Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Non-Deal Roadshow (October 2018)
38 slides from Bluescope Steel's roadshow presentation, Oct 2, 2018
Slide 1: UK and US Investor Meetings
For personal use only UK AND US INVESTOR MEETINGS Mark Vassella Managing Director and Chief Executive Officer Tania Archibald Chief Financial Officer October 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 For personal use only APPROPRIATE FINANCIAL ADVICE.
Slide 3: BlueScope Overview
BLUESCOPE OVERVIEW 3 For personal use only 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
Slide 4: Safety Performance
SAFETY PERFORMANCE 4 For personal use only Continuing our journey towards Zero Harm LTIFR Lost time injuries per million man-hours worked 0.80 0.55 0.57 0.62 FY2015 FY2016 FY2017 FY2018 MTIFR 5.6 5.4 Medically treated injuries per 4.6 5.1 million man-hours worked FY2015 FY2016 FY2017 FY2018 LTIFR an
Slide 5: FY2018 Headlines
FY2018 HEADLINES 5 For personal use only Strong finish to the year with 2H underlying EBIT of $745M UNDERLYING EBIT UNDERLYING EBIT RETURN ON REPORTED NPAT INVESTED CAPITAL $1,269M1 20.0% $1,569M3 Up $164M on FY2017 Up from 18.5% in FY2017 Up 119% on FY2017 2H underlying EBIT $745M2 FREE CASH FLOW C
Slide 6: Underlying EBIT by Segment
UNDERLYING EBIT BY SEGMENT 6 For personal use only Strong group performance driven by a robust and diversified portfolio AUSTRALIAN STEEL PRODUCTS NORTH STAR BUILDING PRODUCTS ASIA & NORTH AMERICA $587M1 $431M $185M Up 28% on FY2017 Up 6% on FY2017 Down 12% on FY2017 2H underlying EBIT $326M 2H unde
Slide 7: Transformation of Earnings
TRANSFORMATION OF EARNINGS 7 For personal use only BlueScope earnings dramatically transformed over last three years Underlying EBIT ($M) North America 1,269 productivity initiatives 20 (23) 1,105 • Rebased earnings to a Driven by productivity and 103 higher level cost improvements, with similar spr
Slide 8: Diversified Portfolio
DIVERSIFIED PORTFOLIO 8 For personal use only Geographic diversity and increasing contribution from value-added products Underlying EBITDA by region ($M) BlueScope despatch volume mix 100% Buildings North America NZ & Pacific $155M 90% Asia 9% Building products $173M 80% Higher value 10% added 70% A
Slide 9: Cash Generation
CASH GENERATION 9 For personal use only Robust cash generation to support growth and shareholder returns Free cash flow ($M) Cash flow yield1 Net cash flow 731 (before investment 7.7% 7.5% 749 expenditure & financing) 638 266 Free cash flow 1,449 (excl Capex & working 1,251 capital mvmt) 686 (314) (
Slide 10: Capital Allocation and Shareholder Returns
CAPITAL ALLOCATION AND SHAREHOLDER RETURNS 10 only Focus on ROIC and EPS growth to ultimately drive shareholder returns Foundation Maintain safe and reliable operations, and operate within The larger buy-back of $250M and Financial Principles, including meeting net cash targets and use increased 8.0
Slide 11: Disciplined Growth
DISCIPLINED GROWTH 11 For personal use only Returns focussed process driving competition for capital Capital expenditure principles Examples of growth opportunities Building Products Asia North Star INVEST TO MAXIMISE VALUE Next Generation Building Products Asia Expansion opportunity ZINCALUME™ roll
Slide 12: Disciplined Growth – North Star Expansion Evaluation
DISCIPLINED GROWTH – NORTH STAR EXPANSION EVALUATION 12 For personal use only Comprehensive study initiated to examine expansion opportunity of 600 to 900 thousand metric tonnes per annum North Star’s competitive position US$M EBITDA and spread2 • Option to expand existing production EBIT margin1 45
Slide 13: Strong Balance Sheet
STRONG BALANCE SHEET 13 For personal use only Investment grade credit ratings; net cash position at 30 June 2018; strong credit metrics Net debt / (cash) ($M) Leverage (Net debt to LTM underlying EBITDA1) ✓ Investment grade Step-up and rapid achieved April 2018 1373 pay-down of North North Star acqu
Slide 14: Our Approach
For personal use only OUR APPROACH
Slide 15: Our Bond, Strategy, Financial Principles & Approach to Sustainability
OUR BOND, STRATEGY, FINANCIAL PRINCIPLES & APPROACH TO SUSTAINABILITY 15 GUIDE WHAT WE AIM TO ACHIEVE AND HOW WE DO IT For personal use only
Slide 16: Our Bond
OUR BOND 16 For personal use only Our Bond guides our decision making in choosing to do what is right OUR CUSTOMERS OUR PEOPLE OUR SHAREHOLDERS OUR COMMUNITIES ARE OUR PARTNERS ARE OUR STRENGTH ARE OUR FOUNDATIONS ARE OUR HOMES Our success depends on Our success comes from our Our success is made Ou
Slide 17: Our Strategy – A Disciplined Approach to Growth and Shareholder Returns
OUR STRATEGY – A DISCIPLINED APPROACH TO GROWTH AND SHAREHOLDER 17 RETURNS FROM A POSITION OF STRENGTH We are For personal use only A steel building products company Our Target Top quartile shareholder returns and safe operations Our Strategic Focus areas Deliver Grow premium branded steel Maximise
Slide 18: Financial Principles
FINANCIAL PRINCIPLES 18 For personal use only Clearly stated financial principles to guide our decision making RETURN INVESTMENT BALANCE SHEET HURDLES TIMING CAPACITY STEELMAKING • Every business to deliver • Intent to have financial • Target positive cash of • Commodity steelmaking in ROIC > WACC c
Slide 19: Approach to Sustainability
APPROACH TO SUSTAINABILITY 19 For personal use only Strong performance and continued focus on sustainability SAFETY, HEALTH & CLIMATE CHANGE SUPPLY CHAIN GOVERNANCE AND DIVERSITY AND WELLNESS AND ENERGY SUSTAINABILITY BUSINESS CONDUCT INCLUSION Continuing our journey towards BlueScope supports Austr
Slide 20: A Different Kind of Steel Building Products Company
For personal use only A DIFFERENT KIND OF STEEL BUILDING PRODUCTS COMPANY Ivanhoe Grammar School in VIC, Australia. Designed by McBride Charles Ryan and built by Building Engineering. Features Colorbond® Steel in Monument® in Lysaght® Longline 305® and Spandek® and Zincalume® Steel in Lysaght® Klip-
Slide 21: BlueScope: A Different Kind of Steel Building Products Company
BLUESCOPE: A DIFFERENT KIND OF STEEL BUILDING PRODUCTS COMPANY 21 For personal use only What makes us different? TECHNOLOGY, BUSINESS COST BRANDING & CHANNELS DIVERSIFICATION COMPETITIVENESS DISCIPLINED CASH GENERATION & APPROACH TO GROWTH CAPITAL MANAGEMENT SUSTAINABILITY
Slide 22: Additional Information: A Different Kind of Steel Company
For personal use only ADDITIONAL INFORMATION: A DIFFERENT KIND OF STEEL COMPANY The Tate Home in Waiheke, NZ. Designed by Chris Tate and installed by Clive Matthews. Features Colorsteel® Endura® in Ebony
Slide 23: Technology, Branding & Channels
TECHNOLOGY, BRANDING & CHANNELS 23 For personal use only Continued investment in research & development to maintain leadership in steel coating and painting technologies Product Technology and Development Leadership Advanced pre-painted and metallic coating development for building, construction and
Slide 24: Technology, Branding & Channels – Brands
TECHNOLOGY, BRANDING & CHANNELS 24 For personal use only Brands – a portfolio of many well-known and respected names to support our premium branded positions Australia New Zealand Asia North America ®
Slide 25: Technology, Branding & Channels – Channels
TECHNOLOGY, BRANDING & CHANNELS 25 For personal use only Channels – clear focus on knowing our end customers and maintaining strong channels to market Australia New Zealand Asia North America
Slide 26: Cost Competitiveness
COST COMPETITIVENESS 26 For personal use only Australian steelmaking breakeven at minimum recent spreads; North Star leading margin in U.S. steelmakers East Asian steel spread & estimated ASP steelmaking cash breakeven (US$/t) North Star’s and North American peers’ EBIT margin 800 19.3% 700 600 500
Slide 27: Australian Steel Products Case Study: Light Gauge Steel Framing
DISCIPLINED GROWTH 27 For personal use only Australian Steel Products case study: light gauge steel framing growth The opportunity for growth How we are capturing the opportunity Current low share in detached ‘The Inner Strength’ a recent major residential framing and marketing re-launch targeting c
Slide 28: Building Products Case Study: Roll Out of Retail Strategy
DISCIPLINED GROWTH 28 For personal use only Building Products case study: roll out of retail strategy GROWING THE RETAIL CREATING A PREMIUM INVESTING IN EDUCATING CONDUCTING NATIONAL ONGOING TRAINING FOR DEALER NETWORK RETAIL EXPERIENCE THE CHANNEL & USERS MARKETING CAMPAIGNS DEALER NETWORK • Retail
Slide 29: Cash Generation & Capital Management
CASH GENERATION & CAPITAL MANAGEMENT 29 For personal use only Robust cash generation to support growth and shareholder returns Free cash flow ($M) Net debt / (cash) ($M) Shareholder returns ($M) Operating cash flow less capex 778 749 731 Dividend 638 Buy-back 362 275 232 190 300 154 150 17 34 (64) 4
Slide 30: Approach to Sustainability – Climate Change
APPROACH TO SUSTAINABILITY – CLIMATE CHANGE 30 For personal use only Our four pillars of commitment to action Support Australia’s 2030 Acknowledge steelmaking Governance structures seek to Steel plays a key role in sustainable emissions target, in line produces emissions; ensure understanding and de
Slide 31: Enhancing Our Sustainability Reporting
APPROACH TO SUSTAINABILITY 31 For personal use only Enhancing our sustainability reporting FY2016 Report FY2017 Report FY2018 Report Initial step towards sustainability reporting, Substantive update using stakeholder Further update using GRI framework combining content of BlueScope’s annual consulta
Slide 32: Additional Information
For personal use only ADDITIONAL INFORMATION Investigator College Senior School in SA, Australia. Designed by Flightpath Architects and built by Partek Construction + Interiors. Features Colorbond® steel Matt in Monument® in Revolution Roofing® Maxline
Slide 33: Reconciliation Between Reported NPAT and Underlying NPAT
RECONCILIATION BETWEEN REPORTED NPAT AND UNDERLYING NPAT1 33 For personal use only FY2018 NPAT $M Reported net profit after tax 1,569.1 Underlying adjustments Asset impairment write back (216.0) Restructuring & redundancy costs 1.8 Asset sales (3.6) Borrowing amendment fees 30.9 Tax asset impairment
Slide 34: Underlying Earnings, Net Finance and Tax Cost
UNDERLYING EARNINGS, NET FINANCE AND TAX COST 34 For personal use only $M 1H FY2018 2H FY2018 FY2018 Breakdown of net finance costs Underlying EBIT 524.3 745.0 1,269.3 144a U.S. unsecured notes 39.3 Syndicated bank facility charges 7.7 Underlying finance costs (40.6) (40.0) (80.7) Finance leases 12.
Slide 35: Summary of Financial Items by Segment
SUMMARY OF FINANCIAL ITEMS BY SEGMENT 35 For personal use only Sales revenue Total steel despatches $M FY2017 1H FY2018 2H FY2018 FY2018 '000 tonnes FY2017 1H FY2018 2H FY2018 FY2018 Australian Steel Products 4,918.7 2,565.7 2,857.4 5,423.2 Australian Steel Products 3,090.7 1,515.3 1,601.2 3,116.6 N
Slide 36: Liquidity & Debt Maturity Profile
LIQUIDITY & DEBT MATURITY PROFILE 36 For personal use only Liquidity (undrawn facilities and cash, $M) Proforma maturity profile2,3 ($M) Receivables securitisation program: 2,1361 BSL Syndicated Bank Facility In addition to debt facilities, BSL has 2,026 408 $440M of off-balance sheet 1,932 U.S. u
Slide 37: Cash Flow
CASH FLOW 37 For personal use only Average free cash flow of ~$700M over last three years Net cash flow (before investment exp and financing) ($M) 749 731 638 Average free cash flow of $706M over last three years $M FY2016 FY2017 FY2018 Reported EBITDA 1,010 1,425 1,840 Adjust for other cash profit
Slide 38: UK and US Investor Meetings
For personal use only UK AND US INVESTOR MEETINGS Mark Vassella Managing Director and Chief Executive Officer Tania Archibald Chief Financial Officer October 2018 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058