Bluescope Steel Limited · ASX:BSL
Bluescope Steel — FY2006 Earnings Presentation
65 slides from Bluescope Steel's earnings presentation, Aug 21, 2006
Slide 1: FY2006 Results Presentation
BLUESCOPE STEEL -FY2006 Results Presentation Period Ended 30 June 2006 | Kirby Aceins. Managing Director and Chiet Executive Offi icer Paul 0 Malley, Chief Financial Officer 21 August 2006
Slide 2: Important Notice
- Important not 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 BE
Slide 3: Introduction
Slide 4: Overview FY2006
a Overview FY2006 = Reporting Segment Results - New Zealand Steel & Pacific - Hot Rolled Products Australia - Coated & Building Products Australia - Hot Rolled Products North America - Coated & Building Products North America - Coated & Building Products Asia * Steel Industry and Strategy = Financia
Slide 5: HNN
HNN a
Slide 6: Zero harm is our goal for our team and communities
Lost time injuries per milllon man-hours worked Zero harm is our goal for our team and communities Medically treated injuries per 1983 1904 1985 1906 1997 1998 1909 2000 2001 2002 2003 2004 2005 2006 1963 1904 1905 1906 1907 1968 1909 2000 2001 2002 2003 2004 2005 2006 includes Contractor performanc
Slide 7: Continuing to reward our shareholders as we grow
_ Continuing to reward our shareholders as we grow Total return to shareholders since BSL’s | public listing (July 2002): = Share buybacks $ 707m 30% " Dividends paid $ 1,409m 54% Share Buybacks - Public listing to 30 June 2006 » Purchased and cancelled 116m shares ~\ — on market — 90m shares — off
Slide 8: Group financial headlines FY2006
Group financial headlines FY2006 “= Revenue = External despatches = EBITDA = EBIT = NPAT EPS = Reported = Before June 06 one-off restructuring » Underlying operational EPS = After tax Return on Invested Capital = After tax Return on Equity " Net operating Cashflow = before capex = after capex / inve
Slide 9: FY2006 EPS meeting guidance
- FY2006 EPS meeting guidance Guidance « February 2006 Market Guidance 65 - 75 cps » June 2006 Market Guidance (update) - Lower end of range “) 65 - 67 cps » June Market Guidance (One Off costs) (2) (15 - 20) cps = June Market Guidance FY2006 reported EPS 45 - 52 cps () Major changes between Februar
Slide 10: Dramatic changes to geographic product destination - volumes
Dramatic changes to geographic product destinati ion - volumes Ve) a _ with North America the largest mark t destination FY2005 North America -NSBSS + C&BPNA (15% merit ee 7% Europe / Africa 4% Exports Australia 28% 43% Asia 10% New Zealand / Pacific 4% Major Changes FY2005 to FY2006 = Additional 1m
Slide 11: Australian despatches decline on weak manufacturing / strong A$
- Australian despatches decline on weak manufacturing / strong A$ Sales Tonnes FY2005 FY2006 mt Packaging 9% 2.965 mt Despatches 2.375mt * Australian sales tonnes lower across all segments in FY2006 to varying degree. = Western Port fire affected year. = In sales volume terms: = Dwelling (down 2%) —
Slide 12: +52% Oo = a = on = = = & g aS = WD
+52% Oo = a = on = = 8 5 = & 8 g 28 aS 4 2 = WD _= = - = q . oO. = = = oS g & oO & 8 = << = oS = 2) ~ SS. pn Do < oO. & (J 3 Q £ & E 5 8 = 2 g @ £ 2 se = i B eos Oo a = 5 ase
Slide 13: New reporting business segments
New reporting business segments Australia New Zealand 4 » Lowest quartile ~ Largest supplier of — . Only fully integrated * Pre-eminent seller of + 50:50 joint venture _* Pre-eminent global producer metallic coated and flat steel maker in branded steel in Asia__ with Cargill Inc. designer / supplier
Slide 14: EBIT variance FY2005 to FY2006 by reporting business segment
EBIT variance FY2005 to FY2006 6 by reporting business segment | . 7. Poe. a a .. FY 2005 Hot Rolled Coated & New Zealand & Coated & Hot Rolled Coated & Corporate & FY 2006 Products Building Pacific Steel Building Products North Building Group Australia Products Products Products Asia America Produc
Slide 15: SEB ee aes ye Bis ee
SEB ee aes ye Bis ee (7) LL ] oF 7 i ) ~—rer—sSB | _ _ _ LD _ _ 7 lo | ~=—srs—itistét Ll _ CC oo ee Le oo | ) 7 . 7 ol . 7 7 j ## #@2@&©=— CC Cy) A yO oo Lo Lg ie / , ] oe CO - i y ] ; j iL _ — y estas ee _
Slide 16: New Zealand and Pacific Steel Products performance
‘New Zealand and Pacific Steel Products performance « FY2006 vs. FY2005 " Sales revenue down 5% to A$709m " EBIT down 44% to A$105m — second best year ever " FY2006 return on net assets (pre-tax) 32% EBIT A$ Millions FY June 03 FY June 04 FY June 05 Prices Volume Conversion & Raw Material Other FY J
Slide 17: New Zealand and Pacific Steel Products - markets and business improvement
: New Zealand and Pacific lee Products — markets and Business * Markets = Business improvement initiatives External sales tonnes (domestic vs. export) * Improve cost and productivity through Domestic Export urther debottlenecking of the steelmaking FY2005 549% 49% and coating plants FY2006 46% 54% "
Slide 18: Hot Rolled Products Australia performance
EBIT A$ Millions = FY2006 vs. FY2005 = EBIT down 60% to A$456m » FY2006 return on net assets (pre-tax) 24% FY June 03 FYJune04 FY June 05 Raw Export Domestic Material Prices Prices Costs (Slab, HRC) (HRC, Plate) = FY2006 vs. FY¥2005 Lower steel prices Higher coal and iron ore prices Unfavourable sal
Slide 19: Hot Rolled Products Australia - markets and business improvement
ae Rolled Products Australia - -markets and business improvement = Products © Slab - Global demand and prices stronger in Q4 = HRC - Tight global market and stronger prices in Q4 = Plate - Domestic demand stronger, but domestic sales down due to: - offshore fabrication - lower priced imports - proje
Slide 20: Improved disclosure - new Slab and HRC price benchmarks
Improved disclosure - new Slab and HRC price benchmarks Previously recommended the Japan to Korea HRC price as being a reasonable public benchmark for BlueScope’s domestic and Asian HRC sales - still valid and Continue to recommend the following better benchmarks HRC Steel Business Briefing HRC East
Slide 21: Port Kembla Steelworks despatches
Port Kembla Steelworks des aiches — _ stronger Pes — Australian external demand ower 2 (ktonnes) FY05-1H FY05-2H FY06-1H FY06-2H @ internal & Domestic Exports * * Including BlueScope Steel Asia feed External Product Slab 34% 51% 54% 42% Sales Mix HRC 48% 36% 35% 45% Plate/Other 18% 13% 11% 13%
Slide 22: Coated & Building Products Australia
Slide 23: Coated and Building Products Australia - another difficult year
Coated and Building Products Australia (excluding raege Products) - - another difficult: ea _ EBIT A$ Millions FY June 03 FYJune 04 FYJune05 — Export Domestic Mix Conversion Raw Raw Other FY2006Pre One-offs FY June 06 Prices Prices &Oth Costs Materiais- Materials - One-offs Zinc& — Steel / Other Alu
Slide 24: Coated and Building Products Australia - Packaging Products
Coated and Building Products Australia — . J eg pode ed 29 Jur Closure of tin EBIT AS Millions -50 -100 -150 -200 -250 FY June 03 FY June 04 = FY June 05 Prices Volume Conversion & FY2006 Pre Oth Costs Other One-offs One-offs FY June 06 « FY2006 vs. FY2005 — Significant impairment and restructuring
Slide 25: Coated and Building Products Australia - markets
Coated and Building Products Australia—markets = Markets * Building market — Branded product price increases implemented, ™ further increases in September TrueCore — Record sales revenue — Dwelling soft, mainly NSW and Victoria — TrueCore® (steel framing) sales exceeding expectations (30% on 2005) —
Slide 26: Coated and Building Products Australia - business improvement
Coated and Building Products: Australia — a aes to drive business impr veme Me = Business improvement initiatives Continue recovery in domestic market share - responsive offers, reliable supply and differentiated products Continue focus on inter-material share growth Continue improvement in utilisat
Slide 27: Hot Rolled Products North America
Slide 28: North America - stronger market - stronger performance
_ North America — stronger market - stronger performance Steel industry ® Strong demand = Steel industry rationalisation providing improved production discipline in marketplace » Favourable price environment BlueScope’s activities = North Star - 50% owned JV, mini-mill steel production = Butler Buil
Slide 29: Hot Rolled Products North America - another excellent year
Hot Rolled Products North America - another excellent year " New reporting segment comprising: " Performance (North Star BlueScope) * North Star BlueScope Steel (50% interest) " FY2006 vs. FY2005 * Castrip LLC and North American and European — Lower scrap / HRC spread sales offices ; — Record annual
Slide 30: North Star BlueScope Steel
North Star BlueScope Steel - Natural Gas Consumption (MMBTU per ton, FY) 2002 2003 2004 2005 Tap to Tap Time (minutes) 2006 ocus on energy management given recent spike in electricity and natural gas prices Electricity Consumption (KWH per ton, FY) EAF operational excellence 2002 2003 2004 2005 EAF
Slide 31: Coated and Building Products North America
Coated and Building Products North America — acquisition . Comprises: " Performance * Butler buildings " FY2006 vs. FY2005 » Vistawall — Buildings — Increased despatches — Higher transition costs associated with closing Galesburg and opening new Tennessee plant * FY2006 vs FY2005 EBIT variance 50 5
Slide 32: Markets
” Markets Overall US economy currently shows strong GDP growth. The macroeconomic measures that have historically had strong correlations with the PEB and architectural aluminium markets continue fo trend up. PEB tonnage shipments up for the year. Business improvement initiatives completed during FY
Slide 33: Coated & Building Products Asia
Slide 34: Coated and Building Products Asia - it is time to deliver
- itis time todeliver . FY2006 vs. FY2005 * Main variances Sales revenue up 5% to A$1,075m, including — Lower sales prices across Asia A$227m from BlueScope Butler China —Higher unit costs from ramp-up of new » EBIT down 101% to (A$1m) facilities (Thailand, Vietnam & China) « FY2006 return on net as
Slide 35: Coated and Building Products Asia - meeting the challenges
Coated and Building Products Asia — meeting the challenges I high Capex Phase ] Sales Revenue EBIT Asm A$Sm 120 1200 100 1000 80 800 60 600 40 400 20 0 200 -20 0 Fiscal Years Notes [ Gag EBIT —@—Saies Revenue (1) Acquired Butler China April 2004
Slide 36: Global Steel Industry Strategy
90,000 80,000 70,000 60,000 50,000 40,008 30,000 20,000 10,000 0 Steel Production (mt) Revenue (US$m) Ewaz Gerdau Maanshan CSN SSAB Tata Stee! GhinaStee! Thyssen Krupp _ Global Steel Indus Str ategy j | STRATEGY es Midstream 600 Million Tonnes
Slide 37: Current industry issues and likely long term outcomes
Current industry issues: Likely industry outcomes long term: = China — steel reform initiatives taken / exports discouraged = China's capacity growth / fragmentation = Higher raw material costs = China — increased demand / steel . displaces other materials = Higher energy and other costs (coating me
Slide 38: Global steel industry consolidation into mega companies
Global steel industry consolidation into “mega companies” 120 100 80 60 40 20 Arcelor + Mittal POSCO JFE Nippon Steel Baosteel US Steel Nucor Corus Severstal Thyssen Krupp Evraz Gerdau ChinaSteel Maanshan BlueScope CSN SSAB Tata Steel 27) Base Production (Mt) —&— Revenue (US$m)
Slide 39: World crude steel production 1950 to 2005 - China driving growth
World crude steel production - 1950 to 2005 - China driving growth Compound Annual Growth Rates 1200 1000 800 600 Million Tonnes China: 1.2% | - (1995-2005) ee 400 World Excluding USSR: 1,1% Japan: 6.9% _ (1980-1995) 700 World Excluding - Japan: 1.8% 1965-1980) es Zz 2 Oo 1950 1960 1970 1980 1990 20
Slide 40: Our strategy remains unchanged and is focused on growing value
Our strategy remains unchanged and is focused on growing value — and diversification and more stable revenue / earnings profile Midstream » Thailand — start-up second metal coating line (MCL2) ~ramp up CRC. » Vietnam — star-up metal coating (MCL) and paint line (PL) » China ~ start-up paint line (PL
Slide 41: Smorgon Steel stake and industry consolidation
The Global steel industry is consolidating and BlueScope Steel has repeatedly stated the existing Australian structure works effectively and that we would not initiate a change A change is now occurring Smorgon Steel has indicated a preparedness to sell and break-up its business The proposed merger
Slide 42: Financials
Slide 43: Earnings performance remains leveraged to steel prices
_ Earnings performance remains leveraged to steel prices I i] 2002") FY2003 FY2004" FY2005 |! 2006-1H § 2006-2H FY2006 A$ Millions ' I Revenue 4,593 5,302 5,770 7,964 1 3,892 4,139 8,031 I EBITDA®) 412 881 1,104 1,655 ! 593 257 850 i] I EBIT®? 160 611 818 1,358 1 449 107 556 I I i] Reported NPAT 452
Slide 44: Underlying FY06 BSL financial performance
Underlying FY06 BSL financial performance June ’06 restructuring includes: A$m ~ PP impairment and closure costs 120 - Staff and executive restructuring 32 - Taiwan closure 8 - CPL7 closure 13 ~ Rail operation outsourcing 9 - Other _3 185 Other unusual and one-off adjustments include: Reported Yune0
Slide 45: EBIT variance FY2005 to FY2006 by reporting business segment
EBIT variance FY2005 to FY2006 6 by reporting business segment Poe. co 2... FY 2005 Hot Rolled Coated & New Zealand & Coated & Hot Rolled Coated & Corporate & FY 2006 Products Building Pacific Steel Building Products North Building Group Australia Products Products Products Asia America Products Nor
Slide 46: EBIT variance FY2005 to FY2006 by item
EBIT variance FY2005 to FY2006 by tem 1600 1400 1200 : a 1000 800 EBIT A$ Millions ° FY 2005 Export Local Market Volume/Mx = NSBSS Conversion Coal / iron Raw Exchange Other FY2006 Pre = One-off FY June 06 Prices Domestic & Other Ore Material Rates One-offs Costs Prices Costs Other zinc and aluminium
Slide 47: Balance sheet - BlueScope to focus on working capital
Balance sheet - BlueScope to focus on working capital A$ Millions 30 June 2006 31 December 2005 Assets Cash 62 79 Receivables 1,344 1,081 Inventory 1,329 1,439 Other Assets 783 732 Net Fixed Assets 3,743 3,592 Total Assets 7,261 6,923 Liabilities Creditors 959 728 Interest Bearing Liabilities 1,952
Slide 48: Cash - $551 million to shareholders and $816 million in capex
‘Cash - $551 milion to shareholders and $816 million in capex $ millions 2002") 2003 2004 2005 | 2006-1H 2006-2H 2006 ee Cash from operations 795 1,012 1,671 569 334 903 Working Capital Movement (31) (94) (432) | (222) 122 (100) Net operating cashflow before borrowing 381 764 918 1,239 | 347 456 803
Slide 49: Dividend reinvestment plan to be introduced
Dividend reinvesiment plan to be induced " Implementation of the BlueScope Steel Limited Dividend Reinvestment Plan (DRP) = The DRP will be established commencing with the 2006 Final Dividend = The DRP provides benefits to both BSL and its shareholders including: » A flexible capital management tool
Slide 50: EBIT remains sensitive to realised HRC prices and raw materials
EBIT remains: sensitive fo realised hot rolled coil De and raw ‘materia oe both were adv rse in FY2006 _ Estimated impact on forecast EBIT (A$mil) Assumption (euren) (previous) +/- US$25 / tonne movement in BlueScope’s average realised export 86 76 HRC price”) +/— 1¢ movement in Australian dollar /
Slide 51: SSS
SS SSS SS ~ << / : i
Slide 52: Questions and Answers
~ Questions and Answers Profitable Way Dynamic — _ Throughthe “Global Steel _ Cyl C Lo Market _— Strong Board & Sa NalueAdded “ _ Management | Branded L Jor / . Products a Govt > A VERY DIFFERENT "grea Opportunities in KIND OF STEEL Operating . on COMPANY racks exible Capital Low Cost _ Structure -
Slide 53: see
see Ve i Hi LI IPI =p : wee EI ———r”r—r—“C”C”CO"F"E==—c“c a$wCrwt:itiésriétC(‘(CCOC*éCié#éC;éCON™CC PR corsteapapme menue Se —- °° # §£§7©&©2 &2&=«©7» =©=FClClChChCCOCOCOCOCOCCCO)CUrUrmrmrmrmrmrrm™hmhmhrLlClU ED IS Te SN OIE), Ye ee ee ee Ye a a a ee Ye a ee VC i 2 hC.UlLUrllLrlLrUrrOrllCOOCOCll!.”U
Slide 54: SO
SO
Slide 55: Annualised capacities and growth as at 2006
_Annualised pole capacities and oo growth é as at ane 2006 — MC 250kt Painting 150kt 3 Butler PEB India Vietnam (50:50 JV with Tata Steel) MC. 125kt MC 250kt (100%) Painting 50kt Painting 150kt (100%) 9 2 Roll forming sites ; | Bulor PEB Brisbane Painting 90kt Port Kembla / Springhill Thailand Raw S
Slide 56: Calendar year financial summary
A$ Millions cY2003 CY2004(2) CY2005 1H-CY2006 Revenue 5,328 7,029 7,980 4,153 EBITDA() 857 1,501 1,411 258 EBIT() 581 4,212 1111 107 Net profit 436 859 792 26 EPS (¢) 56 116 110 4 (1) Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue (2) Includes eight months of BlueScope Butler
Slide 57: From construction to production
From construction to production Major project capital spending profile Thailand ~ Coating expansion 80 78 2 - - - Vietnam — Coating / Painting” 136 116 20 - - - indonesia — Coating / Painting® 145 - 10 - - - (deferred in April 2006) China - Coating and Painting Facility®) 280 155 101 24 - - - Guangz
Slide 58: Huge increase in FY2006 Zinc and Aluminium costs
Huge increase in FY2006 Zinc and Aluminium costs Tonnes Zinc Aluminium AUSTRALIA Springhill 21,250 10,000 Western Port 17,500 9,500 Sub-total 38,750 19,500 NEW ZEALAND 6,500 3,500 NORTH AMERICA Vistawall - 30,000 ASIA 12,250 11,250 TOTAL 57,500 64,250 Note: In future years BSL Asia’s usage will incr
Slide 59: Hot Rolled Products Australia - product flow FY2006
Hot Rolled Products Australia - product flow (Indicative) FY2006 Port Kembla Steelworks 5.3mt slab FY2006 _ - (5.Amt slab FY2005) _ Hot Strip Mill) fo oF Notes: (1) +400kt HSM expansion was completed July 2006. Technically it will take approximately 6 months to ramp-up production by the additional 4
Slide 60: New Zealand Steel (FY2006) product flow
New Zealand Steel (FY2006) product flow , Mine Sites “tron Sand Concentrate * Indicative annual prime 21m LD production and sales (t) New Zealand Stee! 0.6mt Slab 0. 6mt Hot Rolled Cold Strip Mill. Domestic Pipe iM Domestic Hot Rolled 4% ae co Coating lines co (External % + Internal %) inted
Slide 61: Our customers are our partners
Our customers are our partners. [ Our Market Offer « High quality products « Advertising / promotional support « Service Delivery « Satisfaction « Warranty « Technical Support XLERPLATE® = Creating « New products 7] New markets TUBEFORM®
Slide 62: Asia capacity growth by product
(k tonnes) -Forming FY2006 ic — ay | a = a yo Soo EG Pee co — a io FY2007 FY2008 FY2009 oo _ - @ Metal coating E] Painting
Slide 63: Coated and Building Products Australia - packaging products material flow
Coated and Bullding Products Australia - ~ packaging products material 4, Temper Rolling Single Reduce (TM1) or Double Reduce (TM2) ‘A ikighs Touche Cod Rolling Mat ET2 or ET3 3. Annealing Continuous or Cleaning.. GA 6. Final Processing
Slide 64: Value-added Solutions
_ Value-added Solutions Why harvest rainwater? Wore ty a~/ XN MARTRUS ANI OUR VALUE CHAIN
Slide 65: FY2006 Results Presentation
BLUESCOPE STEEL -FY2006 Results Presentation Period Ended 30 June 2006 | Kirby Aceins. Managing Director and Chiet Executive Offi icer Paul 0 Malley, Chief Financial Officer 21 August 2006