Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Investor Presentation (June 2017)
22 slides from Bluescope Steel's investor presentation, Jun 8, 2017
Slide 1: BlueScope Investors & Analysts Visit
For personal use only BlueScope Investors & Analysts Visit June 7th, 2017 1
Slide 2: Important BlueScope notice
Important BlueScope 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 FINANCI
Slide 3: Introducing our senior management team
Introducing our senior management team For personal use only PRESIDENT MIGUEL ALVAREZ VP OPERATIONS VP HUMAN VP SALES & VP PROCUREMENT VP FINANCE JEFF RESOURCES MARKETING & IT JOE BUDION JOLDRICHSEN RICH MENZEL MIKE HANSON HECTOR MARQUEZ Miguel Alvarez; joined company in Feb 2010, came from BlueSc
Slide 4: NSBSL; a key part of BlueScope's strategy
NSBSL; a key part of BlueScope’s strategy For personal use only Grow Deliver Ensure ongoing premium branded steel businesses competitive commodity steel supply financial strength with strong channels to market in our local markets Coated & Painted Building Buildings North Star Australia & NZ Balance
Slide 5: North Star BlueScope Steel
North Star BlueScope Steel Hot rolled coil producer For personal use only Established in 1995 as a 50-50 JV between BlueScope and Cargill – In October 2015, BlueScope acquired Cargill’s 50% interest in the company for $720M USD Original construction capital cost was US$500M (100%); since then
Slide 6: Our competitive advantage; industry leading safety, quality, service and on-time delivery
Our competitive advantage; industry leading safety, quality, service and on-time delivery For personal use only Quality Slab thickness allows for superior surface and formability characteristics Eight-stand, direct charge rolling mill with triple in-line scale removal systems Transforms slabs
Slide 7: Geographically advantaged
Geographically advantaged Scrap sourcing Proximity to customers For personal use only Facility located in Delta, Ohio Geographic advantage Directly within one of the largest scrap – ~90% of North Star customers are within steel surplus regions in North America a ~250 mile radius The vast maj
Slide 8: Strong safety culture
Strong safety culture For personal use only Strong safety culture Improvement in injuries over times Safety culture based on continuous communication and feedback with regular incident reporting (including preventative suggestions) EMT professional on-site 24 hours per day Monthly safety meeti
Slide 9: Experienced management team; engaged and motivated workforce
Experienced management team; engaged and motivated workforce For personal use only Motivated, skilled 380 non-union employees producing 2.3M short tons per annum and flexible workforce Incentivised to continuously improve safety, productivity, quality and profits. Over 50% of overall compensatio
Slide 10: Diversified end-uses and products
Diversified end-uses and products Volume by end-market Customers by type For personal use only Other OEM Agricultural 10% 8% Tubers 5% 11% 50% Automotive 35% Construction 81% Service centres Sales and production focused on 25-30 grades, produced at a consistently high quality – Strong focus on lig
Slide 11: Exposed to sustainable NA markets demonstrating growth
Exposed to sustainable NA markets demonstrating growth For personal use only End markets served North America light vehicle production (m)1 ’12 – ’19E CAGR: +2.3% % growth y-o-y: 5.2% 5.1% 2.6% 1.9% (1.1%) 1.1% 1.7% Source: IHS as of March 2017 Non-residential construction starts (US$Bn) 1 ’12 – ‘19
Slide 12: Raw Materials
Raw Materials Main raw materials: For personal use only – Pig Iron – raw iron with high carbon content (typically 3.5%-5.0%) – Scrap – recycled metal suitable for reprocessing. Scrap types include: Clips, #1 Frag, #2 Frag, Plate & Structural, Roll Mill Scrap. Prime and obsolete scrap in broadly eq
Slide 13: Production Process – EAF's
Production Process – EAF’s For personal use only Scrap and Description Highlights 1 pig iron Twin FUCHS Twin shaft design results in operational efficiencies (Germany) 190 ton by increasing pre-heat times electric arc shaft Produces 190 tons of liquid steel every 37 minutes Scrap bucket (x2) f
Slide 14: Production Process – Caster and Hot Strip Mill
Production Process – Caster and Hot Strip Mill ...from melt shop 3 For personal use only Ladle turret and tundish Gas fired tunnel furnaces Submerged entry nozzle Edger & 6 stand Laminar Twin Slab Caster (102 mm) Slab shear 4 Roughing Finishing flow coilers stands mill cooling Sumitomo Caster Edger
Slide 15: Track record of incremental expansion and debottlenecking
Track record of incremental expansion and debottlenecking; only US mill operating at full capacity since GFC For personal use only North Star despatches since commencement (100% basis) +79% 2,000 1,500 Metric kt GFC 1,000 500 FY98 FY00 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 15
Slide 16: Goal to add 130kt to production by FY2018
Goal to add 130kt to production by FY2018 (compared to FY2014) Coil production – mt (short) For personal use only 2.35 2.31 2.30 2.29 2.25 2.23 2.22 2.20 2.18 2.15 2.10 FY14 FY15 FY16 FY17 FY18 Goal New Edger Projects to reduce Projects to installed; KWH improve caster commissioned in consumption an
Slide 17: Continuous improvement on cost
Continuous improvement on cost For personal use only Continuous Improvement (CI) program linked to the employees’ incentive structure, drives an ongoing focus on cost reduction and mix improvement CI program has delivered over $10M/year in margin improvement over the last several years Ongoing
Slide 18: Strong earnings and cash-flow generation
Strong earnings and cash-flow generation For personal use only US$M EBITDA, cash flow and spread1 – 100% ownership basis U.S. mini-mill spread 340 340 250 EBITDA 320 Cash flow (EBITDA less capex) 295 300 278 U.S. mini-mill spread – US$/t metric 280 257 200 260 247 248 250 253 180 240 233 221 164 220
Slide 19: Trading conditions in June 2017 half
Trading conditions in June 2017 half For personal use only Capacity utilization and sales volume remain aligned at 100% of capacity Metal margins (spreads) similar to 1H FY2017. However, more recently we have seen slightly softer Midwest steel prices and some tightness in scrap and pig iron supp
Slide 20: Our focus
Our focus For personal use only We are focused on: The safety of our employees and contractors Organically growing capacity Improving productivity and reducing cost Servicing customers better than anyone else Building on our quality capabilities Improving diversity and talent development
Slide 21: Summary
Summary For personal use only 1 Competitively advantaged U.S. hot rolled coil supplier Experienced management team supported by a highly 2 engaged and motivated workforce 3 Exposed to sustainable markets demonstrating growth 4 Key part of BSL strategy – maximise value of North Star 5 Strong cash flo
Slide 22: Q&A
For personal use only Q&A 27