Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Corporate Update (December 2018)
64 slides from Bluescope Steel's corporate update, Dec 3, 2018
Slide 1: Investors' Visit to ASEAN Sites
INVESTORS’ VISIT TO ASEAN SITES PACK 1: NS BLUESCOPE COATED PRODUCTS Charlie Elias Chief Executive Building Products Asia and North America December 2018 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058
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: BlueScope Overview
BLUESCOPE OVERVIEW 3 Australian Buildings New Zealand & Building Products Asia North Star Steel Products North America Pacific Steel & North America 100% Ownership Joint Ventures Financial year ended 30 June 2018 Revenue: $5,423M Revenue: $1,924M Revenue: $1,106M Revenue: $834M Revenue: $2,694M EBIT
Slide 4: BlueScope's Diversified Portfolio
BLUESCOPE’S DIVERSIFIED PORTFOLIO 4 Geographic diversity and increasing contribution from value-added products Underlying EBITDA by region ($M, 2018) BlueScope despatch volume mix 100% Buildings North America NZ & Pacific $155M 90% Asia 9% Building products $173M 80% Higher value 10% added 70% Austr
Slide 5: NS BlueScope Coated Products
NS BLUESCOPE COATED PRODUCTS
Slide 6: NS BlueScope Summary
NS BLUESCOPE SUMMARY 6 We have a compelling opportunity in ASEAN • Large and growing populations; growing levels of wealth • Markets trending towards quality branded products • Home appliance opportunity In the near term, external macro factors are negatively impacting markets • Broader geopolitical
Slide 7: Agenda
AGENDA 7 1 Introduction to NS BlueScope Coated Products 2 Macroeconomic, Industry and Sector Overview 3 Footprints and Markets 4 Brands, Channels, Products and Segments 5 Financial Drivers, Performance and Strategy 6 Sustainability
Slide 8: Safety
SAFETY 8 Progress towards our goal of Zero Harm LTIFR BlueScope LTIFR: 0.62 Lost time injuries per million man-hours worked 0.2 0.3 0.0 0.0 FY2015 FY2016 FY2017 FY2018 BlueScope FY18 MTIFR: 5.4 MTIFR Medically treated injuries per million man-hours worked 1.5 1.2 1.5 1.0 FY2015 FY2016 FY2017 FY2018
Slide 9: Business Structure
BUSINESS STRUCTURE 9 This presentation is focused on the NS BlueScope Coated Products joint venture Also in BlueScope’s Building Products segment: BlueScope NSSMC 1 50% 50% BlueScope Tata Steel BlueScope 50% 50% 100% NS BlueScope Coated Products (NBCP) A BlueScope controlled, and therefore consolida
Slide 10: Management Team
MANAGEMENT TEAM 10 Charlie Elias Chief Executive NS BlueScope Amber Williams Isao Takenami Mark Crimmins Sam McMahon Sarah Deukmejian Kerri Thurlow Noriatsu Yanagoika General Counsel CFO President VP Strategy, Marketing President VP People VP Business Asia NS BlueScope ASEAN and Business Devt. North
Slide 11: NS BlueScope History
NS BLUESCOPE HISTORY 11 Over 50 years of experience in the ASEAN region 1968 1988 1994 1996 2008 2013 2016 Lysaght Lysaght Metal coating Metal coating Acquisition of IMSA 50% J.V. with Lysaght Malaysia Thailand and painting and painting Steel Corp, including NSSMC Myanmar established established lin
Slide 12: Working with Nippon Steel and Sumitomo Metal
WORKING WITH NIPPON STEEL AND SUMITOMO METAL 12 Strong, long-standing relationship with Nippon Steel and Sumitomo Metal • Many technical collaborations (over 65 projects since 1970) • Successful partnership over the five years of the NS BlueScope Coated Products JV • Both companies are leaders in st
Slide 13: Alignment to BlueScope Strategy
ALIGNMENT TO BLUESCOPE STRATEGY 13 We are A steel building products company Our Target Top quartile shareholder returns and safe operations Our Strategic Focus areas Deliver Grow premium branded steel Maximise value from competitive Ensure ongoing businesses with strong “Best in Class” commodity ste
Slide 14: Macroeconomic, Industry and Sector Overview
MACROECONOMIC, INDUSTRY AND SECTOR OVERVIEW
Slide 15: Macroeconomic Summary: Economic Opportunities
MACROECONOMIC SUMMARY 15 Compelling opportunity in ASEAN Generally improved financial stability ASEAN’s share of world (2017) Economic opportunities Robust foreign direct investment and infrastructure investment 8.6% 9.4% 7.2% 6.6% Growth oriented government policies and leadership 4.5% Population G
Slide 16: ASEAN Macroeconomy and Industry Drivers
ASEAN MACROECONOMY AND INDUSTRY DRIVERS 16 Strengthening macroeconomic performance despite pockets of geopolitical instability Real GDP growth (annual change, %) Forecast Foreign direct investment (US$Bn, current) Forecast 8 40 6 30 4 20 2 10 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 17: Population Growth and Demographics
POPULATION GROWTH AND DEMOGRAPHICS 17 ASEAN is seeing growth in its working age population; increasing its proportion of middle-class consumers Middle class share of population (2017, %) ASEAN middle class population (million) ASEAN working age population change (%) Estimated CAGR Total 2015 to 2030
Slide 18: Urbanisation and Expanding Cities
URBANISATION AND EXPANDING CITIES 18 Over half of ASEAN's population live in large cities, with the number and size of these cities growing rapidly ASEAN regional population (2017, million people) ASEAN large city population growth (2015-2025, million people) 2015 2025 (CAGR) Jakarta 10.3 12.6 (2.2%
Slide 19: Urbanisation and Expanding Cities
URBANISATION AND EXPANDING CITIES 19 These rapidly growing cities currently account for more than two thirds of the region's GDP Share of population living in urban areas (% of total population) GDP per capita (2017, US$ per person, current) 25,000 Forecast 100 17,700 90 Malaysia 15,000 80 70 9,360
Slide 20: Global Manufacturing and Technology Hub
GLOBAL MANUFACTURING AND TECHNOLOGY HUB 20 Growth will be supported by an ongoing shift to ASEAN in global manufacturing and technology industries Manufacturing GDP (US$Bn, current) The digital economy impact on ASEAN GDP (US$Bn, current) Forecast 300 $0.8 - $1.2 trillion from digitally enabled grow
Slide 21: Building and Construction Industry Trends
BUILDING AND CONSTRUCTION INDUSTRY TRENDS 21 Macro trends are driving building and construction to higher quality, light weight sustainable products URBANISATION / GLOBALISATION / SCARCITY OF CHANGING SUSTAINABILITY NEW TECHNOLOGY COMPETITION RESOURCES REGULATIONS • Growing middle class • Oversupply
Slide 22: Demand for Steel Products
DEMAND FOR STEEL PRODUCTS 22 Coated demand growth forecast to continue; ASEAN steel consumption levels below developed economies Total coated steel product consumption (million tonnes) Finished steel consumption per capita (2017, kg/person) Forecast 20 +4% 600 17.8 523 18 17.1 16.4 500 16 15.3 15.6
Slide 23: Footprints and Markets
BLUESCOPE FOOTPRINTS AND MARKETS
Slide 24: ASEAN Footprint
ASEAN FOOTPRINT 24 Our reach extends across all of ASEAN; a large and growing market, attuned to quality Local presence – metal coating, painting and rollforming Local presence – rollforming only Myanmar Served by nearby NS BlueScope facility Laos Thailand Philippines Cambodia Vietnam Malaysia Brune
Slide 25: Our Footprint in Thailand
OUR FOOTPRINT IN THAILAND 25 Key domestic coated producer with strong local brands and standards • Established in 1988 Khon Kaen • Leading position in Project and Retail segments • Expansion into new Home Appliance segment with SuperDyma® • Three manufacturing facilities: − CRC mill (350ktpa), metal
Slide 26: Our Footprint in Indonesia
OUR FOOTPRINT IN INDONESIA 26 Extensive footprint across main regions of Indonesia • Established in 1973 • Strong presence in projects segment with opportunity to grow in retail • New metal coating line installed in 2011 to support retail segment growth • Eight manufacturing facilities: Metal coatin
Slide 27: Our Footprint in Malaysia, Brunei and Singapore
OUR FOOTPRINT IN MALAYSIA, BRUNEI AND SINGAPORE 27 Leading player in Projects segment with opportunity to grow in Retail Kota Kinabalu • Established in 1968 Brunei • Recently upgraded metal coating line to include inline painting Bintulu technology to support growth in Retail market Shah Alam • Expa
Slide 28: Our Footprint in Vietnam
OUR FOOTPRINT IN VIETNAM 28 Vibrant business in Vietnam with plenty of growth potential Ha Tay • Established in 1993, and is the newest metallic coating facility in ASEAN • Leading player in Projects segment with large opportunity to grow in Retail • Developing channels to extend reach to diverse cu
Slide 29: Our Footprint in the United States
OUR FOOTPRINT IN THE UNITED STATES 29 Presence on the West Coast in coating, painting and building products The Rocky Mountains • Business consists of Steelscape (metal coating and painting) and ASC Profiles (building panels) which WA have merged since 2012 MT ND Kalama OR • Employs ~600 staff ID SD
Slide 30: Brands, Channels, Products and Segments
BRANDS, CHANNELS, PRODUCTS AND SEGMENTS
Slide 31: Coated Products Value Chain
COATED PRODUCTS VALUE CHAIN 31 We serve three key segments through multiple channels Suppliers Processors and users Applications of the products (eg NS BlueScope) Processors/ MANUFACTURING SEGMENT Hot dip component mfg. Industrial manufacturing Painted galvanizing Such as automotive, home appliances
Slide 32: End Use Applications
END USE APPLICATIONS 32 Broad range of coated flat steel products for a range of applications – focused on building and construction Products Primary end-use markets Applications Painted (incl. pre-painted • Structural sections Building and construction COLORBOND® steel) • Industrial and commercial
Slide 33: Coated and Painted Products for the Construction Market
COATED AND PAINTED PRODUCTS FOR THE CONSTRUCTION MARKET 33 Tiered product offering for the markets we serve Product Positioning Premium – Projects PROJECTS Value – Projects Premium – Retail ® RETAIL Lumba Value – Retail
Slide 34: Rollformed Products
ROLLFORMED PRODUCTS 34 Range of rollformed products, customised for the markets we serve LYSAGHT KLIP-LOK® LYSAGHT® SMARTRUSS™ SKYLINE ROOFING® LYSAGHT BONDEK® LYSAGHT® Purlins DESIGN SPAN®hp
Slide 35: Sales and Marketing Channels: Projects
SALES AND MARKETING CHANNELS: PROJECTS 35 Strong presence in projects markets: industrial & commercial, infrastructure & institutional, and residential End user End user Customer Coated steel sub-segments segments Influencers Channels segments producers • FDI Pre-Engineered Buildings (PEB) BlueScope
Slide 36: Sales and Marketing Channels: Retail
SALES AND MARKETING CHANNELS: RETAIL 36 Actively growing our retail presence End user End user Customer Coated steel sub-segments segments Influencers Channels segments producers BlueScope Authorised Dealer BlueScope • Small warehouses Small and • Schools Medium Neighbours • Facilities Enterprises (
Slide 37: Sales and Marketing Channels: Manufacturing
SALES AND MARKETING CHANNELS: MANUFACTURING 37 Growing our exposure to and experience in the manufacturing segment, particularly in home appliances End user End user Customer Coated steel sub-segments segments Influencers Channels segments producers Service centres BlueScope • Air conditioners • Was
Slide 38: Home Appliance Segment
HOME APPLIANCE SEGMENT 38 Targeting white goods market with premium coated and painted steel SUPERDYMA® VIEWKOTE® • Highly corrosion-resistant coated steel sheet • High quality prepainted steel sheet for home developed by NSSMC appliance • Coating composition consisting of zinc as the main • Pebbled
Slide 39: Financial Drivers, Performance and Strategy
FINANCIAL DRIVERS, PERFORMANCE AND STRATEGY
Slide 40: Earnings Performance
EARNINGS PERFORMANCE 40 Relatively flat pro-forma earnings over last three years, showing a shift towards North America Underlying EBIT ($M) 186 FY2018 commentary 14 South-East Asia: 27 145 135 • Margins across all the countries continue to be tight. Lag in 17 17 Indonesia pass-through of rapid incr
Slide 41: 1H FY2019 Trading Conditions
1H FY2019 TRADING CONDITIONS 41 Performance across the Building Products segment remains mixed • Our North America, India, China and Vietnam businesses continue to perform well with robust demand and margins • We are seeing tightening of margins and softness in the projects segment in ASEAN, particu
Slide 42: Core Business Drivers
CORE BUSINESS DRIVERS 42 Financial performance driven by sales volumes and margin, influenced by competition levels in each country Volume and top-line growth driven by: EBITDA margin driven by: • Increased sales into new segments, e.g. home appliance market, • Product-mix targeting movement towards
Slide 43: NS BlueScope Strategy
NS BLUESCOPE STRATEGY “fa NS BLUESCOPE OUR VISION A premium branded steel building products company delivering innovative & sustainable solutions, safely. Customer & Manufacturing & People, Capability Market Focus Operational Excellence & Culture Understand our Safe, continuous Developing future mar
Slide 44: Focus to Deliver $40M Cost Saving Run Rate by FY2020
FOCUS TO DELIVER $40M COST SAVING RUN RATE BY FY2020 44
Slide 45: Get Lean, Efficient and Competitive
GET LEAN, EFFICIENT AND COMPETITIVE 45 Targeting $20M cost savings and productivity improvements in FY2019 with run-rate of $40M by FY2020 Key cost categories Country by country savings Regional Manufacturing & 15% SG&A 29% operations 32% 47% Thailand Indonesia 24% Yield improvements – 11% non prime
Slide 46: Customer and Market Experience
CUSTOMER AND MARKET EXPERIENCE 46 Focussing on delivering a premium customer experience across all channels, brands and products Markets, Customers, Channels, Brands and Products Pursue large-scale growth in Extend leadership positions in large Actively grow share and value of Actively seek new grow
Slide 47: Manufacturing and Operational Excellence
MANUFACTURING AND OPERATIONAL EXCELLENCE 47 Tangible plans in place to improve manufacturing processes Key objectives to improve performance: • Improve production performance in Thailand and Indonesia • Launch manufacturing excellence program in Malaysia and SteelScape • Collaborate with the broader
Slide 48: Projects Market
PROJECTS MARKET 48 Using detailed insights to further develop market offering and enhance our position in the projects market Key strategic initiatives to drive growth: • Enhance the BlueScope value proposition for external customers and channel partners • Build COLORBOND® and ZINCALUME™ brand leade
Slide 49: Rollforming Strategy Renewal
ROLLFORMING STRATEGY RENEWAL 49 Renewal of our rollforming strategy to refresh sales and customer focus Key strategic initiatives to drive growth: • Revitalise sales and specification – Increase sales and specification team members – Actively improve the Customer Experience from order to delivery (D
Slide 50: Retail Roll Out
RETAIL ROLL OUT 50 Focus on a roadmap for extensive expansion Key strategic initiatives to drive growth: • Rapidly expand retail footprint with more branded points of presence to influence and engage more directly with end users • Invest in consumer branding to extend BlueScope’s reach to end consum
Slide 51: Home Appliance Market
HOME APPLIANCE MARKET 51 Compelling opportunity in home appliance steels; ramp-up behind schedule Key strategic initiatives to drive growth: Current status: • Advanced market insights • Volume ramp up remains two years behind schedule – Develop better insights to improve value proposition and custom
Slide 52: New Coating Line in Thailand (MCL3)
NEW COATING LINE IN THAILAND (MCL3) 52 New 150kt metal coating line at Thailand’s Map Ta Phut facility, the most advanced in BlueScope’s footprint Project status: • 150ktpa metal coating line with in-line painting technology • Designed to focus on production of lighter gauge coated and painted produ
Slide 53: Acquisition of Cold Rolling Capacity
ACQUISITION OF COLD ROLLING CAPACITY 53 Acquisition of YKGI Holdings Berhad’s (YKGI) manufacturing facility in Klang Asset overview: Rationale for acquisition: • NS BlueScope Malaysia paying a total of MYR 125M • Consistent with BlueScope’s strategy to grow its coated and (A$42.3M) for the assets, i
Slide 54: Innovation Roadmap
INNOVATION ROADMAP 54 Focussing on developing opportunities in product, process and service across the value chain Drivers of change: DIGITAL • Changing customer expectations and channels • Retail channel (Builder App, POS) • Disruptive business models and shifts in technology • Branding (Websites,
Slide 55: Innovation Highlights
INNOVATION HIGHLIGHTS 55 Projects to support our channels to market and enhance position as a leader in coating and painting products Digital Retail Anti-Microbial Coating Agrished™ • Piloting Retail Business Platform (RBP) which • CRP Antibacterial™ SD steel - a pre-painted • Custom designed high a
Slide 56: Sustainability
SUSTAINABILITY
Slide 57: Contribution to BlueScope's Sustainability Performance
CONTRIBUTION TO BLUESCOPE'S SUSTAINABILITY PERFORMANCE 57 NS BlueScope plays a very important role in BlueScope’s approach to sustainability BlueScope’s key materiality topics: NS BlueScope’s contribution to our sustainability performance: Major sustainability topics for BlueScope identified in cons
Slide 58: Sustainability at NS BlueScope
SUSTAINABILITY AT NS BLUESCOPE 58 Corporate Social Responsibility (CSR) initiatives underpin NS BlueScope’s approach to sustainability NS BlueScope CSR framework Key highlights: • Accelerating and supporting relief efforts during natural disasters e.g. Lombok Earthquake (Aug 2018) – Providing roofin
Slide 59: Supply Chain Sustainability
SUPPLY CHAIN SUSTAINABILITY 59 Development and roll out of a new supply chain governance framework across the region FY2019: PREP & LAUNCH • Develop program, supplier standards, code of FY2020: ROLL OUT conduct and communication materials • Expand engagement to specialised suppliers, FY2021: IMPROVE
Slide 60: Diversity and Inclusion
DIVERSITY AND INCLUSION 60 Four key areas of focus for NS BlueScope GENDER • Proactive focus on female hiring to improve gender diversity Women in NS BlueScope Workforce (%) RECRUITMENT • Improved recruitment materials to target more diverse talent pools 34% • Interview skills training for managers
Slide 61: Governance and Business Conduct
GOVERNANCE AND BUSINESS CONDUCT 61 Focusing on doing business well, because it is the right thing to do • In Our Bond, we recognise that our success depends on our customers and suppliers, our people and our communities, and that our strength is choosing to do what is right • We promote a culture am
Slide 62: Summary
G2 BLUESCOPE SUMMARY
Slide 63: Summary
SUMMARY 63 We have a compelling opportunity in ASEAN • Large and growing populations; growing levels of wealth • Markets trending towards quality branded products • Home appliance opportunity In the near term, external macro factors are negatively impacting markets • Broader geopolitical volatility
Slide 64: Investors' Visit to ASEAN Sites
INVESTORS’ VISIT TO ASEAN SITES PACK 1: NS BLUESCOPE COATED PRODUCTS Charlie Elias Chief Executive Building Products Asia and North America December 2018 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058