Bluescope Steel Limited · ASX:BSL
Bluescope Steel — FY2008 Earnings Presentation
142 slides from Bluescope Steel's earnings presentation, Aug 18, 2008
Slide 1: FY2008 Results Presentation
For personal use only FY2008 Results Presentation Period Ended 30 June 2008 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 18 August 2008 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 16 60 14 NSW Manufacturing 52 14 Medically treated injuries per million man-hours worked 2005 – 27.9 2006 – 24.4 50 47 Lost time injuries per million man-hours worked 1
Slide 5: Extent of our Zero Harm Challenge
Extent of our Zero Harm Challenge For personal use only Injury Performance 07/08 • 25% increase in new employees; and • 90% increase in number of stand-alone manufacturing or 5 30 29.3 4.4 25 4 20 distribution sites. 3 15 2 10 4.0 1 0.6 5 Number of Employees & stand-alone Sites 0 0 LTIFR MTIFR Asia
Slide 6: Sustainability – another core focus
Sustainability – another core focus For personal use only • Water conservation − clear focus on continuing to reduce fresh water consumption − excellent initiatives taken at both Port Kembla, NSW and Western Port, VIC − additional information in “Supporting Information” • Greenhouse gas emissions −
Slide 7: Sustainability and greenhouse gas emissions
Sustainability - BlueScope is committed to improving its environmental footprint, including Greenhouse gas emissions (GHG) For personal use only • We have been and will continue to be very proactive, eg. − Participating in international research (e.g. IISI CO2 Breakthrough Project) − Member of Feder
Slide 8: Group financial headlines FY2008 vs. FY2007
Group financial headlines FY2008 vs. FY2007 For personal use only TWELVE MONTHS ENDED 30 JUNE VARIANCE 2008 2007 % Revenue A$10,495M A$8,913M Up 18% External despatches 8.1M tonnes 7.6M tonnes Up 7% EBITDA − Reported A$1,420M A$1,423M - − Underlying A$1,630M A$1,374M Up 19% EBIT − Reported A$1,063M
Slide 9: Cashflow – very strong leading to lower gearing
Cashflow – very strong leading to lower gearing, including our two major acquisitions For personal use only First full year of operations after listing Very strong operations A$M FY2003 FY2007 FY2008 performance (99% up on FY 2003) Source Cashflow from operations 795 1,367 1,579 Net working capital
Slide 10: FY 2008 – Major business headlines
FY 2008 – Major business headlines For personal use only y Strong domestic and export demand y Improved spread y Excellent operational performance − Production records across multiple facilities y Improved Asian performance − Thailand economic conditions improved − Malaysia & Indonesia – another str
Slide 11: Continuing to reward our shareholders
Continuing to reward our shareholders For personal use only y Shares on issue at listing (July 2002) 793m Total return to shareholders since BSL’s y Share buy backs to 30/6/08 (116)m public listing (July 2002): − on market – 90m shares 677m Share buybacks $ 707m Av price paid Dividends paid $ 1,
Slide 12: Global external sales by region
Global external sales by region – export sales lower due to IMSA acquisition (Steelscape now internal customer) and stronger Australian domestic demand For personal use only FY2006 FY2007 FY2008 8% Exports Exports Exports 18% 8% Expor 41% 36% 29% 16% 15% ts - A Ex North po 15% America r meric ts 21%
Slide 13: Total Australian despatches by segment
Total Australian despatches by segment – improved demand particularly in 2H SALES TONNES For personal use only FY2007(1) FY2008(1) Principal variances: Construction y External sales volumes from our new 3,200 62% Distribution business included in FY08 59% − sales, into all segments, principally 2,80
Slide 14: Other headlines
Other headlines For personal use only y Blueprint − infrastructure established; business initiatives identified; now time to deliver. y Acquisitions – all integration processes are on schedule − Smorgon Distribution (August 2007) − HCI Steel Building Systems, Inc, USA (October 2007) − IMSA Steel Cor
Slide 15: Blueprint Update
For personal use only Blueprint Update Page 15
Slide 16: Blueprint – recap of approach
“Blueprint” – recap on my approach to doing business at BlueScope and significantly improving shareholder value For personal use only A. Reinvigorate our Australian and New Zealand businesses What we will Areas of B. Continue the improvement process across our do … focus Asia and North America busin
Slide 17: Blueprint – infrastructure and KPIs established
“Blueprint” – infrastructure & KPI’s established; delivery of business initiatives underway For personal use only The journey so far to 30 June 2008 (building momentum): y Program Management Office (PMO) established and fully resourced including deployment of initiatives tracking tool throughout the
Slide 18: Blueprint – our future opportunities
“Blueprint” – our future opportunities For personal use only The journey ahead: y Substantial procurement opportunities remain with teams targeting key materials and service categories y Surplus assets to be monetised y Specific initiatives underway and directed at improving Overall Equipment Effici
Slide 19: Reporting Segment Performance
For personal use only Reporting Segment Performance Page 19
Slide 20: External reporting segments have changed
As advised on May 12, 2008, external reporting business segments have changed. What is changing and why? For personal use only THE PRINCIPAL CHANGES ARE TO: 1. Hot Rolled Products Australia; and 2. Coated and Building Products Australia With some minor changes to Hot Rolled Products North America an
Slide 21: Underlying EBIT variance FY2007 to FY2008 by segment
Underlying EBIT variance FY 2007 to FY 2008 by new business segment For personal use only 1500 $32m $62m 1400 $80m $234m $1,273m 1300 ($5m) ($50m) 1200 ($137m) EBIT A$ Millions 1100 $1,057m 1000 900 800 700 600 FY Ended June Coated & Aust Distrib & NZ & Pacific Coated & Bldg Hot Rolled Coated & Bldg
Slide 22: Underlying EBIT variance by major item
Underlying EBIT variance FY2007 to FY2008 by major item For personal use only Escalation (134) Volume 179 Improvement initiatives 89 Mix 32 One off/discretionary (81) Net spread improvement A$349M Other (inc. freight) (37) SSX dividend 1700 $211m Income in FY07 (29) $448m $34m Other (21) 1500 ($49
Slide 23: Australia: Coated & Industrial Products, Distribution & Solutions
For personal use only Australia Coated & Industrial Products Distribution & Solutions Page 23
Slide 24: Australia external reporting segments have changed
Australia external reporting segments have changed for FY2008 results 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 Island
Slide 25: Coated & Industrial Products Australia
New reporting segment ~ Coated & Industrial Products Australia – operational strength continues to meet strong demand For personal use only Markets • Domestic − strong domestic building demand Underlying EBIT − record annual plate sales volumes − record COLORBOND® sales 1200 • Exports 1000 − tight s
Slide 26: Iron ore and coal cost increases for FY2009
The substantial increase in iron ore and coal costs for FY 2009 will broadly increase the global cost of producing raw steel by US$210/tonne since FY 2008 and US$310/tonne since FY 2003. For personal use only • Historical global iron ore (fines) coking coal and semi soft coal prices (financial year)
Slide 27: Australian Distribution & Solutions
New reporting segment ~ Australian Distribution & Solutions - significant improvement driven by acquisition of Smorgon Distribution in August 2007 (including strong rebound in sales in 2H) For personal use only Underlying performance – FY 2008 vs FY 2007 Underlying EBIT • EBIT improvement largely du
Slide 28: New Zealand & Pacific Steel Products
For personal use only New Zealand New Zealand & Pacific Steel Products Page 28
Slide 29: New Zealand and Pacific Steel Products
New Zealand and Pacific Steel Products – improved front end operating performance continues For personal use only Underlying EBIT Markets 100 90 85 • Domestic – conditions remained strong, largely due to the strength of the rural and non-residential sectors. • Export – very strong demand for HRC. 75
Slide 30: Asia: Coated & Building Products Asia
For personal use only Asia Coated & Building Products Asia Page 30
Slide 31: Coated and Building Products Asia
Coated and Building Products Asia – its all about market development and margin management For personal use only Underlying EBIT Markets 100 y All regional markets strong, except for Vietnam due to government imposed controls to curb inflation. 76 y Strong recovery in Thailand market in 2H FY 2008.
Slide 32: Coated and Building Products Asia – regional performance
Coated and Building Products Asia – regional performance improving For personal use only THAILAND VIETNAM • new coalition government appears to stabilise • 1H strong domestic demand slowed in 2H due to new economy, but political tensions remain government controls to curb inflation • BST’s order int
Slide 33: North America
For personal use only North America Hot Rolled Products Coated & Building Products Page 33
Slide 34: Hot Rolled Products North America
Hot Rolled Products North America – Scrap to HRC price spread improvement in 2H FY 2008 For personal use only This segment includes: Underlying EBIT 180 • North Star BlueScope Steel (50% interest) 155 • Castrip LLC 150 120 105 EBIT A$ Millions Markets (North Star) 101 • Despatches increased 2% on FY
Slide 35: Coated and Building Products North America
Coated and Building Products North America – a very strong year for Buildings and acquisition of IMSA Steel Corp February 2008 For personal use only Segment comprises: Underlying EBIT 120 • Butler Buildings (PEB); • HCI Steel Building Systems 99(4) 100 • IMSA Steel Corp 80 EBIT A$ Millions (3) Under
Slide 36: Committed to achieving the synergies
Coated & Building Products North America – Committed to achieving the synergies For personal use only • Buildings (PEB) • IMSA North Steel Corp update − 100% non-residential − Integration progressing well − total despatches up 11% on FY 2007 ¾ improved safety performance a priority − year end backlo
Slide 37: Healthy spreads during strong steel demand
During periods of strong steel demand, healthy spreads have prevailed For personal use only Global crude Steel Production Chinese Industrialisation fuelled by Japan Post industrialisation growth era 2,000 6.9% 1.1% 5.8% 1,500 Millions of tonnes 1,000 500 0 1955 1980 1945 1950 1960 1965 1970 1975 198
Slide 38: In summary – look through the short term
In summary – look through the short term…. For personal use only China Rest of World • GDP expected to slow BUT to around 9%pa • Developed economies slowing. Australian economy stronger but outlook uncertain. • Industrialisation & urbanisation continues • BUT developing economies now account for • S
Slide 39: Global growth driven by Developing Economies
Global growth is being increasingly driven by Developing Economies… For personal use only World GDP Advanced Economies Developing Economies 1995 Avg GDP growth of 3.1% 2005 Avg GDP growth of 3.3% 2015 41% 59% 47% 53% 44% 56% Total = US$34,000bn Total = US$45,000bn (32% growth on 1995) Total = US$62,
Slide 40: BlueScope Steel’s Financial Results
For personal use only BlueScope Steel’s Financial Results Page 40
Slide 41: Earnings performance leveraged to steel price spreads
Earnings performance leveraged to steel price spreads For personal use only A$ Millions FY2004 (2) FY2005 FY2006 FY2007 FY2008 2008-1H(4) 2008-2H(5) Revenue 5,770 7,964 8,031 8,913 10,495 4,734 5,761 EBITDA (1) 1,104 1,655 850 1,423 1,420 502 918 EBIT (1) – Reported 818 1,358 556 1,099 1,063 328 735
Slide 42: Reconciliation from Reported to Underlying EBIT
Reconciliation from Reported to Underlying EBIT for FY 2008 For personal use only China 190 Vietnam 35 West Syd Pre-ops 3 Charlwood 12 M&A costs 3 Lys movex 11 “Blueprint” 13 Integration costs 10 Lysaght Internal Fiji 3 Profit in Stock Elimination 19 restructure 8 1400 $6m $3m $1,273m 1300 $21m $11m
Slide 43: Reconciliation between Reported and Underlying NPAT
High level reconciliation between Reported and Underlying NPAT – most events previously reported (FEB 2008) For personal use only EBIT ($M) NPAT ($M) EPS (cps) FY 2008 FY 2007 FY 2008 FY 2007 FY 2008 FY 2007 Reported 1,063 1,099 596 686 80.1 95.3 Unusual or non-recurring events: ¾ Asset impairment 2
Slide 44: Cash – strong operating cash flows reinvested
Cash – strong operating cash flows have been reinvested in the business For personal use only A$ millions 2004 2005 2006 2007 2008 2008 2008-2H Cash from operations 1,012 1,671 901 1,364 1,579 617 962 Working Capital Movement (94) (432) (98) (21) 69 (17) 86 Net operating cash flow 918 1,239 803 1,34
Slide 45: Balance sheet – lower gearing
Balance sheet – lower gearing even with acquisition of IMSA As at For personal use only A$ Millions 31 December 2007 30 June 2008 IMSA Assets Acquisition Total Reflect higher prices at June Cash 41 52 44 Receivables 1,274 120 1,537 Inventory 1,519 173 1,660 IMSA acquisition & higher capex partly Oth
Slide 46: Debt maturity profile extended
Debt maturity profile extended For personal use only 2,000 DEBT MATURITY PROFILE - PRE REFINANCING PROGRAM Refinancing: • US Private Placement (USPP) issue 1,800 1,600 1,400 of USD$325m (7 year US$81m, 10 year US$204m, 12 year US$40m) to AUD$M 1,200 part refinance bridge facility 1,000 800 • Loan No
Slide 47: EBIT sensitivity to prices and costs
EBIT remains sensitive to realised hot rolled coil prices and raw material costs. FY 08 to 09 changes due to BF No. 5 reline project For personal use only Estimated impact on forecast EBIT (A$mil) Assumption FY 2009 FY 2008 US$25 / tonne movement in BlueScope’s average realised export 65 85 +/– HRC
Slide 48: Summary
For personal use only Summary Page 48
Slide 49: Summary / Outlook
Summary / Outlook For personal use only • FY 2008 − Strong financial performance, supported by ¾ excellent operations performance ¾ increased demand for BSL products in both domestic & exports markets ¾ tight global steel supply/demand conditions ¾ higher global steel pricing − Gearing back to lower
Slide 50: Questions & Answers
For personal use only Questions & Answers Page 50
Slide 51: FY2008 Results Presentation
For personal use only FY2008 Results Presentation Period Ended 30 June 2008 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 18 August 2008 ASX Code: BSL
Slide 52: Supporting Information
For personal use only Supporting Information Page 52
Slide 53: Reporting Segments Additional Information
For personal use only Reporting Segments Additional Information Page 53
Slide 54: FY2007 and FY2008 Underlying NPAT
FY 2007 and FY 2008 Underlying Consolidated Net Profit After Tax (NPAT) For personal use only Underlying NPAT 1000 816 800 643 NPAT A$ Millions 600 511 384 400 305 259 200 0 FY07-1H FY07-2H FY07 FY08-1H FY08-2H FY08 1H 07 2H 07 FY 07 1H 08 2H 08 FY 08 Underlying 384 259 643 305 511 816 Reported 388
Slide 55: Coated & Industrial Products Australia EBIT variance
New Segment - Coated & Industrial Products Australia – underlying EBIT variance analysis (FY2008 vs FY 2007) For personal use only Freight (41) West Sydney ramp up (17) Labour (27) 1400 Net spread +A$389M Other (20) 1300 $438m $26m $31m 1200 1100 ($3m) ($75m) $1,000m 1000 ($105m) Iron Ore (85) ($6
Slide 56: Australian Distribution & Solutions EBIT variance
New Segment - Australian Distribution & Solutions – underlying EBIT variance (FY 2008 vs FY 2007) For personal use only 100 $13m $1m $86m 80 $83m 60 40 20 $6m 0 ($14m) ($3m) -20 FY Ended June Domestic Prices Raw Material Volume Conversion & Other FY Ended June 2007 Costs Oth Costs 2008 Page 56
Slide 57: New Zealand and Pacific Islands EBIT variance
New Zealand and Pacific Islands Products – underlying EBIT variance analysis (FY 2008 vs FY 2007) For personal use only Reduced spread (5) Utilities (16) Labour (7) 120 R&M Freight (5) $6m Scrap sales 10 $13m Vanadium sales 11 100 $3m $90m $3m $1m $85m 80 ($24m) ($7m) Coal (21) 60 Coating Metals 2
Slide 58: Coated and Building Products Asia EBIT variance
Coated and Building Products Asia – underlying EBIT variance analysis (FY 2008 vs FY 2007) For personal use only Net spread increase $34M 140 $45m 120 $36m ($1m) 100 $40m $3m $76m 80 ($28m) ($51m) ($12m) 60 $44m 40 20 0 FY Ended June Export Prices Domestic Raw Material Volume Mix Conversion & Exch
Slide 59: Coated and Building Products North America EBIT variance
Coated and Building Products North America – underlying EBIT variance analysis (FY 2008 vs FY 2007) For personal use only Comprises: Butler Buildings HCI IMSA 150 130 $58m EBIT A$ Millions 110 Net spread improvement $28M $99m ($15m) 90 ($6m) ($3m) $35m 70 ($7m) 50 $37m 30 10 -10 FY Ended J
Slide 60: Old Business segment earnings variance
Old Business segment earnings variance – Underlying EBIT For personal use only 1600 1500 $33m $62m $94m 1400 $263m $1,273m 1300 ($5m) ($53m) 1200 ($178m) EBIT A$ Millions 1100 $1,057m 1000 900 800 700 600 FY Ended June Hot Rolled Coated & NZ & Pacific Coated & Hot Rolled Coated & Corporate & FY Ende
Slide 61: Old Segment - Hot Rolled Products Australia
Old Segment - Hot Rolled Products Australia (or PKSW) For personal use only Performance - FY2008 vs FY 2007 y Stronger domestic and export demand Underlying EBIT 990 1000 y Improved spread 900 y Partly offset by higher freight; discretionary repairs and 800 727 maintenance and stronger A$. 700 637 y
Slide 62: Hot Rolled Products Australia EBIT variance
Old Segment - Hot Rolled Products Australia (PKSW) – underlying EBIT variance analysis (FY 2008 vs FY 2007) For personal use only 1300 Net spread improvement $330M Iron Ore (85) Scrap (51) Alloys (24) 1200 $77m Op Stock Adj (8) Coal 52 $369m 1100 $2m $990m 1000 ($116m) EBIT A$ Millions ($1m) 900 (
Slide 63: Old Segment - Coated & Building Products Australia
Old Segment - Coated & Building Products Australia For personal use only Reconciliation from Reported to Underlying EBIT for FY 2008 Reported $72m Underlying EBIT 150 (1) 127 Unusual and non-recurring items in reported EBIT: 125 ― Closure of PK Service Centre paint line $11m ― Lysaght asset impairme
Slide 64: Coated and Building Products Australia EBIT variance
Old Segment - Coated and Building Products Australia - underlying EBIT variance analysis (FY 2008 vs FY 2007) For personal use only Springhill (32) West Syd (17) Wport (12) Freight (5) 250 Labour 12 $31m S&A 13 Other (13) $83m 200 Net spread improvement $83M EBIT A$ Millions ($54m) 150 $102m $127m
Slide 65: Other Supporting Information
For personal use only Other Supporting Information Page 65
Slide 66: Sustainability
For personal use only Sustainability Page 66
Slide 67: Water conservation
Water conservation – clear focus on further reducing fresh water consumption For personal use only Port Kembla Steelworks Western Port Operation Total Water Use (ml/day) for process and cooling $21.5 million water recycling project with South East Water, including funding from Victorian Waste Wate
Slide 68: Australian Carbon Pollution Reduction Scheme
Australian Federal Government’s Carbon Pollution Reduction Scheme For personal use only • Green Paper released 16 July 2008. White Paper and draft legislation by end of 2008. Legislation introduced to Parliament 2009, for 2010 scheme start. • Green Paper – 516-page discussion document setting out op
Slide 69: Carbon Pollution Reduction Scheme (cont)
Australian Federal Governments Carbon Pollution Reduction Scheme (cont)… For personal use only • According to Green Paper, ‘integrated steel manufacturing’ likely to qualify for 90% assistance (table, p.320) – HRP Australia FY07 intensity approximately 3,012t / $million revenue (Slab/ HRC / Plate) –
Slide 70: PKSW Cogeneration plant
PKSW Cogeneration plant – technology led solution to abate greenhouse gas emissions For personal use only • Feasibility study completed Surplus process gas from iron & steel making • Total investment likely to be greater $1,000m • Net NSW reduction approximately 800,000 tpa CO2 equivalent Port Kembl
Slide 71: New Zealand - Proposed Emissions Trading Scheme
New Zealand - Proposed Emissions Trading Scheme For personal use only Proposed New Zealand Government Emission Trading Scheme • All gasses and eventually all sectors • Steel sector in scheme from December 2010 • 90% free credits (2005 base) to 2018 • Zero credits by 2030 (rate of credit removal for
Slide 72: New Zealand Steel and sustainability – cogeneration
New Zealand Steel and sustainability – benefits of cogeneration For personal use only 1200 1000 800 Internal Cogeneration GWh 600 400 Electricity 200 from NZ grid 0 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 /0 /8 /8 /8 /8 /8 /8 /9 /9 /9 /9 /9 /9 /9 /9 /9 /9 /0 /0 /0 /0 /0 /0 /0 /0 82 83 84 8
Slide 73: Port Kembla Steelworks
For personal use only Port Kembla Steelworks Page 73
Slide 74: Port Kembla Steelworks – total product flow
Port Kembla Steelworks – total product flow (Indicative) FY2008 For personal use only Port Kembla Steelworks 5.3mt slab FY2008 (5.3mt slab FY2007) Western Port, VIC Hot Strip Mill Export Slab Plate Mill Coated 55% 14% 9% 22% (54%) (15%) (9%) (22%) Springhill, NSW, Coated Domestic HRC BSL Distributio
Slide 75: Port Kembla Steelworks despatches
Port Kembla Steelworks despatches – continued strong domestic demand & support of core export customers 6000 For personal use only 5500 5,268 5,209 5,210 5000 4,922 4500 30% 26% 28% 40% 4000 3500 (ktonnes) 18% 3000 21% 19% 2500 16% 2000 1500 51% 44% 51% 56% 1000 500 0 2005 2006 2007 2008 Internal Cu
Slide 76: Expected raw material usage in FY2009
Port Kembla Steelworks - Expected raw material usage in FY 2009 For personal use only • Iron Ore: – approximately 7.0mtpa (vs. 7.7mtpa in FY 2008. Reduction due to BF No. 5 reline) – current indicative mix – 20% lump, 50% fines and 30% pellets – principally sourced from BHP Billiton (3.8mtpa). Other
Slide 77: 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) 10,000 2,000 1,750 8,000 1,500 Employee Numbers 6,000 1,250 1,000 4,000 750 500 2,000 250 0 0 99/00 00/01 01/02 02/03 03/04 04/05 05/0
Slide 78: Port Kembla Steelworks – relentless cost control
Port Kembla Steelworks – relentless cost control For personal use only Total cost $ $ FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 (1) S&A Conversion Costs Despatch & Freight Raw Materials (1) Raw material includes iron ore, coal, scrap and alloys but not scrap purchased on behalf of OneSteel. Page 78
Slide 79: 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). Asian HRC Benchmark Price HRC $1,200 SBB HRC E
Slide 80: No.5 Blast Furnace reline
Port Kembla Steelworks – No.5 Blast Furnace reline For personal use only 28 Page 80
Slide 81: Blast Furnace reline overview
Port Kembla Steelworks – Blast Furnace No. 5 reline overview For personal use only • Total capital cost A$370m ($146m spent by end of FY 2008). Depreciated over 20 years. • The project will take approx. 105 days, commencing in March 2009 and finishing June 2009. • Expected lost slab production (shut
Slide 82: Blast Furnace reline experience
Port Kembla Steelworks – No. 5 Blast Furnace - Reline experience For personal use only y Many of the Project Team and Key personnel have been key resources in : −1996 No.6 BF construction −1993 No.4 BF Reline −1991 No.5 BF Reline −1989 No.2 BF Reline −1987 No.4 BF Reline −1978 No.5 BF Reline −1976 N
Slide 83: Activities during the reline
Port Kembla Steelworks Activities during the No. 5 Blast Furnace reline For personal use only Operation continues until the raw materials inside the furnace are consumed. 5 days Furnace is shutdown and isolated from rest of the plant. Holes are cut in the shell to gain access to rake out remaining m
Slide 84: Cut in - access through shell
Port Kembla Steelworks - Cut in - access through shell (No.5 BF reline 1991) For personal use only 90 Page 84
Slide 85: Hearth demolition
Port Kembla Steelworks - Hearth demolition (No.5 BF reline 1991) For personal use only 91 Page 85
Slide 86: Internal working and protection platforms
Port Kembla Steelworks - Internal working & protection platforms (No.5 BF reline 1991) For personal use only 92 Page 86
Slide 87: Installation hearth sidewall refractory
Port Kembla Steelworks - Installation hearth sidewall refractory (No.5 BF reline 1991) For personal use only 93 Page 87
Slide 88: Installation of stave lining
Port Kembla Steelworks - Installation of stave lining (No.5 BF reline 1991) For personal use only 94 Page 88
Slide 89: Installation hot blast main refractory
Port Kembla Steelworks - Installation hot blast main refractory (No.5 BF reline 1991) For personal use only 95 Page 89
Slide 90: Granulator stack and downcomer installation
Port Kembla Steelworks - Granulator stack & downcomer installation (No.5 BF reline 1991) For personal use only Page 90
Slide 91: Reline Complete
Port Kembla Steelworks - Reline Complete (No.5 BF reline 1991) For personal use only Page 91
Slide 92: BF reline implementation risks
Port Kembla Steelworks - No. 5 BF reline implementation risks For personal use only y Two major unknown conditions at blow-out(1) : (a) Remaining untapped liquid hot metal (salamander) requiring blasting and (b) Condition of the bosh shellplate, can add additional time to schedule y Skilled labour a
Slide 93: BF ramp up plan
Port Kembla Steelworks - No. 5 BF ramp up plan For personal use only 6BF Plan 5BF Plan Actual 6BF First service 5 BF Uprate Plan post reline 8000 7000 6000 5000 Tonnes/day 4000 3000 2000 1000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Days Note: 7000 tonne
Slide 94: Sinter Plant upgrade
Port Kembla Steelworks – Sinter Plant upgrade For personal use only y Main shutdown planned for April – May 2009 (approx. 35 days) y To coincide with No.5 BF reline, when demand for sinter is reduced. y Total capital cost A$134m. y No.3 Sinter machine at PKSW − is single source of 5.3 mtpa of sinter
Slide 95: What is sinter?
What is sinter? For personal use only Page 95
Slide 96: Sinter Plant upgrade – sinter process
Port Kembla Steelworks - Sinter Plant upgrade For personal use only Sinter process Iron Lime Coke Sinter Ore stone Breeze Fines Water Fines Fines Dry Electrostatic Precipitators Mixing & Rolling Drum STRAND Main Fans Sinter Waste Gas Mains x2 to Blast Furnaces Dust recycled Page 96
Slide 97: Sinter Plant upgrade scope
Port Kembla Steelworks – Sinter Plant upgrade For personal use only Entry End • New Ignition Furnace • New Strand Feeder Exit End • Rebuild cooler • Increase Width • Increase Fan Power • Relocate Lowering wheel and extend building • New cooler feed chute Precipitators • Refurbish zones 2, 3 & 4 - R&
Slide 98: Coated Businesses in Australia
For personal use only Coated Businesses in Australia Page 98
Slide 99: Value-added solutions
Value-added solutions For personal use only NEETASCREEN Plus Fence AQUAPLATE® Graffiti Remover Page 99
Slide 100: Springhill – Coated, Port Kembla cost profile
Springhill – Coated, Port Kembla cost profile For personal use only Total cost $ $ FY2005 FY2006 FY2007 FY2008 Conversion Costs S&A Paint Metals Feed − 06/07 coating metals – increased zinc and aluminium prices − 07/08 conversion costs – increase in price of electricity Page 100
Slide 101: Australian Distribution & Solutions Business
For personal use only Australian Distribution & Solutions Business Page 101
Slide 102: Australian Distribution & Solutions
Australian Distribution & Solutions For personal use only The new Distribution and Solutions division brings together BlueScope Steel’s Australian-based Downstream businesses Sheet & Coil Processing Services • Steel Plate • Pipeline • Hot Rolled • Roofing • Tanks Supplies coil • Walling • Slitting •
Slide 103: Australian Distribution & Solutions - Network
Australian Distribution & Solutions - Network For personal use only Darwin KEY Lysaght SheetLysaght Bluescope & Coil ProcessingSteel Bluescope Services Cairns Mareeba Sheet Metal Supplies Sheet Metal Supplies Townsville Regional Distribution Regional Metro Distribution Distribution Mount Isa Charter
Slide 104: BlueScope Distribution – Overview
BlueScope Distribution – Overview For personal use only BlueScope Distribution: • Operates an integrated network of more than 85 metropolitan and regional sites around Australia • Provides over 15,000 customers with steel in the form they need • Offers our customers a diverse range of steel products
Slide 105: Distribution - Market Segments & Products
BlueScope Distribution - Market Segments & Products For personal use only Distribution supplies over 850,000+ tonnes of steel products into the following markets; International Other Domestic Mills 36% 45% 2% 4% 13% Manufacturing Manufacturing Non Non Residential Residential Engineering Engineering
Slide 106: Distribution - Market Structure (1H08)
Distribution - Market Structure (1H08) For personal use only Indicative Product Mix (t) Indicative Sales by Sector (t) Other Other Other 8% Reinforcing 6% Sheet & Coil Distributor 8% 26% 9% Building & Construction Merchant Bar Mining 39% 11% 6% Structural 14% Plate 18% Manufacture Tubular 38% 17% Pa
Slide 107: New Zealand & Pacific Islands
For personal use only New Zealand & Pacific Islands Page 107
Slide 108: Operations – New Zealand
Operations – New Zealand For personal use only Glenbrook • Iron and Steel production Auckland • Hot and Cold Rolling Mills Glenbrook Tauranga • Dual Pot Metal Coating Line Wharf Waikato North Head • Paint Line Taharoa • Plate Line • Hollow sections plant Waikato North Head Mine • Concentrated iron s
Slide 109: Operations – Pacific Islands & Australia
Operations – Pacific Islands & Australia For personal use only Fiji • Components business − Roll formed roofing and cladding products plus accessories − Operate in two locations, Suva and Lautoka − FY07 sales of 4,500t • PEB capability including in-house design, engineering, structural steel supply
Slide 110: Unique direct reduction process
Unique direct reduction process For personal use only Page 110
Slide 111: Raw materials
Raw materials For personal use only Iron Sand Concentrate (Waikato North Head Mine) • Iron sand mined and concentrated on site - 58.5% Fe • 13mt of contained product in probable reserves and 13mt of contained product in proven reserves • Additional 591mt of inferred resource • Concentrate is slurry
Slide 112: New Zealand - Nominal product flow
New Zealand - Nominal product flow Mine Sites For personal use only Iron Sand Concentrate 2.3mt Export Export New Zealand Steel Iron Sand Vanadium Slag 0.6mt Slab Concentrate 14 kt 0.6mt Hot Rolled 1.0mt Export Export Hot Cold Strip Domestic Domestic Domestic Plate Rolled Mill Pipe Hot Rolled Plate
Slide 113: Market – New Zealand vs export
Market – New Zealand vs export (internal & external sales) For personal use only Growing the NZ market Reducing dependence on Deep Sea Exports Sales within New Zealand Sales outside New Zealand (incl. Pacific Islands) 350 300 450 250 400 350 200 300 kt 150 250 kt 200 100 150 50 100 50 0 0 's 94 95 9
Slide 114: New Zealand Steel - product distribution
New Zealand Steel - product distribution For personal use only Indicative Product Mix (t) Indicative Sales by Country (t) Painted Asia 11% Pacific Islands 6% Metal Coated Australia 6% 15% 27% Japan Cold Rolled 3% 12% USA/Canada Pipe 21% 5% Indicative Sales by Sector (t) Hot Rolled Manufacturing New
Slide 115: New Zealand Steel - domestic sales
New Zealand Steel - domestic sales For personal use only Indicative Product Mix (t) Indicative Sales by Sector (t) Manufacturing Painted 7% 16% Other 16% Distribution 36% Cold Rolled 10% Metal Coated 46% Pipe 9% Hot Rolled Building & 19% Construction (incl. Plate 13%) 41% * External & Internal sales
Slide 116: New Zealand Steel - export sales
New Zealand Steel - export sales For personal use only Indicative Product Mix (t) Indicative Sales by Region (t) Other Japan, 6% Metal Coated 5% 6% Asia, 12% Cold Rolled North America, 41% 13% Australia, 29% Hot Rolled 76% (incl Plate 10%) Pacific Islands, 12% * External & Internal sales Page 116
Slide 117: Non steel revenue streams
Non steel revenue streams For personal use only Iron Sand • Iron sands exports from Taharoa of 885kt, up 21% on FY2007, largely due to an additional shipment in FY2008. Scrap • Higher revenue due to higher volume and price. • Volumes: 2008: 92.6kt vs. 2007: 80kt. • Average price: 2008: NZ$438/t vs.
Slide 118: Non steel revenue streams - Vanadium Slag
New Zealand Steel - non steel revenue streams - Vanadium Slag For personal use only • What is vanadium? Historical global market prices − Vanadium in its pure form is a metal V2O5 − It is present in the NZS ore body as an oxide 30.00 within the individual grains of Titanomagnetite 25.00 ironsand. It
Slide 119: New Zealand Steel mineral opportunities
New Zealand Steel mineral opportunities For personal use only Overview • The abundant iron sand resource at New Zealand Steel (“NZS”) has become an increasingly more valuable asset to BlueScope Steel. • A number of projects are being studied or considered. • However, final approval will be subject t
Slide 120: Specific project opportunities
Specific project opportunities For personal use only • The specific projects being studied or considered are: – Vanadium Converter Project – Increases the quality and quantity of vanadium slag recovered from the existing hot metal supply. Also increases slab make thereby reducing slab unit cost and
Slide 121: Taharoa Iron Sands – expansion or sale
Taharoa Iron Sands – expansion or sale For personal use only • Taharoa is located approx. 300km south of Auckland • Titanomagnetic iron sands • Mine is leased from the local Maori owners – 70 year lease from 1972 • Resources: − Proven – 75mt − Probable – 112 mt − Total inferred indicated and measure
Slide 122: North America
For personal use only North America Hot Rolled Products Coated & Building Products Page 122
Slide 123: North Star BlueScope Steel – EAF operational excellence
North America - North Star BlueScope Steel – EAF operational excellence For personal use only Focus on energy management given recent spike in electricity and natural gas prices Natural Gas Consumption Electricity Consumption (MMBTU per ton, FY) (KWH per ton, FY) 2002 2003 2004 2005 2006 2007 2008 2
Slide 124: Acquisition of HCI Steel Building Systems
North America – acquisition of HCI Steel Building Systems, Inc For personal use only • On 1 November 2007 BlueScope acquired privately owned HCI Steel Building Systems Inc. (a pre-engineered steel buildings business) − HCI designs & manufactures steel PEB’s for heavy industry, commercial and communi
Slide 125: IMSA Steel Corp Acquisition
Coated & Building Products North America – IMSA Steel Corp Acquisition For personal use only • BlueScope Steel has acquired the outstanding shares of IMSA Steel Corp from Ternium S.A, a NYSE-listed public company, effective February 2008. • IMSA Steel Corp has four distinct businesses in North Ameri
Slide 126: IMSA Steel Corp Acquisition (cont)
Coated & Building Products North America – IMSA Steel Corp Acquisition (cont….) For personal use only • Recap the deal −cost US$730m (A$815m as at 1 February 2008) −funded by a 12 month bridge facility −expected EPS outcome ¾EPS neutral, pre-AIFRS adjustments, in FY 2008 ¾EPS accretive from FY 2009
Slide 127: IMSA geographic coverage and product diversification
IMSA extensive geographic coverage and product diversification in North America For personal use only Tacoma WA Spokane Kalama Las Vegas Salt Lake St. Joseph WA WA NV City, UT MO Evansville Galvamet WI Shelbyville, IN Salem Anchorage OR AK Sacramento CA (2) Richmond Coating Facilities VA Building Co
Slide 128: Combined Butler / HCI / VP Buildings footprint
The combined Butler / HCI / VP Buildings manufacturing footprint gives BlueScope Steel’s North American PEB business geographic diversity For personal use only The acquisition provides BlueScope Steel Varco Pruden Plant with manufacturing capacity in the high Butler Manufacturing volume Midwest Regi
Slide 129: IMSA provides vertically integrated business
The IMSA acquisition provides BlueScope with a vertically integrated business and outstanding builder network For personal use only y Steelscape doubles purchases of hot rolled coil from Port Kembla post acquisition y Butler, VP Buildings, ASC Profiles and MetlSpan purchase approx. 70kt from Steelsc
Slide 130: Other
For personal use only Other Page 130
Slide 131: Unique production footprint in fastest growing regions
Unique production footprint in the world’s fastest growing regions For personal use only Asia China 24 Lysaght and MC 250kt PEB Sites Painting 150kt • Coated and Building Products India North America Metal Coating 250kt • North Star BlueScope JV Vietnam Painting 150kt MC 125kt Hot Rolling 1.90mt (10
Slide 132: BlueScope Steel China footprint
BlueScope Steel China footprint For personal use only FY 2008 REVENUE: A$ 441M EBITDA: (A$ 173M ) EBITDA – Underlying: A$ 10M EMPLOYEES: 2,070 INVESTED CAPITAL: A$ 208M SUZHOU BlueScope Steel in China 1 Metal Coating/Painting Line Facility 5 Lysaght Manufacturing Facilities 3 Butler PEB Manufacturin
Slide 133: BlueScope Steel North American footprint
BlueScope Steel North American footprint For personal use only FY 2008 REVENUE: A$ 1,407M EBITDA (reported): A$ 231M EMPLOYEES: 5,384 incl. North Star INVESTED CAPITAL: A$ 784M NB: Revenue excludes BSL’s 50% interest in North Star BlueScope Steel. WA ME MT ND OR VT MN NH ID MA SD WI NY CT RI WY MI I
Slide 134: Major approved capital projects and investment summary
Major approved capital projects and investment summary (noting “Stay in Business” capital is approx. 75% of depreciation) For personal use only PROJECTS Total Est. Actual to FY2008 FY2009 FY2010 FY2011 All in A$million Capex / Cost 30/6/07 Actual Projects completed Thailand – Coating expansion 80 80
Slide 135: Blueprint - Strategy for longer term earnings growth
“Blueprint” - Strategy for longer term earnings growth For personal use only y Reinvigorate our position in the Australian/NZ markets, through ongoing focus on strengthening our customer relationships, product and service innovation and driving operational efficiency. y Continue to improve our posit
Slide 136: BRICs share of global crude steel production
BRIC’s will account for over 50% of the global crude steel production by 2010, up from 25% in 2000, on the back of strong relative growth +13% For personal use only 1,600 +58% 1,516 1,500 40 Brazil 1,400 1,344 82 Russia +18% 65 India 1,300 34 72 1,200 53 Global Steel Production 1,100 +39% 611 China
Slide 137: Calendar year earnings
Calendar year earnings For personal use only A$ Millions CY2003 CY2004(2) CY2005 CY2006 CY2007(3) Revenue 5,328 7,029 7,980 8,693 9,333 EBITDA(1) 857 1,501 1,411 1,052 1,130 EBIT(1) - reported 581 1,212 1,111 742 792 - operational - - 1,308 966 924 Net profit - reported 436 859 792 413 414 - operati
Slide 138: Asset impairment process FY2008
Asset impairment process FY 2008 For personal use only • Detailed business and market review undertaken as part of the 1H FY 2008 process. • Based on higher of: − estimated future cashflows discounted at WACC plus country risk premium; or − estimated recoverable value • Subject to scrutiny by extern
Slide 139: Global debt facilities – current maturity schedule
BlueScope’s global debt facilities – current maturity schedule For personal use only Currency (m) Committed Maturity Date Undrawn (3) Working Capital Facilities AUD 350 Oct-08 180 Loan Note Facility (1) Tranche 1 - 364 day AUD 92 Dec-09 92 (1) Tranche 2 - 3 year AUD 550 Dec-11 359 Tranche 3 - 5 year
Slide 140: Indicative FY2009 Zinc and Aluminium usage
Indicative FY2009 Zinc and Aluminium usage vs FY2008 For personal use only Tonnes Zinc Aluminium FY2009(E) FY2008(A) FY2009(E) FY2008(A) AUSTRALIA Springhill 21,519 22,711 11,321 10,595 Western Port 21,332 21,954 10,748 10,590 Sub-total 42,851 44,665 22,069 21,185 NEW ZEALAND 7,504 6,831 3,817 3,619
Slide 141: Global steel industry consolidation
Global steel industry consolidation For personal use only Key Regional Steel Producers 120 $120 EU / Americas 100 $100 EU / Asia 80 $80 Millions of tonnes capacity Asia 60 $60 US$ Billions Australia, Asia, Americas 40 $40 EU 20 $20 Americas 0 $0 Evraz Severstal Wuhan Gerdau Tata Corus BlueScope Baos
Slide 142: FY2008 Results Presentation
For personal use only FY2008 Results Presentation Period Ended 30 June 2008 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 18 August 2008 ASX Code: BSL