 24, 181 William Street, Melbourne, VIC, 3000
Slide 2: Important Notice
IMPORTANT NOTICE This presentation is not and does not form part of any offer, invitation or recommendation in respect of securities. Any decision to buy or sell BlueScope Steel Limited securities or other products should be made only after seeking appropriate financial advice. Reliance should not b
Slide 3: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY BlueScope acknowledges the Traditional Custodians of the land on which we work, live and operate. We recognise our First Nations Peoples who have inhabited Australia for millennia, their enduring connection to Country, sky, and waterways and their rich and vital cultures.
Slide 4: 1H FY2025 Highlights
1H FY2025 HIGHLIGHTS Profitability despite depressed spreads highlights the need for business model resilience Underlying EBIT of $309M and ROIC of 8.1% despite depressed spreads • Delivered $162M in shareholder returns; $88M net cash balance sheet • 30 cps interim dividend and extension of current
Slide 5: Health, Safety & Environment Starts With All of Us
HEALTH, SAFETY & ENVIRONMENT STARTS WITH ALL OF US • Our commitment to our culture of learning and people-centred approach Lead Indicators to health and safety is unwavering, enabled by a focus on engaging our people in designing solutions to deliver effective controls 1,896 Leaders involved in our
Slide 6: 1H FY2025 Financial Headlines
1H FY2025 FINANCIAL HEADLINES BlueScope’s profitability despite depressed spreads highlights the need for business model resilience Underlying EBIT1 Underlying EBIT Return Reported NPAT On Invested Capital2 $309M 8.1% $179M Down $409M on 1H FY2024 Down from 13.4% for 1H FY2024 Down $260M on 1H FY202
Slide 7: 1H FY2025 Sustainability Update
1H FY2025 SUSTAINABILITY UPDATE Embedding sustainability in all that we do Climate Change Inclusion & Diversity • Released second Climate Action Report in Sep-24 • Continuing our work to % of females in BSL workforce • Kwinana, WA selected as location for ESF pilot plant reflect the communities in p
Slide 8: 2H FY2025 Group Outlook
2H FY2025 GROUP OUTLOOK1 • Underlying EBIT in 2H FY2025 is expected to be in the range of $360M to $430M, an improvement on 1H FY2025 driven by an improved spread outlook in the US, stronger domestic volumes in Australia and benefits from the Group- wide cost and productivity program. • For the purp
Slide 9: Strategy and growth to 2030
Strategy and growth to 2030 9
Slide 10: Our Purpose and Strategy
OUR PURPOSE AND STRATEGY In place since late 2019, Our Strategy sets out how we will deliver on Our Purpose and drive transformation and growth, while continuing to deliver on core expectations for our stakeholders Our Purpose: We create and inspire smart solutions in steel, to strengthen our commun
Slide 11: Significant Earnings Growth Opportunity
SIGNIFICANT EARNINGS GROWTH OPPORTUNITY Target annual EBIT improvement Cost and • Initial target $200M of initiatives commenced for delivery in FY2026 productivity $200M+ • Program to deliver further improvements initiatives • Targeted annual earnings contribution from growth initiatives and ~$500M
Slide 12: Driving Cost and Productivity Improvement
DRIVING COST AND PRODUCTIVITY IMPROVEMENT Initiatives identified and commenced to deliver target $200M net annual earnings improvement in FY2026; now reviewing further improvement opportunities Initial $200M cost and productivity program Ongoing program underway Cost and productivity • Target initia
Slide 13: BlueScope's Target Growth to 2030
BLUESCOPE’S TARGET GROWTH TO 2030 Growth investments and initiatives to drive EBIT uplift, supported by macro normalisation Target annual underlying EBIT contribution from growth investments by 2030 Cost and productivity initiatives New Zealand 15% Asia 15% Growth North ~$500M 45% America Spread 25%
Slide 14: Growth to 2030: North America
GROWTH TO 2030: NORTH AMERICA Targeting annual EBIT uplift of over $200 million1 Initiatives Measures of success • North Star targeting 3.3Mtpa – $200M investment in debottlenecking North Star 2.8mt 3.3mt program through to FY2027 volume 2.1mt • BCP improvement and ramp-up, incl. FY19 LTM FY301 focu
Slide 15: Growth to 2030: Australia
GROWTH TO 2030: AUSTRALIA Targeting annual EBIT uplift of $125 million1 Initiatives Measures of success • Continued shift towards branded and value-added products COLORBOND® 600kt 730kt – COLORBOND® and TRUECORE® steel volume 510kt steel sales growth on favourable demand trends and customer- FY19 LT
Slide 16: Growth to 2030: Asia & New Zealand
GROWTH TO 2030: ASIA & NEW ZEALAND Targeting collective annual EBIT uplift of ~$150 million1 Asia Initiatives New Zealand Initiatives • ASEAN volume growth: • Continued growth in demand for – Focus on Malaysia, Indonesia and COLORSTEEL® products: Vietnam – Supported by continued capital – Benefit fr
Slide 17: Growth to 2030: Property Realisation
GROWTH TO 2030: PROPERTY REALISATION Reviewing near-term opportunities to realise value from the surplus West Dapto land asset Near-term West Dapto opportunity West Dapto Landholding (200-ha) • 33-ha of zoned residential land – Potential for 350-400 lots in attractive West Dapto Urban land release a
Slide 18: Growth Upside: Substantial Value in Adjacent Land Portfolio
GROWTH UPSIDE: SUBSTANTIAL VALUE IN ADJACENT LAND PORTFOLIO Three adjacent sites with compelling infrastructure access; positioned for strategic value realisation • Sites located with compelling port, rail and electricity Port Kembla, NSW interconnector access • ~200ha, 80km from Sydney on a • As pa
Slide 19: Material Upside from Macro Improvement
MATERIAL UPSIDE FROM MACRO IMPROVEMENT An improvement in spread levels would offer meaningful upside, even allowing for unfavourable FX Historical average2 Annual EBIT impact3 FY2025 10-year 5-year 10-year 5-year Cost and History average1 average average average average productivity 1,500 initiative
Slide 20: Business performance
Business performance 20
Slide 21: Australia
AUSTRALIA Slightly improved performance on stronger spreads and improved domestic despatches, offset by higher costs Underlying EBIT ($M) • Stronger realised spread performance as 258 lower coal and iron ore costs more than offset softer pricing – Benchmark spreads remained at 119 131 depressed leve
Slide 22: Australia
AUSTRALIA Increased despatches in 1H FY2025, driven largely by residential construction demand Total Australian domestic despatch volumes (kt) Dwelling • Approximately half of product goes to Alterations & Total construction % shown in dark red Additions (A&A) sub-segment 74% 74% • Stronger demand i
Slide 23: Australia
AUSTRALIA Ongoing focus on shifting mix towards premium branded products combined with a focus on cost in steelmaking Asian steel spread1 & indicative steelmaking Asian steel spread1 & ASP EBITDA per tonne ($A/t) cash breakeven2 (US$/t) 550 Underlying EBITDA per tonne (A$/t) 800 1H FY25 indicative s
Slide 24: North America
NORTH AMERICA Significantly softer result in 1H FY2025 on materially weaker benchmark spreads at North Star and further moderation of performance at Buildings & Coated Products Underlying EBIT1 ($M) North Star 518 EBIT $66M in 1H FY2025; $293M in 2H FY2024 417 • Materially weaker benchmark spreads i
Slide 25: North America
NORTH AMERICA The economy has remained resilient supported by consumer spending and low unemployment. Auto demand in particular remains solid, while non-residential strength reflects public investment plans Non-residential construction1 Automotive2 Manufacturing3 (Value of work put in place, US$Bn;
Slide 26: North Star
NORTH STAR Remains a leading margin producer in the US; rebased benchmark spreads have offset higher industry costs (largely non-benchmark raw materials) Macro factors have driven up Spreads have structurally North Star remains a leading industry production costs increased to compensate margin produ
Slide 27: Asia
ASIA Stronger performance on typical seasonality in China; similar results in India and Southeast Asia, with ongoing strength in Thailand Underlying EBIT ($M) Southeast Asia1 96 EBIT $52M in 1H FY2025; $54M in 2H FY2024 64 69 • Similar result to 2H FY2024 on broadly unchanged volumes across the regi
Slide 28: New Zealand and Pacific Islands
NEW ZEALAND AND PACIFIC ISLANDS Significantly lower result on continued impacts from soft macroeconomic conditions Underlying EBIT ($M) 26 • Similar domestic despatches in 1H FY2025 as soft macroeconomic 18 conditions and low levels of construction activity continued from the prior half 3 1H FY2024
Slide 29: Underlying Group EBIT Variance
UNDERLYING GROUP EBIT VARIANCE Softer result in 1H FY2025, predominantly due to softer spreads 1H FY2025 vs 1H FY2024 ($M) 1H FY2025 vs 2H FY2024 ($M) 718 Net spread decrease $240M Raw material costs ($M) Coal (incl. lower coke margin of -$16M) 32 (34) Iron ore 29 621 Net spread decrease $312M Scrap
Slide 30: 2H FY2025 Regional Guidance
2H FY2025 REGIONAL GUIDANCE Outlook subject to assumptions and qualifiers referenced on page 8 North • Expect a result approximately one-third higher Australia • Expect a result moderately stronger than 1H FY2025 America than 1H FY2025 • Higher domestic volumes • North Star – expect a result more th
Slide 31: Financial framework
Financial framework Ey)
Slide 32: Financial Framework Underpinning Resilience
FINANCIAL FRAMEWORK UNDERPINNING RESILIENCE Our principles that drive financial performance and disciplined allocation of capital Disciplined Returns Focus Robust Capital Structure Capital Allocation • ROIC > WACC on average through • Strong balance sheet, with a target • Invest to maintain safe and
Slide 33: Returns Focus: Strong Focus on ROIC; Maximising Cash
RETURNS FOCUS STRONG FOCUS ON ROIC; MAXIMISING CASH Targeting returns above cost of capital through the cycle; maximising cash flows to support investment pipeline Group ROIC1 (%) and invested capital2 ($Bn) Net cash flow ($M) (before investment exp and financing) $11.0Bn $11.3Bn $11.5Bn $9.1Bn $M F
Slide 34: Robust Balance Sheet: Net Cash Position; Ample Liquidity
ROBUST BALANCE SHEET NET CASH POSITION; AMPLE LIQUIDITY Strong balance sheet providing the foundation to deliver long term sustainable earnings and growth Net cash / (debt)1 ($M) Liquidity ($M) 703 (undrawn facilities and cash) 606 614 3,655 3,317 364 3,172 3,132 2,9292 88 Net Debt Target Range ~$40
Slide 35: Disciplined Capital Allocation: Capital Expenditure
DISCIPLINED CAPITAL ALLOCATION CAPITAL EXPENDITURE Investing for sustainable earnings and growth Capital allocation framework CAPEX spending and forecast1 ($M) Major projects in forecast include: 6BF reline & upgrade2 • MCL7 in Western Sydney (growth) Operating Asset Sales Divestments • North Star d
Slide 36: Disciplined Capital Allocation: Shareholder Returns
DISCIPLINED CAPITAL ALLOCATION SHAREHOLDER RETURNS Over $3.5Bn returned since FY2017; 30 cps fully franked interim dividend and extension of the on market buy-back program Dividends paid and buy-backs4 ($M) EPS • BlueScope’s capital management policy is to distribute at improvement (%) Dividend leas
Slide 37: Summary and Q&A
Summary and Q&A 37
Slide 38: BlueScope: A Leading Premium Steel Producer with Proven Returns
BLUESCOPE: A LEADING PREMIUM STEEL PRODUCER WITH PROVEN RETURNS AND STRONG GROWTH TRAJECTORY • Advantaged platform in US, including best-in-class EAF facility Strategic Asset Base • Extensive Australasian manufacturing network and integrated value chains • A global leader in metal coating and painti
Slide 39: Questions
Questions 39
Slide 40: 1H FY2025 Financial Results Presentation
1H FY2025 Financial Results Presentation Mark Vassella Managing Director and Chief Executive Officer David Fallu Chief Financial Officer 17 February 2025 BlueScope Steel Limited. ASX Code: BSL Pictured: ABN: 16 000 011 058 BBW House in Geelong, VIC, Level 24, 181 William Street, Melbourne, VIC, 3000