Bluescope Steel Limited · ASX:BSL
Bluescope Steel — H1 FY2010 Earnings Presentation
107 slides from Bluescope Steel's earnings presentation, Feb 15, 2010
Slide 1: First Half FY2010 Results Presentation
For personal use only First Half FY2010 Results Presentation Period Ended 31 December 2009 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 15 February 2010 ASX Code: BSL
Slide 2: Important notice
Important notice For personal use only 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.
Slide 3: Introduction and Headlines
For personal use only Introduction and Headlines Page 3
Slide 4: Safety – Our target remains Zero Harm
Safety – Our target remains Zero Harm For personal use only Lost Time Injury Frequency Rate Medically Treated Injury Frequency Rate 18 70 16 16.0 NSW Manufacturing 60.0 Medically treated injuries per million man-hours worked 60 14.0 2005 27.9 Lost time injuries per million man-hours worked 14 2006 2
Slide 5: Group financial headlines 1H FY2010 vs. 1H FY2009
Group financial headlines 1H FY2010 vs. 1H FY2009 …small loss as per guidance For personal use only SIX MONTHS ENDED 31 DEC VARIANCE 2009 2008 % Revenue A$4,103M A$6,156M Down 33% External despatches 3,304M tonnes 3,244M tonnes Up 2% EBITDA − Reported A$154M A$857M - − Underlying A$155M A$946M Down
Slide 6: Movement in BlueScope's Underlying EBIT from 2H FY2008
Movement in BlueScope’s Underlying EBIT from 2H FY2008 For personal use only • Strong 1Q - strong Australian demand; • Mild improvement in net spread record steel prices (above US$1,000/t (favourable from export prices, • Strong half - in August 2008) favourable from raw materials and peak • Rapid o
Slide 7: Australian Divisions – Earnings Progression
Australian Divisions – Earnings Progression For personal use only Coated & Industrial Products Australia Australian Distribution & Solutions Underlying EBITDA $M Underlying EBITDA $M • Domestic and • Strong 1Q, but steel prices • Strong 1Q, but volumes started export markets and demand fall rapidly
Slide 8: Our markets – external sales by region
Our markets – external sales by region ….volumes recover in 1H FY 2010 For personal use only 1H FY2009 2H FY2009 1H FY2010 Exports Exports Exports 17% 3% 34% 24% 6% 5% 3% (558kt) 22% (934kt) 19% (794kt) 6% 8% 12% 22% 15% 11% 17% 5% 13% 30% 45% 13% 4% 37% 4% Total External Sales 3,244kt 15% decline 2
Slide 9: Total Australian external domestic despatches by market segment
Total Australian external domestic despatches by market segment …strong increase in domestic demand over 2H FY 2009 For personal use only DESPATCH VOLUMES(1) 2H FY2008 1H FY2009 2H FY2009 1H FY2010 60% 60% 1,600 61% 63% 1,400 25% 62% 25% 62% 1,200 Construction Construction 25% (312kt) ‘000 tonnes 22
Slide 10: Australian domestic sales volume recovery in 1H FY 2010
Australian domestic sales volume recovery in 1H FY 2010 For personal use only 1H FY2009 to 2H FY2009 y Sales volumes - peak levels in first four months of 1H FY2009. Sales declined markedly into 2H as a result of slower activity levels and abnormally high channel inventory, particularly across our D
Slide 11: North American Divisions – Earnings Progression
North American Divisions – Earnings Progression For personal use only Hot Rolled Products North America Coated & Building Products North America Earnings Before Tax $M Underlying EBITDA $M • Peak conditions, prior • Strong half; to the onset of the 5 months of global financial crisis IMSA • Onset of
Slide 12: North America – building indices confirm contraction of Buildings business
North America – building indices confirm contraction of our Buildings business with limited upside in the short term For personal use only F.W. Dodge Metal Building Manufacturers Non-residential Building Contract Association Domestic & Export Awards Shipments (Tons) 1,800,000 1,800,000 1,600,000 1,6
Slide 13: New Zealand and C&BP Asia – Earnings Progression
New Zealand and C&BP Asia – Earnings Progression For personal use only New Zealand Steel and Pacific Islands Coated & Building Products Asia Underlying EBITDA $M Underlying EBITDA $M • Despite lower volumes than 2H • Strongest half • Improved steel margins, FY08 (-25%), improved domestic since 2H re
Slide 14: Our other markets
Our other markets For personal use only New Zealand North America y Residential building consents near y North Star – service centre restocking & historic lows improved auto sales y Non-residential building down on reduced y Coated - economic activity ¾ Steelscape (metal coated / pre-painting) – imp
Slide 15: Management interventions continued in 1H FY10
Management continued to pursue the interventions in 1H FY 2010 which were initiated in FY2009 when markets weakened … For personal use only y Early Intervention in FY2009 delivered $295M of Cost Savings of which $132M Pursuit of major cost were permanent reductions. reductions(1) y Since last result
Slide 16: Near term drivers of performance
For personal use only Near term drivers of performance Page 16
Slide 17: Near term drivers of performance
Near term drivers of performance For personal use only y China and Asean ¾ economy – macro benefit to Australia; direct benefit to BlueScope’s China business – continued strong steel demand in China; supply/demand balance in the region; reduced risk of material long term increase in steel exports an
Slide 18: Global market overview – apparent steel use
Global market overview – particular focus on past 18 months – GFC severely disrupted steel demand in developed economies; growth in China & India highlights need to be able to operate profitably with scale in these countries For personal use only Apparent Steel Use (ASU) ASU : USA (mt’s) 140 Tonnes
Slide 19: Absolute apparent steel use driven heavily by developing economies
Absolute apparent steel use driven heavily by developing economies For personal use only Russia India ROW Apparent Steel Use : BRIC vs ROW Brazil China Tonnes (Millions) (1970 – 2010e) 1,300 % Share of World Total (2010e) 1,200 2% 1,100 2% 5% 1,000 900 553 46% 800 355 700 124 600 54 87 32 56 500 20
Slide 20: BRICs are now the dominant crude steel producers
… commensurate with this BRIC’s are now the dominant crude steel producers For personal use only Crude Steel Production Tonnes (Millions) BRIC (1970 – 2009) 1,400 ROW 1,300 World 1,200 1,220 1,100 1,000 900 800 711 700 600 500 509 400 300 200 100 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Note:
Slide 21: Real-time demand indicators continuing to improve
Real-time demand indicators are continuing to improve across all regions For personal use only Industrial Production 3 Month Moving Average – YOY % Change China 5 OECD 20 India 0 15 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 -5 10 -10 5 -15 -20 0 US Germany Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 J
Slide 22: China is again a net exporter of steel
China is again a net exporter of steel, but currently at lower levels For personal use only China Total Steel Trade: Jan 04 – Jan 10 Semi-finished and Finished Steel, Thousand Metric Tonnes Imports 5,000 Net Trade (000’s) Imports 4,000 Exports 3,000 2,000 1,000 0 -1,000 -2,000 -3,000 -4,000 -5,000 -
Slide 23: India is again a net importer of steel
…but India, currently the world’s second fastest - growing major economy, is again a net importer of steel due to insufficient local steel production For personal use only India Total Steel Trade: Jan 04 – Jun 09 Semi-finished and Finished Steel, Thousand Metric Tonnes Net Trade Imports 1,000 (000’s
Slide 24: Steel capacity utilisation has recovered from the trough
Steel capacity utilisation has recovered from the trough, but recovery in the developed economies remains tenuous For personal use only Monthly Crude Steel Utilisation (%) Yearly Global Crude Steel Utilisation (%) (Jan 08 – Dec 09) (2000 – 2009) 100% Global Capacity Utilisation (%) 80% 100% 60% 40%
Slide 25: Iron ore costs correlated to HRC prices
Historically iron ore costs are strongly correlated to HRC prices, but steel capacity utilisation is key… For personal use only Annual Changes in Seaborne Iron Ore Demand 250 200 China 150 Rest of World mt per annum 100 50 - (50) (100) (150) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 200
Slide 26: Consolidation likely to continue in developing world
…consolidation likely to continue, particularly in developing world For personal use only Top 10 Share of Global Steel Production Top 3 Share of Global Production: 2008 40% 1997 69% 2007 57% 17% 27% 25% 13% 22% 19% 69% 13% 13% 33% 32% 8% 3% 3% Top 10 (World) Top 10 (World Steel(1) Iron Ore(2) Met Co
Slide 27: Outlook
For personal use only Outlook Page 27
Slide 28: Outlook
Outlook For personal use only y Currently expect to deliver a small reported profit for FY 2010, largely due to: ¾ continued improvement in domestic/export demand ¾ improved steel prices ¾ further cost reduction initiatives y Key sensitivities to 2H include: ¾ iron ore prices from 1 April 2010 ¾ ste
Slide 29: BlueScope Steel's Financial Results
For personal use only BlueScope Steel’s Financial Results Page 29
Slide 30: Earnings performance
Earnings performance For personal use only A$ Millions FY2005 FY2006 FY2007 FY2008(3) FY2009 1H FY09 1H FY10 Revenue (1) 7,964 8,031 8,913 10,495 10,329 6,156 4,103 EBITDA (2) 1,655 850 1,423 1,420 380 857 154 EBIT (2) – Reported 1,358 556 1,099 1,063 15 665 (23) – Underlying (4) 1,559 840 1,057 1,2
Slide 31: Underlying EBIT variance 1H FY2009 to 1H FY2010 by major item
Underlying EBIT variance 1H FY 2009 to 1H FY 2010 by major item …largely driven by weaker steel spread For personal use only 1000 Raw Materials: Coal 325 External Steel Feed 327 Net Spread Reduction ($823m) Iron ore 147 800 $753m Alloys 38 Scrap 27 600 NRV's 165 Opening Stock Adjustments (270) Oth
Slide 32: Underlying EBIT variance 2H FY2009 to 1H FY2010
Underlying EBIT variance 2H FY 2009 to 1H FY 2010 ……improvement driven by lower costs, improved spread, North Star and FX For personal use only Raw Materials: Coal 212 $136m 0 Ext Steel Feed 137 Iron ore 146 ($4m) ($22m) -100 Alloys (20) $318m Scrap 4 -200 NRV's 127 Opening Stock Adj (171) Underlyin
Slide 33: Fixed cost and overhead reductions
Fixed cost and overhead reductions: on track to deliver in excess of $325M cumulative permanent reduction in the cost base by end FY2010 For personal use only y $295M reduction in the cost base for nine months in FY2009 ¾ $132M permanent savings ¾ $163M temporary savings (not carried over into FY201
Slide 34: Categorisation of $216M 1H FY2010 cost saving initiatives
General categorisation of $216M 1H FY2010 cost saving initiatives For personal use only Split of 1H FY2010 Savings Cost Categories and Examples of 1H FY2010 Savings Process improvements ie Manufacturing production slabmaking scheduling to optimisation ie sinter gas improve throughput, sinter consump
Slide 35: Divisional categorisation of cost saving initiatives
Divisional categorisation of 1H FY2010 cost saving initiatives For personal use only Divisional Split of Total 1H FY2010 Savings Divisional Split of 1H FY2010 Permanent Savings Corporate 3% Corporate 6% Asia Asia 8% 13% Coated & Coated & NZ Steel Industrial Industrial NZ Steel 10% Products Products
Slide 36: Port Kembla Steelworks – Contracting of primary raw materials
Port Kembla Steelworks – Contracting of primary raw materials in FY2010 For personal use only y Coal ¾ Coking coal principally sourced from local BHP Billiton Illawarra mines (30 year contract from July 2002). Pricing reflects average price paid by all long term customers of BHP Billiton Australian
Slide 37: Cashflow
Cashflow ….small draw on cash through the half For personal use only Modest A$ millions FY2007 FY2008 FY2009 1H FY2009 1H FY2010 cash inflow Cash from operations 1,364 1,579 534 926 144 Working capital movement (21) 69 250 (863) 108 Working capital level contained at Net operating cash flow 1,343 1,
Slide 38: Balance sheet
Balance sheet ….conservative stance maintained For personal use only As at See previous slide A$ Millions 31 Dec 2008 30 June 2009 31 Dec 2009 Decreased on account of Assets Material cashA$, stronger balance arising and U.S. from equity raisings and favourable Cash 35 369 215 seasonality and busines
Slide 39: Balance Sheet – inventory
Balance Sheet …inventory largely unchanged June to December 2009 For personal use only RMS 994 WIP 571 FGS 1,057 Other 193 Book Value of Inventory ($M) 3000 $2,815m RMS 617 RMS 519 RMS 338 2500 WIP 167 WIP 475 WIP 569 FGS 712 FGS 517 FGS 498 Other 164 Other 191 Other 182 2000 $1,660m $1,702m $127m $
Slide 40: Balance Sheet – conservative gearing
Balance Sheet …maintaining with conservative gearing For personal use only y Gearing at 11.6% (ND/ND+E) y Net debt at 31 December of $733.6M, comprised of $948.2M of drawn debt less $214.6m cash y 31 Dec 2009 total undrawn facilities and cash of A$1,631M vs. A$1,757M 31 July 2009 Net Debt ($M) 900 1
Slide 41: Debt Facilities and Maturity Profile
Debt Facilities and Maturity Profile …no material refinancing obligation due until July 2011 For personal use only Cost of Debt A$M 1,200 y Current average cost of drawn debt 7.5% 1,000 y Plus 800 ¾Commitment 600 1,075 fees on undrawn 400 200 loan note 587 200 112 facilities approx 101 147 2.25%pa 0
Slide 42: EBIT sensitivity to HRC price, raw materials and FX
EBIT is sensitive to realised export HRC price, raw material costs and foreign exchange movement For personal use only Estimated impact on EBIT A$m Assumption FY 2010 (1) (indicative) +/– US$25 / tonne movement in BlueScope’s average realised export HRC price(2) 76 +/– 1¢ movement in Australian doll
Slide 43: Summary
Summary For personal use only y 1H FY 2010 – improved performance on 2H FY 2009 ¾ In particular our Asian business ¾ Blast Furnace No. 5 completed its production ramp up, following reline, in October 2009. y Continued focus on ¾ Cost reductions ¾ Working capital – managing inventory at a time of inc
Slide 44: Questions & Answers
For personal use only Questions & Answers Page 44
Slide 45: First Half FY2010 Results Presentation
For personal use only First Half FY2010 Results Presentation Period Ended 31 December 2009 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 15 February 2010 ASX Code: BSL
Slide 46: Supporting Information
For personal use only Supporting Information Page 46
Slide 47: Reporting Segments Additional Information
For personal use only Reporting Segments Additional Information Page 47
Slide 48: Reporting Segments
Reporting Segments Corporate / Group For personal use only Australia New Zealand Asia North America Coated & Australian New Zealand Coated & Hot Rolled Coated & Industrial Distribution & Pacific Building Products Building Products & Solutions Islands Products North America Products Australia Product
Slide 49: Australia
For personal use only Australia Coated & Industrial Products Distribution & Solutions Page 49
Slide 50: Coated & Industrial Products Australia
Coated & Industrial Products Australia For personal use only Markets y Domestic – lower sales volume across all sectors, and lower prices Underlying EBIT (given 1Q FY2009 was very strong); volumes better than 2H FY2009 1,200 – continuing recoveries in residential construction, distribution, pipe & 1
Slide 51: Coated & Industrial Products Australia – underlying EBIT variance
Coated & Industrial Products Australia – underlying EBIT variance analysis (1H FY 2010 vs. 1H FY 2009) For personal use only 800 Coal 325 Net Spread Reduction + ($620M) Iron ore 147 600 $553m Repairs & Maintenance 50 Alloys 38 Cold Mill Closure 46 Scrap 27 Freight 13 NRV's 128 Labour 11 400 Openin
Slide 52: Key drivers of Coated & Industrial Products Australia result
BlueScope Steel – Key drivers of Coated & Industrial Products Australia 1H FY2010 result For personal use only Held above or around US$1,000/t through August, then declined to around US$500/t by December Moved down to circa US$400/t in May and recovered back to US$500/t by 1H 2008 2H 2008 1H 2009 2H
Slide 53: Coated & Industrial Products Australia – Despatch Mix
Coated & Industrial Products Australia - Despatch Mix For personal use only Smorgon Distribution IMSA consolidated from Feb consolidated from Aug 2008. Internal despatches 2007 – increases internal increase and external Chart shows despatch volume, kt despatches, decreases despatches decrease due to
Slide 54: PKSW – Production & Despatch Flow
PKSW – Production & Despatch Flow For personal use only Port Kembla Steelworks Slab Production Slab Export 1H 2010 1H 2009 839 722 375 161 2,187 2,400 Interco Western Port (2) 464 561 Inventory movements & yield losses Hot Strip HRC Domestic Mill 1,112 1,200 256(3) 314 Port Kembla Steelworks Export
Slide 55: Coated Australia – Annual Capacities
Coated Australia – Annual Capacities For personal use only Western Hot Strip Mill HRC Port 1,400 Pickle Line HRC 1,100 Slab Cold Mill CRC 1,000 Port Kembla Metal Coating Lines Metal Coated 830 Strip Steelworks Paint Lines Painted Strip 330 HRC Springhill Coupled Pickled Cold Mill CRC 990 Metal Coati
Slide 56: Port Kembla Steelworks – despatches by half year
Port Kembla Steelworks - despatches by half year For personal use only 3000 2,600 2,609 2,608 2,602 2,118 1,348 2,081 2500 20% 30% 32% 32% 2000 13% 18% 26% 20% (ktonnes) 1500 21% 18% 18% 16% 36% 1000 12% 500 49% 50% 50% 62% 67% 52% 58% 0 FY07-1H FY07-2H FY08-1H FY08-2H FY09-1H FY09-2H FY10-1H Intern
Slide 57: Port Kembla Steelworks productivity
Port Kembla Steelworks productivity For personal use only Productivity (Crude Steel Output, Tonnes/Employee/Year) Employees Productivity (Tonnes per person per year) 6,000 2,000 1,750 1,500 Employee Numbers 4,000 1,250 1,000 2,000 750 500 250 0 * 0 2001 2002 2003 2004 2005 2006 2007 2008 2009(YTD De
Slide 58: Port Kembla Steelworks – cost profile
Port Kembla Steelworks – cost profile For personal use only Total cost $ A$m FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 1H10 S&A Conversion Costs Despatch & Freight Raw Materials Notes: (1) Chart shows cost of despatches (2) Conversion costs include depreciation (3) Raw material includes iron
Slide 59: PKSW – Consumption of primary raw materials
PKSW – Consumption of primary raw materials For personal use only Volume consumed in production (dry mt) FY2008 FY2009 1H FY2010 Coal Coking 3.0 2.2 1.3 PCI 0.6 0.4 0.3 Anthracite 0.1 0.0 0.0 Total 3.7 2.6 1.6 Iron Ore Fines 4.0 2.9 1.7 Lump 1.6 1.0 0.6 Pellets 2.3 1.6 0.8 Total 7.9 5.5 3.1 (1) Scra
Slide 60: Global iron ore, coking coal and semi soft coal benchmark prices
Global iron ore fines, coking coal and semi soft coal benchmark prices For personal use only 2002 2003 2004 2005 2006 2007 2008 2009 2010 Iron Ore Fines $17.97 $17.54 $19.12 $22.68 $38.88 $46.27 $50.66 $91.14 $61.061 US$/dmt % change 4.3% -2.4% 9.0% 18.6% 71.5% 19.0% 9.5% 79.9% -33% Hard Coking Coal
Slide 61: Slab and HRC price benchmarks
Slab and HRC price benchmarks for Asia & Australian sales For personal use only The following Steel Business Briefing prices continue to be a reasonable public benchmark for BlueScope’s domestic and Asian HRC prices (noting this can change over time). US$/t Asian HRC Benchmark Price SBB HRC East Asi
Slide 62: Port Kembla Steelworks – Blast Furnace Reline
Port Kembla Steelworks– No. 5 Blast Furnace Reline For personal use only Page 62
Slide 63: Port Kembla Steelworks – Blast Furnace Reline
Port Kembla Steelworks – No. 5 Blast Furnace Reline For personal use only Reline activities entailed the following stages: y Copy book run-down Shut-down & tap salamander y Salamander tapped; no blasting in hearth required Demolition y Completed as planned – no material issues y No environmental inc
Slide 64: Port Kembla Steelworks – Sinter Plant Upgrade
Port Kembla Steelworks – Sinter Plant Upgrade For personal use only y Sinter Plant re-commissioned 29 June 09 y Increased sinter production capacity by 1.1mtpa to 6.6mtpa y Total capital cost approx. $142m v $134m budget largely due to difficulties with installation of the first precipitator y Plann
Slide 65: What is sinter?
What is sinter? For personal use only FINE ORES Blended and Fluxed in Sinter Machine to Produce Sinter PELLETS LUMP ORES Pellets Sinter Lump PREPARED BURDENS BLAST FURNACE Page 65
Slide 66: Australia Distribution & Solutions
Australia Distribution & Solutions For personal use only Underlying EBIT Underlying performance – 1H FY2010 vs 1H FY2009 125 y $72M EBIT reduction largely due to : 100 86 ¾ reduced margins with lower average domestic 75 selling prices being partly offset by lower steel 75 64 feed costs 50 ¾ Lower de
Slide 67: Australia Distribution & Solutions – underlying EBIT variance
Australia Distribution & Solutions – underlying EBIT variance (1H FY 2010 vs. 1H FY 2009) For personal use only 100 Net Spread Reduction ($72M) 80 $75m 60 40 EBIT A$M 20 $71m $29m $3m 0 -20 ($30m) -40 -60 ($143m) -80 Dec 08 HY Domestic Prices Raw Material Costs Volume Conversion & Other Dec 09 HY
Slide 68: Australia Distribution & Solutions
Australia Distribution & Solutions For personal use only The Distribution and Solutions division brings together BlueScope Steel’s Australian-based downstream businesses Emerging Sheet & Coil Business y Plate Processing y Tanks/Irrigation y Roofing Services y Tube y Hot Rolled coil y High and Low y
Slide 69: Australia Distribution and Solutions – Overview
Australia Distribution and Solutions - Overview For personal use only Darwin KEY Lysaght Cairns Sheet & Coil Mareeba Processing Services Sheet Metal Supplies Townsville Bluescope Distribution Charters Towers Mount Isa Bluescope Water Mackay Rockhampton Emerald Gladstone Bundaberg Archerfield Acacia
Slide 70: Distribution – Market structure in Australia
Distribution – Market structure in Australia (1H FY2010) For personal use only Sales Volume by Product Group Sales Volume by Market Segment Auto & Other Transport Non-dwelling 8% 12% Construction Reinforcing Sheet & Coil Agri & 16% 8% 28% Mining 7% Merchant Bar 11% Dwelling Construction 24% Structur
Slide 71: New Zealand & Pacific Islands
For personal use only New Zealand & Pacific Islands Page 71
Slide 72: New Zealand and Pacific Islands Products
New Zealand and Pacific Islands Products For personal use only Underlying EBIT 100 Markets 87 y Domestic – subdued demand conditions both in 90 85 78 residential and non-residential construction 80 y Export – export conditions still challenging 70 60 49 Underlying performance – 1H FY2010 vs 1H FY200
Slide 73: New Zealand and Pacific Islands – underlying EBIT variance
New Zealand and Pacific Islands Products – underlying EBIT variance analysis (1H FY 2010 vs. 1H FY 2009) For personal use only 90 Net Spread Reduction ($73M) 80 $78m 70 Costs Repairs & Maintenance 24 60 Utilities 4 Other 2 EBIT A$M 50 40 $30m 30 $21m 20 ($13m) ($1m) 10 ($65m) $12m $3m 0 ($2m) -10
Slide 74: Operations – New Zealand
Operations – New Zealand For personal use only Glenbrook y Iron and Steel production Auckland y Hot and Cold Rolling Mills Glenbrook Tauranga y Dual Pot Metal Coating Line Wharf Waikato North Head y Paint Line Taharoa y Plate Line y Hollow sections plant Waikato North Head Mine y Concentrated iron s
Slide 75: New Zealand - unique direct reduction process
New Zealand - unique direct reduction process For personal use only Page 75
Slide 76: New Zealand – raw materials
New Zealand – raw materials For personal use only Iron Sand Concentrate (Waikato North Head Mine) y Iron sand mined and concentrated on site - 58.5% Fe y 13mt of contained product in probable reserves and 13mt of contained product in proven reserves y Additional 591mt of inferred resource y Concentr
Slide 77: New Zealand Steel – 1H FY2010 product flow
New Zealand Steel – 1H FY 2010 product flow Mine Sites For personal use only Iron Sands Export 0.47mt 0.99mt NZS Slab 0.26 HRC 24% Domestic 10% mt Export 47% Export Vanadium Interco (Export) 43% Slag 4.6kt Plate 12% Domestic 50% Export 50% Pipe 4% Domestic 100% Cold Mill 60% Domestic 11% Export 8% I
Slide 78: New Zealand – 1H FY2010 product distribution
New Zealand– 1H FY2010 product distribution (external and internal) For personal use only Indicative Product Mix (t) Indicative Sales by Country (t) Painted Asia 10% 11% Australia Pacific 14% Japan Cold Rolled Islands 4% Metal Coated 13% 9% 37% Pipe 4% USA/Canada 11% Indicative Sales by Sector (t) H
Slide 79: New Zealand – Non steel revenue streams
New Zealand – 1H FY2010 Non steel revenue streams For personal use only Iron Sand y Iron sands exports from Taharoa of 467kt, an increase of 25% on both previous half yearly periods. y The increase over 1H FY2009 relates to timing of shipments, and above 2H FY2009 is due to a scheduled dry dock for
Slide 80: Asia – Coated & Building Products Asia
For personal use only Asia Coated & Building Products Asia Page 80
Slide 81: Coated and Building Products Asia
Coated and Building Products Asia For personal use only Markets y Despatch tonnes stronger in aggregate, but slightly weaker in Underlying EBIT Thailand and Malaysia 100 y Conditions in each constituent nation continue to improve, and are 76 particularly positive in 80 ¾ China: Government projects a
Slide 82: Coated and Building Products Asia – underlying EBIT variance
Coated and Building Products Asia – underlying EBIT variance analysis (1H FY 2010 vs. 1H FY 2009) For personal use only 100 Net Spread Improvement $54M $35m $1m $50m 50 $272m ($16m) ($16m) ($7m) ($1m) 0 EBIT A$M -50 ($47m) -100 -150 -200 ($171m) -250 Dec 08 HY Export Prices Domestic Raw Material V
Slide 83: North America
For personal use only North America Hot Rolled Products Coated & Building Products Page 83
Slide 84: Hot Rolled Products North America
Hot Rolled Products North America For personal use only BSL share of equity accounted net profit before tax This segment includes: 125 y North Star BlueScope Steel (50% interest) 105 100 y Castrip LLC 69 75 50 36 Underlying performance – 1H FY2010 vs 1H FY2009 y North Star BlueScope 25 15 14 A$ Mill
Slide 85: Coated and Building Products North America
Coated and Building Products North America For personal use only Segment comprises: Underlying EBIT (1) y Buildings: combined businesses of Butler, Varco Pruden & HCI 125 y Steelscape, Metl Span, ASC Profiles 99 100 Underlying performance – 1H FY2010 vs 1H FY2009 75 61 y $26M EBIT reduction largely
Slide 86: Coated and Building Products North America – EBIT variance
Coated and Building Products North America – underlying EBIT variance analysis (1H FY 2010 vs. 1H FY 2009) For personal use only Comprises: y BlueScope Buildings North America: Butler, VP, HCI y SteelScape, MetlSpan, ASC Profiles 150 Net Margin Increase $35M 100 $38m Net Spread Reduction ($3M) 5
Slide 87: Other
For personal use only Other Page 87
Slide 88: Strategy
Strategy…BluePrint provided the focus; operational focus last 12 months; now sales/market development focus and review of our strategy underway For personal use only y Reinvigorate our position in the Australian/NZ markets, through ongoing focus on strengthening our customer relationships, product a
Slide 89: Global footprint and production capacities
BlueScope Steel’s global footprint and production capacities as at 31 Dec 2009 For personal use only NorthStar (2) Kalama • Raw Steel 2.0mt • Cold Rolling 500kt • Metal Coating 250kt • Hot Rolling 2.0mt India(1) • Painting 120kt • Metal Coating (+250kt) North America • Painting (+150kt) • Butler/VP
Slide 90: BlueScope Steel China footprint
BlueScope Steel China footprint For personal use only 1H 2010 REVENUE: [TIM] A$242M EBITDA: A$ 23M EBITDA – Underlying: A$ 23M EMPLOYEES: 2,013 NET OPERATING ASSETS (PRE-TAX): A$132M SUZHOU BlueScope Steel in China 1 Metal Coating/Painting Line Facility 4 Lysaght Manufacturing Facilities 3 Butler PE
Slide 91: BlueScope Steel North American footprint
BlueScope Steel North American footprint 1H 2010 Revenue: A$ 693M EBITDA (reported): A$48M Employees: 3,753 incl. North Star For personal use only Net Operating Assets (Pre-Tax): A$965M Note: Revenue excludes BSL’s 50% interest in North Star BlueScope Steel. Burlington, Ontario Key ASC MetlSpan ASC
Slide 92: Calendar year earnings
Calendar year earnings For personal use only A$ Millions CY2003 CY2004(3) CY2005 CY2006 CY2007 CY2008(4) CY2009 Revenue(1) 5,328 7,029 7,980 8,693 9,333 11,926 8,283 EBITDA(2) 857 1,501 1,411 1,052 1,130 1,775 (324) EBIT(2) - reported 581 1,212 1,111 742 792 1,399 (673) - operational - - 1,308 966 9
Slide 93: Historical dividend profile since listing
Historical dividend profile since listing in July 2002 For personal use only Interim Final Special 70 42 / 20¢ 60 20 47 / 0¢ 49 / 0¢ 50 44 / 0¢ 30 / 10¢ 40 10 26 27 22 / 7¢ 24 30 24 7 20 18 13 10 18 20 21 22 12 5 / 0¢ 9 0¢ 5 0 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 1H FY2010 Page 93
Slide 94: Reconciliation – Reported EBIT / NPAT to Underlying
Reconciliation – Reported EBIT / NPAT to Underlying For personal use only EBIT ($M) NPAT ($M) 1H 2010 1H 2009 1H 2010 1H 2009 Reported (23) 665 (28) 407 Unusual or non-recurring events: ¾ Asset impairment (1) - 36 - 36 ¾ Profit on sale and leaseback of properties (2) (4) - (3) - ¾ Restructure & redu
Slide 95: Underlying EBIT variance movement 1H FY2009 to 1H FY2010
Underlying EBIT variance movement 1H FY2009, 2H FY 2009 and 1H FY 2010 For personal use only Net Spread: Exp prices (784) Dom prices (252) Raw materials 255 1000 800 $753m Underlying EBIT A$ Millions 600 400 Net Spread: Exp prices 87 200 Dom prices (410) Raw materials 410 $318m 0 ($781m) ($4m) ($22m
Slide 96: Reported Corporate and Group Costs
Reported Corporate and Group Costs – impacted each half by profit in stock elimination and foreign exchange movements For personal use only A$M 50 30 6 -9 -3 0 1H 2008 2H 2008 FY 2008 1H 2009 2H 2009 FY 2009 1H 2010 -50 -41 -100 -106 -150 -136 Comprised of: Underlying cost (58) (43) (101) (61) (35)
Slide 97: Balance Sheet – net equity flat
Balance Sheet …net equity flat For personal use only 7000 6500 6000 $5,663m $54m $5,607m $1m 5500 ($28m) EBIT A$M ($83m) 5000 4500 DB super fund actuarial adjustments taken through Retained Profits account: Pre-tax 76 4000 Tax (22) 3500 3000 June 2009 Prof its Exchange DB Super & Other Dec 2009 Fluc
Slide 98: Major approved capital projects and investment summary
Major approved capital projects and investment summary (in addition “Stay in Business” capital is approx. 75% of depreciation) For personal use only PROJECTS Total Est. Actual to 2H FY2010 FY2011 FY2012 All in A$million Capex / Cost 31-Dec-09 Projects completed Thailand – Coating expansion 80 80 - -
Slide 99: Zinc and Aluminium Usage
Zinc and Aluminium Usage For personal use only Tonnes Zinc Aluminium 1H FY2010 1H FY2009 1H FY2010 1H FY2009 AUSTRALIA Springhill 10,768 9,862 4,955 4,816 Western Port 8,496 10,097 4,516 5,162 Sub-total 19,264 19,959 9,471 9,978 NEW ZEALAND 3,096 3,248 1,636 1,779 ASIA 5,974 6,263 6,579 6,706 TOTAL
Slide 100: Committed Debt Facilities as at December 2009
Committed Debt Facilities as at 31 December 2009 For personal use only Committed Debt Facilities as at 31 Dec 2009 Committed Drawn Maturity US$/THBm A$m A$m Syndicated Loan Note Facility Tranche 1 Jul-11 200 16 Tranche 2 Jul-12 1,075 - 2004 US Private Placement Notes Series A Jul-11 US$100 112 112 S
Slide 101: Shares on issue – no material change during 1H FY2010
Shares on issue – no material change during 1H FY2010 For personal use only Million (rounded) y Shares on issue at listing, July 2002 793 y Share buy-backs (116) y Dividend reinvestment scheme issues +67 y Employee share plan issues +34 y Institutional share placement, Dec 2008 +97 y Share purchase
Slide 102: Carbon Pollution Reduction Scheme (CPRS)
Carbon Pollution Reduction Scheme (CPRS) For personal use only y November 2009, Government announced amendments to CPRS: ¾ Aligning permit allocation with actions of international competitors (‘70 per cent’ test). ¾ Allocating permits to gassy coal mines, which should reduce Scope 3 coal costs. ¾ Mi
Slide 103: Monthly Crude Steel Production
Monthly Crude Steel Production For personal use only YoY% Change (Jan 08 – Dec 09) North America 60% 49% 40% 31% 20% 12% 8% 5% 4% 7% 6% 3% 3% 0% -20% -2% -7% -21% -27% -40% -42% -39% -37% -60% -52% -53% -51% -49% -51% -47% -46% Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 YoY% Change EU 2
Slide 104: China has rapidly increased demand for coals
Raw Materials - China has also rapidly increased demand for coals For personal use only Growth of Monthly Chinese Coking Coal Net Imports Growth of Monthly Chinese Thermal Coal Net Imports 15 6 Net Imports 5 Net Imports 10 Imports Imports 4 Exports Exports mt monthly 5 mt monthly 3 2 - Jun-07 Jun-08
Slide 105: Construction remains the largest consumer of steel globally
Construction remains the largest consumer of steel globally For personal use only Real output by steel-use sector, US$b $USb 4,000 Automotive Mechanical engineering 3,500 Metal fabrication 575 546 Construction 548 3,000 525 508 401 452 483 402 405 431 440 466 369 729 735 2,500 353 360 672 329 615 32
Slide 106: Contribution of China's Real GDP Growth
Contribution of China’s Real GDP Growth (%) For personal use only 14% Net Exports of Goods and Services 12% Gross Capital Formation Final Consumption Expenditure 10% 8% 6% 4% 2% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -2% -4% -6% Source: National Bureau of Statistics
Slide 107: First Half FY2010 Results Presentation
For personal use only First Half FY2010 Results Presentation Period Ended 31 December 2009 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 15 February 2010 ASX Code: BSL