Bluescope Steel Limited · ASX:BSL
Bluescope Steel — H1 2011 Earnings Presentation
99 slides from Bluescope Steel's earnings presentation, Feb 21, 2011
Slide 1: 1H FY2011 Results Presentation
For personal use only 1H FY2011 Results Presentation Six Months Ended 31 December 2010 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 21 February F b 2011 ASX Code: BSL Page 0
Slide 2: Important notice
Important notice For personal use only THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER 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 A
Slide 3: Introduction & Headlines
For personal use only Introduction & Headlines Page 2
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 18 70 16.0 16 60.0 Medicaally treated injuries pper million man-houurs worked 60 14.0 14 52.2 me injuries per millioon man-hours workked 50 47.1 12 10 40 Reported perfo
Slide 5: Group financial headlines 1H FY2011 vs. 1H FY2010
Group financial headlines 1H FY2011 vs. 1H FY2010 For personal use only SIX MONTHS ENDED 31 DEC VARIANCE 2009 2010 % Revenue A$4,103M A$4,622M 13% External despatches 3,304M tonnes 3,841M tonnes 16% EBITDA − Reported A$154M A$127M - − Underlying A$155M A$134M (14%) EBIT − Reported A$(23)M A$(48)M -
Slide 6: Asset carrying value assessment results in net impairment write down of A$9M
Asset carrying value assessment results in net impairment write down of A$9M For personal use only In accordance with accounting standards: 1. China Coated business at Suzhou – partial impairment write back of A$68M y Commissioned in late 2006; A$270M cost y A$190M write down in Dec 2007 due to poor
Slide 7: Segment summary
Segment summary For personal use only Underlying EBIT, A$M Comments 1H FY2010 2H FY2010 1H FY2011 1H FY2011 2H FY2011 Spread contraction; Coated & Industrial Spread expansion in (80) 188 (97) domestic / export Products Australia Q4? sales mix Australia Distribution & 3 (1) (15) Imports & margins Rem
Slide 8: Coated & Industrial Products Australia heavily impacted by rising cost of raw materials
Coated & Industrial Products Australia heavily impacted by rising cost of raw materials For personal use only Coated & Industrial Products Australia – Underlying EBIT Net Spread Reduction $250m $250M unfavourable net spread movement in 1H FY2011 vs. 2H FY2010 driven by: +106 y Iron ore costs $195M u
Slide 9: Global external despatch volumes broadly unchanged from 2H FY2010
Global external despatch volumes broadly unchanged from 2H FY2010, however Australian exports increased due to lower domestic sales For personal use only 1H FY2010 2H FY2010 1H FY2011 Exports Exports Exports 24% 29% 33% (794kt) (1,137kt) 11% volume increase (1,266kt) 5% (of which 1,112kt 4% 6% 3% 6%
Slide 10: Australia: lower external sales volume in 1H FY2011
Australia: BlueScope’s biggest and most important market saw lower external sales volume in 1H FY2011 For personal use only BSL EXTERNAL DESPATCH VOLUMES(1) 1,800 2H FY2008 1H FY2009 2H FY2009 1H FY2010 2H FY2010 1H FY2011 60% 1,600 61% 62% 1,400 25% (409kt) 63% 25% (371kt) 64% 1,200 27% (368kt) Con
Slide 11: Why lower domestic Australian despatches?
Why lower domestic Australian despatches? For personal use only Total Australian External Despatches by Reporting Segment (kt), last three half years 1H FY2010 867 376 1,243 Coated & Industrial Products Aus (C&IPA) 2H FY2010 1,003 378 1,381 Aus Distribution & Solutions (AD&S) 1H FY2011 798 370 1 168
Slide 12: Australian Floods – potential impact on BlueScope
Australian Floods – potential impact on BlueScope For personal use only The floods’ floods impact on BSL was mainly in the state of Queensland: – Queensland represents in the order of 20-25% of BlueScope’s Australian domestic revenue (C&IPA and AD&S segments) – Particularly strong market for roofing
Slide 13: Global Business Environment & the Steel Industry
For personal use only Global Business Environment & the Steel Industry Page 12
Slide 14: Global steel production is at near record levels again
Global steel production is at near record levels again, driven primarily by the BRICs. Rest of world remains below pre-GFC level … For personal use only Monthly World Crude Steel Production World Tonnes (Millions) (Jan 00 – Nov 10) BRICs C * World (Excl BRICs) 130 120 110 100 90 80 70 60 50 40 30 20
Slide 15: Capacity utilisation levels considerably below pre-GFC levels
… which is reflected in continuing capacity utilisation levels considerably below pre-GFC levels … For personal use only Crude Steel Capacity Utilisation* World (Jan 00 – Nov 10) Utilisation (%) China World (Excl China) 115% 110% 0% 105% 100% 95% 90% 85% 80% 77% 75% 74% 71% 70% 65% 60% 55% 50% Jan 0
Slide 16: Steel margin volatility with higher priced raw materials
… and along with higher priced raw materials contributing to ongoing steel margin volatility For personal use only Indicative Steelmaker HRC Spread (A$/t) SBB East Asia HRC price less cost of 1.5t 1 5t iron ore fines and 0.71t 0 71t hard coking coal $800 $700 $600 $500 A$/t $400 $300 $200 $100 $0 Ja
Slide 17: Ongoing recovery in major economies, PMI indices improving
There is evidence of ongoing recovery in major economies, eg PMI Indices (manufacturing activity) are improving, but Japan remains weak … For personal use only 65 65 61 United States Eurozone 60 60 57 PMI Index PMI Index 55 55 Expansion 50 50 Contraction Supported by weak 45 45 dollar for exports 40
Slide 18: Japan's exports have increased due to weak domestic economy
… but Japan’s exports have increased more materially due to a weak domestic economy For personal use only Japan Total Steel Trade: Feb 88 – Dec 10 Japan Supply & Demand: 1988 – 2014(f)* Imports p Thousand Metric Tonnes (000’s) Tonnes (M’s) Crude Production Semi Exports ASU Net Trade Imports Exports
Slide 19: United States non-residential construction showing signs of recovery
United States: non-residential market construction has been sluggish but signs of recovery are now appearing. >50% improvement in BSL Buildings order book (YoY) to Jan 2011 For personal use only Non-Residential Construction Value of Work Done Quarterly F. W. Dodge Awards^ Annual % Change, (Cal Yrs)
Slide 20: China: GDP adjusting to more sustainable growth outlook
China: GDP adjusting to more sustainable growth outlook; construction activity remains robust; the challenge is migration to consumption based economy For personal use only Gross Domestic Product Monthly Leading Indicator of Industrial Production Quarterly YoY % Change YoY % Change 16 28% LI 14 24%
Slide 21: New combined Butler PEB and Lysaght rollforming facility in Xi'an
Development of new combined Butler PEB and Lysaght rollforming facility in Xi’an due to strong growth outlook in central China For personal use only • To pursue construction of a new joint Butler and Lysaght plant in Xi Xi’an an. The plant will be similar to existing plant in Guangzhou • Plant expec
Slide 22: Global business environment and the steel industry – summary
Global business environment and the steel industry – summary For personal use only y Global steel production at near record levels driven by BRICs y Reflected in world steel capacity p y utilisation considerablyy below ppre-GFC levels y Along with high priced raw materials, contributing to steel mar
Slide 23: Financial Results
For personal use only Financial Results Page 22
Slide 24: Historical earnings performance
Historical earnings performance For personal use only A$ Millions FY2007 FY2008(3) FY2009 FY2010 1H FY10 2H FY10 1H FY11 Revenue(1) 8,913 10,495 10,329 8,624 4,103 4,521 4,622 EBITDA – Reported(2) 1,423 1,420 380 590 154 436 127(6) EBIT(2) – Reported 1,099 1,063 15 240 (23) 263 (48)(6) – Underlying(
Slide 25: Underlying EBIT variance 1H FY2010 to 1H FY2011 by major item
Underlying EBIT variance 1H FY2010 to 1H FY2011 by major item For personal use only Raw Materials: Coal (180) Net Spread Reduction $20m Iron ore (300) S Scrap (13) Alloys (17) External steel feed (35) +92 Net realisable value provisions (20) Coating metals (21) Opening stock adjustment 235 (1) Other
Slide 26: Underlying EBIT variance 2H FY2010 to 1H FY2011 by major item
Underlying EBIT variance 2H FY2010 to 1H FY2011 by major item For personal use only Net Spread p Reduction $245m $ Raw Materials: Coal (160) Iron ore (195) Scrap (7) +81 Alloys (8) External steel feed (25) Net realisable value provisions (46) Coating metals (1) +72 Opening stock adjustment 45 +277 O
Slide 27: Fixed cost and overhead reductions
Fixed cost and overhead reductions For personal use only y As advised in August 2010, $658M cumulative savings were achieved by end of FY2010 (vs. FY2008 cost base) ¾ $340M permanent savings ¾ $318M temporary savings y These permanent and temporary savings were retained as at 31 December 2010 y Duri
Slide 28: Cashflow
Cashflow For personal use only In general, weaker steel spreads reduced cash A$ millions FY2007 FY2008 FY2009 FY2010 1H FY10 2H FY10 1H FY11 from operations Cash from operations 1 364 1,364 1 579 1,579 534 596 144 452 166 Working capital movement (21) 69 250 (133) 108 (241) (182) Increase in WC: see
Slide 29: Balance Sheet
Balance Sheet ….conservative stance maintained As at For personal use only A$ Millions 31 Dec 2009 30 June 2010 31 Dec 2010 Cash balance of prior A t Assets halves drawn down in 1H FY2011 Cash 215 251 86 Lower than 2H FY2010 Receivables 959 1,199 987 due to seasonal effects (D volumes) (Dec l ) Inve
Slide 30: Balance Sheet – increase in inventory since June 2010
Balance Sheet … $133M increase in inventory since June 2010 predominantly on account of prices and volumes at C&IPA, offset in part by foreign exchange benefits For personal use only +2,815 RMS $421M RMS $397M WIP 690 WIP 639 FGS 679 RMS $338M FGS 618 Other 172 WIP 569 Other 175 FGS 498 Other 182 +1
Slide 31: Balance Sheet – maintaining conservative gearing
Balance Sheet …maintaining conservative gearing For personal use only y Gearing at 14% (ND/ND+E). Target range 25-30% y Net debt at 31 December 2010 of $912M (rounded), comprised of $999M of drawn debt less $86M cash y 31 December total undrawn facilities and cash of A$1,332M Net Debt ($M) Gearing 1
Slide 32: Debt Facilities and Maturity Profile as at December 2010
Debt Facilities and Maturity Profile as at 31 December 2010 For personal use only y Refinanced the Syndicated Facility in December 2010 to improve debt maturity profile and reduce financing costs 915 Cost of Debt A$M 757 240 y Effective average cost of drawn US Private Placement debt in 1H FY2011 wa
Slide 33: EBIT is sensitive to HRC price, raw material costs and FX
EBIT is sensitive to realised export HRC price, raw material costs and foreign exchange movement For personal use only Estimated impact on EBIT A$m Assumption FY2011 (1) (indicative) +/– US$25 / tonne movement in BlueScope’s average realised export HRC price(2) 86 +/ 1¢ movement in Australian dollar
Slide 34: Outlook
For personal use only Outlook Page 33
Slide 35: Key trends
Key trends For personal use only M k t Market: • Improved global steel price environment • Continued improvement in U.S. economic outlook • Nippon Steel and Sumitomo Metal Industries’ merger announced. Potential catalyst for further M&A Operational: • Retention off permanent and temporary cost reduc
Slide 36: Three key areas of management focus
Three key areas of management focus For personal use only Aligning Australian manufacturing capacity and market demand to improve margins • Reinvigorate channels and markets, markets eg ¾ Proactively position to capture mining and energy capital investment spend n • Reinvigorate products, eg ¾ New g
Slide 37: Second half outlook
Second half outlook For personal use only y Three key drivers will continue to be strong influences: ¾ A$ ¾ Steel spread (which is a function of HRC and raw material prices) ¾ Demand (domestic and global) y 2H FY2011 financial performance will largely depend upon steel spread outcome for Q4, which i
Slide 38: Questions & Answers
For personal use only Q ti Questions & Answers A Page 37
Slide 39: 1H FY2011 Results Presentation
For personal use only 1H FY2011 Results Presentation Six Months Ended 31 December 2010 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 21 February F b 2011 ASX Code: BSL Page 38
Slide 40: Other Supporting Information
For personal use only Other Supporting pp g Information Page 39
Slide 41: Reporting Segments – Additional Information
For personal use only Reporting g Segments g Additional Information Page 40
Slide 42: Reporting Segments
Reporting Segments Corporate / Group For personal use only Australia New Zealand Asia North America Coated & Australia New Zealand Coated & Hot Coated & Industrial Distribution & Pacific Steel Building Rolled Building Products & Products Products Products Products Australia Solutions Asia North Amer
Slide 43: Segment business drivers
Segment business drivers Corporate / Group For personal use only Australia New Zealand Asia North America Coated & Australia New Zealand Coated & Hot Coated & Industrial Distribution & Pacific Steel Building Rolled Building Products & Products Products Products Products Australia Solutions Asia Nort
Slide 44: Australia
For personal use only Australia Coated & Industrial Products Distribution & Solutions Page 43
Slide 45: Coated & Industrial Products Australia – EBIT variance vs 2H FY2010
Coated & Industrial Products Australia – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2010) For personal use only 2H FY10 1H FY11 Slab-make 2,537kt 2,643kt Total despatches 2,510kt 2,406kt - Dom / tot split 49% 41% Net Spread Reduction $250m Raw Material Costs: Underlying EBITDA $284M $3M C
Slide 46: Coated & Industrial Products Australia – EBIT variance vs 1H FY2010
Coated & Industrial Products Australia – underlying EBIT variance analysis (1H FY2011 vs. 1H FY2010) For personal use only 1H FY10 1H FY11 Slab-make 2,187kt 2,643kt Total despatches 2,007kt 2,406kt - Dom / tot split 54% 41% Net Spread Reduction $1m Underlying EBITDA $21M $3M Raw Material Costs: Coal
Slide 47: Key drivers of Coated & Industrial Products Australia 1H FY2011 result
BlueScope Steel – Key drivers of Coated & Industrial Products Australia 1H FY2011 result For personal use only 2H 2009 1H 2010 2H 2010 1H 2011 Strengthened to ~US$700/t in April East Asia HRC price1, US$/t 452 536 633 611 (GFMS shows US$750/t), falling to just above US$600/t in June IO fines, benchm
Slide 48: Coated & Industrial Products Australia – Despatch Mix
Coated & Industrial Products Australia – Despatch Mix For personal use only Smorgon Distribution IMSA consolidated from Feb consolidated from Aug 2008. Internal despatches Both PKSW 2007 – increases i iinternal t l increase and external Both PKSW Chart shows furnaces despatches, decreases despatches
Slide 49: PKSW – Production & Despatch Flow
PKSW – Production & Despatch Flow For personal use only Port Kembla Steelworks Slab Domestic Slab Production 872 839 0 0 1H 2011 1H 2010 2,643 2,187 Export 351 375 Inventory movements Interco Western Port (2) & yield losses 521 464 Hot Strip HRC Domestic Mill Port Kembla Steelworks 1,448 1,112 213(3
Slide 50: Coated Australia – Annual Capacities
Coated Australia – Annual Capacities For personal use only Western Hot Strip Mill HRC Port 1,400 Pickle Line HRC 1,100 Slab Cold Mill CRC 1 000 1,000 Port Kembla Metal Coating Lines Metal Coated 830 Strip Steelworks Paint Lines Painted Strip 330 HRC Springhill Coupled Pickled Cold Mill CRC 990 Metal
Slide 51: Port Kembla Steelworks – despatches by half year
Port Kembla Steelworks – despatches by half year For personal use only 2,609 2,599 2,611 2,555 2,494 2,118 2,081 BSL internal* 1,361 1,295 1 606 1,606 1,423 1 322 1,322 1,411 1,348 1,203 699 Export external 782 838 526 710 876 267 540 490 Domestic external 466 466 479 440 422 100% exported, with 338
Slide 52: Port Kembla Steelworks productivity
Port Kembla Steelworks productivity For personal use only Productivity (tonnes per person per year) 6,000 1,800 E l Employees 5,500 oyee/Year) 1,600 5,000 4,705 1 400 1,400 de Steel Outputt, Tonnes/Emplo 4,500 4,049 4,000 3,783 1,200 3,662 3,610 3,567 3 500 3,500 3,406 3,146 3 171 3,171 3,087 3,107
Slide 53: Port Kembla Steelworks – cost profile
Port Kembla Steelworks – cost profile For personal use only Total cost A$m Raw Materials Desp & Freight Conv Costs S&A FY2006 FY2007 FY2008 FY2009 FY2010 1H FY2011 Notes: (1) Chart shows cost of despatches. (2) Conversion costs include depreciation . (3) Raw material includes iron ore, coal, scrap a
Slide 54: Consumption of primary raw materials at Port Kembla Steelworks
Consumption of primary raw materials at Port Kembla Steelworks For personal use only Volume consumed in production (dry mt) Indicative use rate FY2008 FY2009 FY2010 1H FY11 per slab tonne Iron Ore Reflects mix shift Fines 4.0 2.9 4.0 2.3 0.97t from sinter plant Lump 16 1.6 10 1.0 15 1.5 09 0.9 0 31t
Slide 55: Supply and pricing of iron ore to the Port Kembla Steelworks
Supply and pricing of iron ore to the Port Kembla Steelworks For personal use only Supplier Term Volume (p/a) Pricing Basis Simplified price proxy for forward modelling Analyst forecasts / index futures for the relevant 10 years from 0.73mt fines Trailing monthly index with period, adjusted for frei
Slide 56: Iron ore indexes
Iron ore indexes For personal use only • Platts Platts, Metal Bulletin and The Steel Index publish relevant indexes. indexes Index levels amongst these three have so far been quite homogenous • Forward prices are available from SGX (Singapore Exchange) and some financial institutions 200 Futures 180
Slide 57: Supply and pricing of metallurgical coals to the Port Kembla Steelworks
Supply and pricing of metallurgical coals to the Port Kembla Steelworks For personal use only Supplier Term Product / Volume (p/a) Pricing Basis Hard coking coal; Reflects average price paid by all long term BHP Billiton 30 years from volume linked to blast furnace customers of BHP Billiton Australi
Slide 58: Historical global iron ore, coking coal and semi soft coal benchmark prices
Historical global iron ore fines, coking coal and semi soft coal benchmark prices For personal use only 2002 2003 2004 2005 2006 2007 2008 2009 2010 Iron Ore Fines $17 97 $17.97 $17 54 $17.54 $19 12 $19.12 $22 68 $22.68 $38 88 $38.88 $46 27 $46.27 $50 66 $50.66 $91 14 $91.14 $61.06 $61 061 US$/dmt $
Slide 59: Slab and HRC price benchmarks for Asia & Australian sales
Slab and HRC price benchmarks for Asia & Australian sales For personal use only The followingg Steel Business Briefingg pprices continue to be a reasonable ppublic benchmark for BlueScope’s domestic and Asian HRC prices (noting this can change over time). US$/t Asian HRC Benchmark Price SBB HRC East
Slide 60: What is sinter?
What is sinter? For personal use only FINE ORES Blended and Fluxed in Sinter Machine to Produce Sinter PELLETS LUMP ORES Pellets Sinter Lump PREPARED BURDENS BLAST FURNACE Page 59
Slide 61: Australia Distribution & Solutions – EBIT variance vs 2H FY2010
Australia Distribution & Solutions – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2010) For personal use only 2H FY10 1H FY11 Total despatches 383kt 378kt Underlying EBIT margin -0.1% -1.7% Underlying EBITDA $14M $0M Net Spread Reduction $12m +5 -1 EBIT A$M -17 -2 -1 +1 -15 15 Jun-10 HY Pri
Slide 62: Australia Distribution & Solutions – EBIT variance vs 1H FY2010
Australia Distribution & Solutions – underlying EBIT variance analysis (1H FY2011 vs. 1H FY2010) For personal use only 1H FY10 1H FY11 Total despatches 382kt 378kt Underlying EBIT margin +0 3% +0.3% -1.7% 1 7% Underlying EBITDA $18M $0M Net Spread Reduction $8m +3 -1 EBIT A$M M -9 -31 +23 -15 Conver
Slide 63: Australia Distribution & Solutions
Australia Distribution & Solutions For personal use only The Distribution and Solutions division brings g together g BlueScope Steel’s Australian-based downstream businesses Emerging Sheet Metal Supplies Sheet & Coil Business y Plate Processing y Residential and y Roofing Services y Tube Commercial
Slide 64: Australia Distribution and Solutions – Overview
Australia Distribution and Solutions – Overview Darwin KEY For personal use only Lysaght Cairns Sheet & Coil Mareeba Processing Services Sheet Metal Supplies Townsville Bluescope Distribution Charters Towers Mount Isa Bluescope Water Mackay Rockhampton Emerald Gladstone Bundaberg Archerfield Acacia
Slide 65: New Zealand & Pacific Islands
For personal use only New Zealand & Pacific Islands Page 64
Slide 66: New Zealand and Pacific Steel Products – EBIT variance vs 2H FY2010
New Zealand and Pacific Steel Products – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2010) For personal use only 2H FY10 1H FY11 Slab make Slab-make 315kt 305kt Total despatches 287kt 237kt Net Spread Improvement $4m Underlying EBITDA $69M $67M +9 -22 +17 A$M +52 -2 +1 -66 EBIT A +49 Raw M
Slide 67: New Zealand and Pacific Steel Products – EBIT variance vs 1H FY2010
New Zealand and Pacific Steel Products – underlying EBIT variance analysis (1H FY2011 vs. 1H FY2010) For personal use only 1H FY10 1H FY11 Slab-make 262kt 305kt Total despatches 219kt 237kt Underlying EBITDA $38M $67M Net Spread Improvement $15m +66 -5 -2 +49 -26 +15 EBIT A$M M +35 +5 Conversion C i
Slide 68: New Zealand - unique direct reduction process
New Zealand - unique direct reduction process For personal use only Page 67
Slide 69: New Zealand – raw materials
New Zealand – raw materials For personal use only Iron Sand Concentrate (Waikato North Head Mine) y Iron sand mined and concentrated on site – 58.5% Fe y Sufficient resource for long term steel making operations y Concentrate is slurry pumped 18km underground to Glenbrook Thermal Coal y Predominantl
Slide 70: New Zealand Steel – 1H FY2011 product flow
New Zealand Steel – 1H FY2011 product flow Mine Sites For personal use only Iron Sands Export 0.47mt 0.99mt HRC 35% Domestic 7% NZS Slab 0.31 mt Export 33% Interco (Export) 60% Export Vanadium Sl 6.3kt Slag 6 3kt Pl 12% Plate Domestic 46% % Export 54% Pipe p 5% Domestic 99% Export 1% Cold Mill 48% D
Slide 71: New Zealand – 1H FY2011 product distribution
New Zealand – 1H FY2011 product distribution (external and internal) For personal use only Indicative Product Mix (t) Indicative Sales by Country (t) Pacific Painted Islands 9% 6% Australia 12% Metal Coated Cold Rolled 27% 13% Americas Asia 21% 16% Pipe 5% Indicative Sales by Sector (t) Hot Rolled 4
Slide 72: New Zealand – 1H FY2011 Non steel product sales
New Zealand – 1H FY2011 Non steel product sales For personal use only Iron Sand y Iron sands exports from Taharoa of 467kt in 1H FY2011 which is in line with prior periods y Higher prices were achieved for 1H FY2011 Ferrous Scrap y Volumes: 1H FY2011 15kt vs. 1H FY2010 28kt. y Greater utilisation of
Slide 73: Asia – Coated & Building Products Asia
For personal use only Asia Coated & Building Products Asia Page 72
Slide 74: Coated & Building Products Asia – EBIT variance vs 2H FY2010
Coated & Building Products Asia – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2010) For personal use only 2H FY10 1H FY11 Conversion & Other Costs: Total despatches 524kt 549kt Cost improvement initiatives 2 Underlying EBIT margin 9 2% 9.2% 6 2% 6.2% Net Spread Reduction $18m Escalation (9
Slide 75: Coated & Building Products Asia – EBIT variance vs 1H FY2010
Coated & Building Products Asia – underlying EBIT variance analysis (1H FY2011 vs. 1H FY2010) For personal use only 1H FY10 1H FY11 Total despatches 454kt 549kt Underlying EBIT margin 7.9% 6.2% Underlying EBITDA $71M $67M Net Spread Reduction $27m +2 -1 +50 +4 -77 +46 Conversion & Other Costs: -33 C
Slide 76: North America – Coated & Building Products
For personal use only North America Coated & Building Products Page 75
Slide 77: Coated & Building Products North America – EBIT variance vs 2H FY2010
Coated & Building Products North America – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2010) For personal use only 2H FY10 1H FY11 Total despatches 257kt 290kt Underlying EBIT margin -4.4% -2.4% Underlying EBITDA ($5M) $4M Net Margin Reduction $1m A$M Net Spread Improvement $1m EBIT A -17
Slide 78: Coated & Building Products North America – EBIT variance vs 1H FY2010
Coated & Building Products North America – underlying EBIT variance analysis (1H FY2011 vs. 1H FY2010) For personal use only Net Margin Reduction $33m 1H FY10 1H FY11 Net Spread Reduction $29m Total despatches 278kt 290kt Underlying EBIT margin 1.6% -2.4% Underlying EBITDA $34M $4M +42 A$M EBIT A -7
Slide 79: BlueScope Buildings North America – traditional markets
BlueScope Buildings North America (pre-engineered buildings) – commercial, community and industrial are traditional markets For personal use only Retail Distribution Manufacturing Healthcare Service Page 78
Slide 80: 1.2 million square foot distribution facility erected in 28 days
Buildings North America: 1.2 million square foot distribution facility erected in 28 days for major retailer For personal use only Page 79
Slide 81: Other
For personal use only Other Page 80
Slide 82: In FY2010 we revisited our strategic direction
In FY2010 we revisited our strategic direction For personal use only Reinvigorate. Products, channels and markets, cost base Australian, New Zealand and U.S. steel businesses Secure cost-effective supply of raw materials Extract maximum value from our Asian footprint Global building products & solut
Slide 83: Strategy – focus primarily on building products and solutions
Strategy – globally our focus is primarily on building products and solutions (indicative 1H FY2010) For personal use only China 1% C t d&B Coated Building ildi NA N th Star North St USA 10% 99% 25% ASEAN 35% % 10% 30% 100% 90% Australia New Zealand 15% 25% 10% 35% Building & construction 15% 60% Ma
Slide 84: Strategy – grow participation in building and construction markets
Strategy – We will grow participation in building and construction markets globally with premium sustainable steel products and solutions For personal use only • Expand our portfolio of products and solutions with focus on construction and energy efficiency including: ¾ Pre-engineered buildings: − L
Slide 85: Capabilities fit large, developing steel building and construction markets
Strategy – Our capabilities fit well in large, developing steel building and construction markets both within and outside of our current footprint (eg Sth America) For personal use only Regional Construction Markets Contribution to GDP of Construction Sector(1) Total Construction Market Gross Output
Slide 86: BlueScope Steel's global footprint and capacities as at Dec 2010
BlueScope Steel’s global footprint and capacities as at 31 Dec 2010 For personal use only North Star (2) Kalama • Raw Steel 2.0mt • Cold Rolling 455kt • Metal Coating 235kt • Hot Rolling 2.0mt India(1) • Painting 110kt • Metal Coating C ( (+250kt)) North America • Painting (+150kt) • Butler/VP PEB s
Slide 87: BlueScope Steel China footprint
BlueScope Steel China footprint For personal use only 1H FY2011 Site of Xi’an REVENUE: A$320M Butler/Lysaght development EBITDA – Reported: A$ 93M EBITDA – Underlying: A$ 25M EMPLOYEES: 2,166 NET OPERATING ASSETS (PRE-TAX): A$176M SUZHOU BlueScope Steel in China 1 Metal Coating/Painting g g Line Fac
Slide 88: BlueScope Steel North America footprint 1H FY2011
BlueScope Steel North America footprint 1H FY2011 REVENUE: A$675M EBITDA – Reported: A$13M EMPLOYEES: 3,637 incl. North Star For personal use only NET OPERATING ASSETS (PRE-TAX): A$815M NB: Revenue excludes BSL’s 50% interest in North Star BlueScope Steel of A$316M. HQ Key ASC M tl S Metl-Span ASC S
Slide 89: Calendar year earnings
Calendar year earnings For personal use only A$ Millions CY2003 CY2004(3) CY2005 CY2006 CY2007 CY2008(4) CY2009 CY2010 Revenue(1) 5,328 7,029 7,980 8,693 9,333 11,926 8,283 9,148 EBITDA(2) 857 1,501 1,411 1,052 1,130 1,775 (324) 563 EBIT(2) - reported 581 1,212 1,111 742 792 1,399 (673) 215 - underl
Slide 90: Dividend history
Dividend history For personal use only 42 / 20¢ 20 49 / 0¢ 47 / 0¢ 44 / 0¢ 30 / 10¢¢ 10 27 26 22 / 7¢ 24 24 Special 7 18 Final 13 20 21 22 18 5 / 0¢ 12 5 / 0¢ Interim 9 2¢ 5 5 2 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 Page 89
Slide 91: Reported Corporate and Group Costs
Reported Corporate and Group Costs – impacted each half by profit in stock elimination and foreign exchange movements For personal use only A$M 30 6 -9 -3 -16 -41 -49 -90 -105 -135 135 1H FY08 2H FY08 FY08 1H FY09 2H FY09 FY09 1H FY10 2H FY10 FY10 1H FY11 Comprised of: Corporate costs (58) (43) (101
Slide 92: Major approved capital projects and investment summary
Major approved capital projects and investment summary (in addition “Stay in Business” capital is approx. 75% of depreciation) For personal use only Total Est. Actual to $A Millions Capex / Cost 31 Dec 10 2H FY2011 FY2012 FY2013 Projects completed Thailand – Coating expansion 80 80 - - - Vietnam – C
Slide 93: Zinc and Aluminium Usage
Zinc and Aluminium Usage For personal use only Tonnes Zinc Aluminium 1H FY2011 1H FY2010 1H FY2011 1H FY2010 AUSTRALIA Springhill 10,185 10,768 4,895 4,955 Western Port 10,318 8,496 5,168 4,516 S bt t l Sub-total 20 503 20,503 19 264 19,264 10 063 10,063 9 471 9,471 NEW ZEALAND 3,227 3,096 1,876 1,6
Slide 94: Committed Debt Facilities as at December 2010
Committed Debt Facilities as at 31 December 2010 For personal use only Maturity Committed Drawn US$m/THBm A$m A$m Syndicated Loan Note Facility Tranche 1 Dec-13 675 210 Tranche 2 Dec-15 675 - 2004 US Private Placement Notes Series A Jul-11 US$100 98 98 Series B Jul 14 Jul-14 US$200 197 197 2008 US P
Slide 95: Shares on issue – no material change
Shares on issue – no material change For personal use only Million (rounded) y Shares on issue at listing, July 2002 793 y Share buy-backs (116) y Dividend reinvestment scheme issues +67 y Employee p y share pplan issues +34 y Institutional share placement, Dec 2008 +97 y Share purchase plan issue,
Slide 96: Greenhouse Gas Regulation - Australia
Greenhouse Gas Regulation - Australia For personal use only • As a trade-exposed emissions-intensive manufacturer, BlueScope Steel notes the ongoing national and international debate about carbon pricing. • In Australia, the Federal Government has established a multi-party committee to provide advic
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BlueScope Greenhouse Gas Policy Principles - Context For personal use only • BlueScope Steel strives to continually improve its environmental footprint. We are committed to reducing the greenhouse gas intensity of our operations. BlueScope Steel is also playing an active and ongoing role in the glob
Slide 98: Greenhouse Gas Policy Principles
Greenhouse Gas Policy Principles For personal use only 1. Reducingg ggreenhouse ggas emissions is a gglobal pproblem that requires q a gglobal approach. pp 2. Australia should adopt policy that achieves emissions targets at least cost. Putting a price on carbon which is visible to consumers and prod
Slide 99: 1H FY2011 Results Presentation
For personal use only 1H FY2011 Results Presentation Six Months Ended 31 December 2010 Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 21 February F b 2011 ASX Code: BSL Page 98