Bluescope Steel Limited · ASX:BSL
Bluescope Steel — FY2011 Earnings Presentation
113 slides from Bluescope Steel's earnings presentation, Aug 22, 2011
Slide 1: FY2011 Results and Business Update Presentation
For personal use only FY2011 Results and Business Update Presentation Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 22 August 2011 ASX Code: BSL Page 1
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: Safety – our target remains Zero Harm
For personal use only Safety – our target remains Zero Harm Lost Time Injury Frequency Rate Medically Treated Injury Frequency Rate 18 70 16.0 16 60.0 Medically treated injuries per million man-hours worked 60 14.0 14 52.2 Lost time injuries per million man-hours worked 50 47.1 12 10 40 Reported per
Slide 4: Introduction – Business performance
Introduction – Business performance For personal use only • Structural change in macro-economic factors have driven an unacceptable result from our Australian business, leading to today's announcement ¾ In addition asset carrying value assessments resulted in net impairment write downs of $922m (pri
Slide 5: Steel spread – rising raw material costs and highly volatile steel prices
Steel spread – rising raw material costs and highly volatile steel prices For personal use only Indicative Steelmaker HRC Spread (A$/t) SBB East Asia HRC price less cost of 1.5t iron ore fines and 0.71t hard coking coal $800 $700 $600 $500 A$/t $400 $300 $200 $100 $0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-
Slide 6: Global steel market dynamics remain challenging oversupply
Steel spread - global steel market dynamics remain challenging oversupply, China is operating at around 700mt p.a., however ROW utilisation remains subdued… For personal use only Annualised Monthly World Crude Steel Production^ Monthly Crude Steel Capacity Utilisation* (M Tonnes) Tonnes (M’s) Utilis
Slide 7: Quantum jump in iron ore and coal prices over the last three years
… with a quantum jump in iron ore and coal prices over the last three years when price setting also moved from annual to quarterly For personal use only Iron Ore Coking coal Source: CRU, Platts, TSI, BlueScope Steel Note: • Iron ore pricing used: 62% Fe iron ore fines price assumed. Industry annual
Slide 8: Foreign Exchange – stronger A$ exacerbates contraction of USD spread
Foreign Exchange – stronger A$ exacerbates the contraction of USD spread and leads to increased import competition in Australia For personal use only USD/AUD Monthly Foreign Exchange Rate 1.10 (01-Aug) 1.10 1st July 1990 – 1st August 2011 1.00 0.90 Avg, 0.88 Start: $0.79 End: $1.10 0.80 High: $1.10
Slide 9: Export mix has grown off soft Australian sales
… and our export mix has grown off soft Australian sales Total BlueScope Group External Despatches For personal use only FY2009 FY2010 FY2011 Exports Exports Exports 25% 4% 27% 33% (1,492kt) 9% 21% (1,931kt) 4% 6% 6% (2,579kt) 20% 20% 11% 12% 17% 16% 12% 12% 4% 38% 30% 37% 4% 14% 3% Total External S
Slide 10: Australian external sales volumes falling 11%
... with Australian external sales volumes falling 11% (FY2011 on FY 2010) EXTERNAL DESPATCH VOLUMES(1)(4) For personal use only 1,800 2H FY2008 1H FY2009 2H FY2009 1H FY2010 2H FY2010 1H FY2011 2H FY2011 (Blast furnace 63% No. 5 Reline) 1,600 64% 65% 1,400 27% (436kt) 27% (389kt) Construction 66% 6
Slide 11: Decision to balance Australian steelmaking production capacity with demand
Decision to balance Australian steelmaking production capacity with Australian demand For personal use only • Today we announced our decision to exit the business of exporting steel manufactured at Port Kembla, whilst remaining fully committed to our Australian domestic business ¾ This decision to e
Slide 12: Growth focus
Growth focus For personal use only • Delivering on our investment in Asia ¾Restructured the business ¾Now delivering strong returns ¾With material upside as we grow sales from our existing investments • Continue to grow our global presence in building construction markets ¾In particular steel Pre-En
Slide 13: FY 2011 Headlines
For personal use only FY 2011 Headlines Page 13
Slide 14: Group financial headlines FY2011 vs. FY2010
Group financial headlines FY2011 vs. FY2010 Twelve MONTHS ENDED 30 June VARIANCE For personal use only 2010 2011 % Revenue 8,624M 9,153M +6% External despatches 7.2M tonnes 7.8M tonnes +9% EBITDA − Reported 590M (687M) - − Underlying 605M 254M -58% EBIT − Reported 240M (1,043M) - − Underlying 255M (
Slide 15: Reconciliation between FY2011 reported NLAT and underlying NLAT
Reconciliation between FY2011 reported NLAT and underlying NLAT For personal use only FY2011 NLAT A$M Reported (1,054) Net (gains) / losses from discontinued businesses (1) Reported earnings from continuing businesses (1,055) Restructuring & redundancy costs 10 Asset impairment 922 Business developm
Slide 16: Segment EBIT summary
Segment EBIT summary Underlying EBIT, A$M Comments For personal use only FY2010 FY2011 1H FY2011 2H FY2011 2H FY2011 (vs 1H) Coated & Industrial Products Further spread contraction; soft domestic 108 (258) (97) (161) Australia demand and prices; NRV adjustments - Indicative HRC Spread * 365 269 252
Slide 17: Spread drives over 90% of decline in Coated & Industrial Products Australia
Spread: drives over 90% of the decline in performance of Coated & Industrial Products Australia FY2011 vs. FY2010 For personal use only Coated & Industrial Products Australia – Underlying EBIT Net Spread Reduction $333m $333M unfavourable net spread movement in FY2011 vs. FY2010 driven by: y Iron or
Slide 18: Export losses – export sales profitable in only two years since 2000
Export losses – since 2000 BlueScope’s export sales have made a strong contribution to profits in only two years For personal use only Indicative Steelmaker HRC Spread (A$/t) SBB East Asia HRC price less cost of 1.5t iron ore fines and 0.71t hard coking coal $800 $700 $600 $500 A$/t $400 $300 $200 $
Slide 19: Focusing our Australian steelmaking to support the domestic market
For personal use only Focusing our Australian steelmaking to support the domestic market Background • BlueScope operates 2 blast furnaces (No. 5 and No. 6) at Port Kembla, New South Wales • Each has a capacity of approximately 2.6mtpa or 5.3mtpa in total • Assets form part of the Coated & Industrial
Slide 20: Macro environment and poor returns are driving this decision
Macro environment and poor returns are driving this decision 1,236 For personal use only 1,000 Historical CIPA 697 766 546 569 total segment underlying EBIT 224 (pre-NRV charge) 35 (A$m) 367 -191 202 Indicative 76 69 76 historical CIPA Export underlying -97 EBIT (pre-NRV -189 -246 charge) (A$m) -487
Slide 21: BlueScope better off under restructure by an estimated $225M
(1) BlueScope is better off under this restructure by an estimated $225M (pro-forma impact on FY 2011) For personal use only Underlying EBIT A$ (Pre-NRV charge) -80 (1) -182 (1) +487 +34 -191 FY2011 Actual CIPA Add back Export loss Loss retained on Fixed costs retained Revised Pro- some exports (Pro
Slide 22: Proforma impact of restructure on 2011 CIPA income statement
Proforma impact of restructure on 2011 CIPA income statement For personal use only (1) 2011 Comprised of: Impact of proforma for • Raw materials, including assumption of raw materials mix A$m; year to 30 June 2011A restructure restructure improvement to lower price (greater proportional utilisation
Slide 23: Indicative EBIT sensitivities for FY2012
Indicative EBIT sensitivities for FY2012 (reflecting FY2011 CIPA asset base) compared to FY2012 (reflecting the one Blast Furnace announcement) For personal use only Estimated impact on FY2012 EBIT A$m (1) 2 Blast Furnaces 1 Blast Furnace Assumption +/– US$25 / tonne movement in BlueScope’s average
Slide 24: Fixed cost reductions through closure of certain assets
Fixed cost reductions will be achieved through the closure of certain assets For personal use only 5.3mtpa asset base 2.6mtpa asset base Cokemaking Operating 4 batteries Operate 3 batteries (closing No. 4) and 21/22 Blowers Sinter Plant Full Capacity Reduce production through reduced shifts to 5day/
Slide 25: At 2.6mtpa, capacity sufficient to meet all domestic demand
At 2.6mtpa, capacity sufficient to meet all domestic demand, with continued investment in next generation Zincalume and Colorbond (in JV with Nippon Steel) For personal use only Historical Australian External Sales from both CIPA and Australian Distribution & Solutions Mtpa 2.699 2.7 2.663 2.597 2.6
Slide 26: Questions associated with the transition plan: cost and funding
Questions associated with the transition plan For personal use only 1. What is the expected cost to transition to one blast furnace (2.6mtpa) and how will it be funded? •The bulk of the transition activity will take place between now and March 2012. •Anticipate restructure cash costs will be met fro
Slide 27: Questions associated with the transition plan: restarting BF No. 6
Questions associated with the transition plan For personal use only 2. Will BlueScope be able to cost effectively restart BF No. 6? •Intention is to ¾Tap the salamander to drain the molten iron ¾Then keep the BF on a basic “care and maintenance” mode •The company will have the ability to restart BF
Slide 28: Questions associated with the transition plan: stay in business capex
Questions associated with the transition plan For personal use only 3. What is the Group’s ongoing “stay in business” capital expenditure after the restructure? ¾Previously reported annual “stay in business” capital for the BlueScope group was approximately 75% of group depreciation. ¾Over next few
Slide 29: Safety, our people, community and our customers
For personal use only Safety, our people, community and our customers • Safety ¾ During the implementation process we will not compromise BlueScope’s focus on safety • Our people and our community ¾ Treat our employees, contractors, suppliers and our communities with respect • Customers ¾ Domestic c
Slide 30: BlueScope has lender support for the restructuring
BlueScope has lender support for the restructuring For personal use only • Discussions have been concluded with BlueScope’s principal lending groups ¾ Bank Syndicate ¾ US Private Placement Noteholders • BlueScope’s objective in these negotiations was to obtain lender support to implement this value-
Slide 31: Summary
Summary For personal use only • Restructuring is imperative given: ¾ Industry and macro economic structural changes ¾ Resulting in loss making export business; and ¾ History shows we are only giving up a small amount of upside whilst materially reducing the downside • We have demonstrated an ability
Slide 32: Additional financial information on revised CIPA configuration
For personal use only Additional financial information to assist understanding of the revised CIPA steel market configuration Page 32
Slide 33: Proforma impact of restructure on 2011A CIPA income statement
Proforma impact of restructure on 2011A CIPA income statement For personal use only (1) 2011 Comprised of: Impact of proforma for A$m; year to 30 June 2011A restructure restructure • Raw materials, including assumption of raw materials mix improvement to lower price (greater proportional utilisation
Slide 34: Components of fixed cost reduction estimate ($315M)
(1) Components of fixed cost reduction estimate ($315M) For personal use only • Utilities includes electricity, natural gas, internal gases, cryogenic gases, water, steam, compressed air and hot blast Utilities & services • Includes contracted services for management of slag and other materials hand
Slide 35: Relevant factors for CIPA in FY2012
Relevant factors for CIPA in FY2012 For personal use only • When considering variable contribution, bear in mind: – Q1 FY11 benefited from domestic price (and spread) lag from strong Q4 FY10 – FY2011 benefited from an opening stock adjustment (c.$100M) – Escalation of retained variable conversion co
Slide 36: Working capital release and cost to achieve
Working capital release and cost to achieve For personal use only We anticipate that restructure cash costs will be met through release of working capital; estimates only at this stage, but expect both will be in the order of $400-500M (1) Working capital release Cash costs (by estimated size) • Mai
Slide 37: Financial Results
For personal use only Financial Results Page 37
Slide 38: Historical earnings performance
Historical earnings performance For personal use only A$ Millions FY2007 FY2008(3) FY2009 FY2010 1H FY11 2H FY11 FY11 Revenue(1) 8,913 10,495 10,329 8,624 4,622 4,531 9,153 EBITDA – Reported(2) 1,423 1,420 380 590 127 (814) (687)(6) EBIT(2) – Reported 1,099 1,063 15 240 (48) (995) (1,043)(6) – Under
Slide 39: Asset carrying value assessments result in A$922m impairment
Asset carrying value assessments result in net impairment write downs of A$922m For personal use only • As a normal part of finalising its accounts each half year BlueScope reviews the carrying value of its non-current assets. • Given ongoing macroeconomic challenges of high AUD:USD, low spreads (se
Slide 40: Underlying EBIT variance FY2010 to FY2011 by major item
Underlying EBIT variance FY2010 to FY2011 by major item For personal use only Net Spread Reduction ($324m) Raw Materials: Coal (450) +184 Iron ore (480) Conversion & Other Costs : Scrap (55) Cost improvement initiatives 38 Alloys (17) Volume 125 (2) External steel feed (68) Escalation (109) Net real
Slide 41: Underlying EBIT variance 2H FY2011 to 1H FY2011
Underlying EBIT variance 2H FY2011 to 1H FY2011 by major item For personal use only Raw Materials: Coal (107) Net Spread Reduction ($103m) Iron ore (77) Conversion & Other Costs: -5 Scrap (14) Alloys 3 Cost improvement Initiatives 47 External steel feed (3) Volume 12 Net realisable value provisions
Slide 42: Fixed cost and overhead reductions
Fixed cost and overhead reductions For personal use only y During FY2011 an additional $38M reduction in the cost base was achieved, before escalation. y $696M cumulative savings were achieved by the end of FY2011 (vs. FY2008 cost base) ¾ $340M permanent savings ¾ $356M temporary savings y Cost redu
Slide 43: Cashflow
Cashflow In general weaker steel For personal use only spreads reduced cash A$ millions FY2007 FY2008 FY2009 FY2010 1H FY11 2H FY11 FY2011 from operations Cash from operations 1,364 1,579 534 596 166 142 308 Working capital movement (21) 69 250 (133) (182) 16 (166) Increase in WC: see balance sheet
Slide 44: Balance Sheet
Balance Sheet As at For personal use only A$ Millions 30 June 2010 31 Dec 2010 30 June 2011 Refer previous slide Assets Higher than Dec 2010 Cash 251 86 172 largely due to higher selling prices over first Receivables 1,199 987 1,050 half. Inventory 1,829 1,962 2,029 Other Assets 1,446 1,198 1,041 Re
Slide 45: Balance Sheet – inventory increase
Balance Sheet … $67M increase in inventory since December 2010 predominantly on account of prices and volumes at C&IPA, offset in part by foreign exchange benefits For personal use only RMS $388M WIP 750 +2,815 RMS $421M FGS 718 WIP 690 RMS $397M Other 173 FGS 679 WIP 639 RMS $338M Other 172 FGS 618
Slide 46: Balance Sheet – keeping gearing below target levels
Balance Sheet …keeping gearing below target levels For personal use only y Gearing at 19.5% (ND/ND+E). Target range 25-30% y Net debt at 30 June 2011 of $1,068M (rounded), comprised of $1,240m of drawn debt less $172m cash y 30 June total undrawn facilities and cash of A$1,137m vs. $A1,332m at 31 De
Slide 47: Debt Facilities and Maturity Profile as at June 2011
Debt Facilities and Maturity Profile as at 30 June 2011 For personal use only y Refinanced the Syndicated Facility in December 2010 to improve debt maturity profile and reduce financing costs 903 Cost of Debt A$M 751 228 y Effective average cost of drawn US Private Placement debt in FY2011 was 7.30%
Slide 48: Indicative EBIT sensitivities for FY2012
Indicative EBIT sensitivities for FY2012 (reflecting FY2011 CIPA asset base) compared to FY2012 (reflecting the one Blast Furnace announcement) For personal use only Estimated impact on FY2012 EBIT A$m (1) 2 Blast Furnaces 1 Blast Furnace Assumption +/– US$25 / tonne movement in BlueScope’s average
Slide 49: Outlook
For personal use only Outlook Page 49
Slide 50: First half FY 2012 outlook
First half FY 2012 outlook For personal use only • Three key drivers will continue to have a material influence on our 1H12 financial performance: ¾ A$/US$ ¾ Steel spread (function of HRC and raw material prices) ¾ Demand • Restructure costs will also have a material impact on financial performance
Slide 51: Questions & Answers
For personal use only Questions & Answers Page 51
Slide 52: FY2011 Results and Business Update Presentation
For personal use only FY2011 Results and Business Update Presentation Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 22 August 2011 ASX Code: BSL Page 52
Slide 53: Other Supporting Information
For personal use only Other Supporting Information Page 53
Slide 54: Reporting Segments Additional Information
For personal use only Reporting Segments Additional Information Page 54
Slide 55: Reporting Segments
Reporting Segments Corporate / Group Australia New Zealand Asia North America For personal use only 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 56: Segment business drivers
Segment business drivers Corporate / Group Australia New Zealand Asia North America For personal use only Coated & Australia New Zealand Coated & Hot Coated & Industrial Distribution & Pacific Steel Building Rolled Building Products & Products Products Products Products Australia Solutions Asia Nort
Slide 57: Australia: Coated & Industrial Products, Distribution & Solutions
For personal use only Australia Coated & Industrial Products Distribution & Solutions Page 57
Slide 58: CIPA underlying EBIT variance analysis (FY2011 vs. FY2010)
Coated & Industrial Products Australia – underlying EBIT variance analysis (FY2011 vs. FY2010) EBIT A$M use only Net Spread Reduction ($333m) Raw Material Costs: Coal (428) +63 Iron ore (480) Scrap (40) Alloys (17) Net realisable value provisions (67) Opening stock adjustment 229 Coating metals (17)
Slide 59: CIPA underlying EBIT variance analysis (1H vs. 2H FY2011)
Coated & Industrial Products Australia – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2011) EBIT A$M use only Net Spread Reduction ($111m) Raw Material Costs: Coal (98) -56 Iron ore (77) Scrap (12) Alloys & coating metals 3 Net realisable value provisions (26) Opening stock adjustment 10 (1
Slide 60: Key drivers of Coated & Industrial Products Australia FY2011 result
BlueScope Steel – Key drivers of Coated & Industrial Products Australia FY2011 result For personal use only 2H 2009 1H 2010 2H 2010 1H 2011 2H 2011 East Asia HRC price1, US$/t 452 536 633 611 722 IO fines, benchmark2 91 61 n/a n/a n/a IO fines index avg, one qtr 71 76 114 147 169 lag3 IO fines index
Slide 61: 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 Both PKSW increase and external Both PKSW 2007 – increases internal furnaces furnaces Chart shows despatches decrease
Slide 62: PKSW – Production & Despatch Flow
PKSW – Production & Despatch Flow Port Kembla Steelworks For personal use only Slab Domestic Slab Production 1,821 1,678 0 21 FY 2011 FY 2010 5,173 4,724 Export 853 672 Inventory movements Interco Western Port (2) & yield losses 968 985 Hot Strip HRC Domestic Port Kembla Steelworks Mill 2,735 2,648
Slide 63: 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 Port Kembla Metal Coating Lines Metal Coated 830 Strip Steelworks Paint Lines Painted Strip 330 HRC Springhill Coupled Pickled Cold Mill CRC 990 Metal Coati
Slide 64: 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 2,421 2,118 2,081 BSL internal* 1,361 1,295 1,606 1,423 1,322 1334 1,348 1,203 1,411 Export external 699 782 838 100% exported, with 710 526 876 761 geographic sales 267 540 split being: Asia 71% Dom
Slide 65: Port Kembla Steelworks productivity
For personal use only Port Kembla Steelworks productivity 5,000 Employees Productivity (Tonnes per person per year) 2,000 4705 4,500 1,750 Productivity (Crude Steel Output, Tonnes/Employee/Year) 4049 4,000 3783 3662 3610 3567 1,500 3,500 3406 3146 3171 3,123 3087 1,250 3,000 2,500 1,000 2,000 750 1,
Slide 66: Port Kembla Steelworks – cost profile
Port Kembla Steelworks – cost profile For personal use only Total cost A$m FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 S&A Conversion Costs Despatch & Freight Raw Materials Notes: (1) Chart shows cost of despatches (2) Conversion costs include depreciation (3) Raw material include
Slide 67: 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) FY2008 FY2009 FY2010 FY FY11 Indicitave use rate per slab tonne Iron Ore (Assuming 2 blast furnaces running at capacity) Fines 4.0 2.9 4.0 4.4 0.97t Lump 1.6 1.0 1.5 1.8 0.31t
Slide 68: Historical iron ore, coking coal and semi soft coal benchmark prices
Historical global iron ore fines, coking coal and semi soft coal benchmark prices 2002 – 2010 inclusive For personal use only 2002 2003 2004 2005 2006 2007 2008 2009 2010 Iron Ore Fines $17.97 $17.54 $19.12 $22.68 $38.88 $46.27 $50.66 $91.14 $61.061 US$/dmt % change 4.3% -2.4% 9.0% 18.6% 71.5% 19.0%
Slide 69: Slab and HRC price benchmarks for Asia & Australian sales
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 & Slab Benchmark Price US$/t (SBB Ea
Slide 70: 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 70
Slide 71: Australia Distribution & Solutions – EBIT variance (FY2011 vs. FY2010)
Australia Distribution & Solutions – underlying EBIT variance analysis (FY2011 vs. FY2010) use only Net Spread Reduction ($26m) +2 0 For personal EBIT A$M -61 -8 +4 -5 +1 -2 -34 +35 FY 2010 Export Prices Domestic Raw Material Volume Mix Conversion & Exchange Other FY 2011 Prices Costs Other Costs Ra
Slide 72: Australia Distribution & Solutions – EBIT variance (1H vs. 2H FY2011)
Australia Distribution & Solutions – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2011) use only Net Spread Reduction ($2m) For personal EBIT A$M -15 0 -6 -19 +4 -15 +13 1H 2011 Domestic Prices Raw Material Costs Volume/Mix Conversion Costs Other 2H 2011 Page 72
Slide 73: Australia Distribution & Solutions
Australia Distribution & Solutions For personal use only The Distribution and Solutions division brings together 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 y Ho
Slide 74: Australia Distribution and Solutions – Overview
Australia Distribution and Solutions – Overview For personal use only Sites (incl 2 U.S.) 127 Employees 3,100 Active Customers >18,000 Page 74
Slide 75: New Zealand & Pacific Islands
For personal use only New Zealand & Pacific Islands Page 75
Slide 76: New Zealand and Pacific Steel Products – EBIT variance (FY2011 vs. FY2010)
New Zealand and Pacific Steel Products – underlying EBIT variance analysis (FY2011 vs. FY2010) EBIT A$M use only Net Spread Improvement $32m Exchange rate: +16 Export revenues (18) Other 1 -43 For personal +59 -7 +6 0 -17 -5 +82 +73 Raw Material Costs: Conversion & Other Costs: Coal (22) Cost improv
Slide 77: New Zealand and Pacific Steel Products – EBIT variance (1H vs. 2H FY2011)
New Zealand and Pacific Steel Products – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2011) use only Net Spread Reduction ($3m) +1 +11 -15 +49 For personal -4 0 EBIT A$M +1 -7 -3 +33 Conversion & Other Costs: Cost improvement initiatives 7 Volume 5 Raw Material Costs: Escalation (6) Coal (9
Slide 78: New Zealand - unique direct reduction process
New Zealand - unique direct reduction process For personal use only Page 78
Slide 79: 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 80: New Zealand Steel – FY2011 product flow
New Zealand Steel – FY2011 product flow Mine Sites Iron Sands Export 0.82mt For personal use only 2.15mt HRC 36% Domestic 6% NZS Slab 0.61 mt Export 31% Interco (Export) 63% Export Vanadium Slag 15.6kt Plate 12% Domestic 44% Export 56% Pipe 4% Domestic 98% Export 2% Cold Mill 48% Domestic 9% Export
Slide 81: New Zealand – FY2011 product distribution
New Zealand – FY2011 product distribution (external and internal) For personal use only Indicative Product Mix (t) Indicative Sales by Region (t) Pacific Painted Islands 6% Australia 9% 12% Cold Rolled Metal Coated 11% 28% Asia Americas 14% 23% Pipe 4% Other 1% Indicative Sales by Sector (t) Hot Rol
Slide 82: New Zealand – FY2011 Non steel product sales
New Zealand – FY2011 Non steel product sales For personal use only Iron Sand y Iron sands exports from Taharoa down at 819kt in FY2011 vs 927k in FY2010 due to shipping schedule constraints y Higher prices were achieved for FY2011 compared to FY2010 Ferrous Scrap y Volumes: FY2011 33kt vs. FY2010 52
Slide 83: Asia: Coated & Building Products Asia
For personal use only Asia Coated & Building Products Asia Page 83
Slide 84: Coated & Building Products Asia – EBIT variance (FY2011 vs. FY2010)
Coated & Building Products Asia – underlying EBIT variance analysis (FY2011 vs. FY2010) EBIT A$M use only Conversion & Other Costs: Cost improvement initiatives 5 Volume 13 Escalation (17) Net Spread Reduction ($26m) One off / discretionary (6) Other - +39 +7 -5 -68 -27 +116 +3 For personal +45 +108
Slide 85: Coated & Building Products Asia – EBIT variance (1H vs. 2H FY2011)
Coated & Building Products Asia – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2011) EBIT A$M use only Net Spread Improvement $12m -2 -18 +7 -6 +62 +30 +5 0 For personal +46 Conversion & Other Costs: Exchange rates: 0 Cost improvement initiatives 5 Translation (5) Raw Material Costs: Volume
Slide 86: North America: Coated & Building Products
For personal use only North America Coated & Building Products Page 86
Slide 87: Coated & Building Products North America – EBIT variance (FY2011 vs. FY2010)
Coated & Building Products North America – underlying EBIT variance analysis (FY2011 vs. FY2010) EBIT A$M use only Net Margin Reduction ($18m) Net Spread Reduction ($8m) For personal +96 -105 +1 -16 +1 0 +2 -20 -10 +11 FY 2010 Export Prices Domestic Raw Material Conversion Volume Mix Exchange Other
Slide 88: Coated & Building Products North America – EBIT variance (1H vs. 2H FY2011)
Coated & Building Products North America – underlying EBIT variance analysis (1H FY2011 vs. 2H FY2011) EBIT A$M use only Net Margin Improvement $17m Net Spread Improvement $22m -15 For personal -5 +37 -5 0 0 0 -4 0 -16 1H 2011 Export Prices Domestic Raw Material Conversion & Volume Mix Exchange Othe
Slide 89: BlueScope Buildings North America – pre-engineered buildings 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 89
Slide 90: Buildings North America: 1.2 million square foot 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 90
Slide 91: Other
For personal use only Other Page 91
Slide 92: 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 93: Strategy – global focus on building products and solutions
Strategy – globally our focus is primarily on building products and solutions (indicative FY2010) For personal use only China 1% Coated & Building NA North Star USA 10% 99% 25% ASEAN 35% 10% 30% 100% 90% Australia New Zealand 15% 25% 10% 35% Building & construction 15% 60% Manufacturing 40% Auto Ag
Slide 94: 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 95: 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) Regional Construction Markets For personal use only Contribution to GDP of Construction Sector(1) Total Construction Market Gross Output
Slide 96: Global footprint and capacities as at June 2011
BlueScope Steel’s global footprint and capacities as at 30 June 2011 North Star (2) For personal use only Kalama • Raw Steel 2.3mt • Cold Rolling 455kt • Hot Rolling 2.1mt India (1) • Metal Coating 235kt • Metal Coating (+250kt) • Painting 110kt • Painting (+150kt) North America • Lysaght / PEB Site
Slide 97: BlueScope Steel China footprint
BlueScope Steel China footprint For personal use only Site of Xi’an FY2011 Butler/Lysaght REVENUE: A$591M development EBITDA – Reported: A$118M EBITDA – Underlying: A$50M EMPLOYEES: 2,089 NET OPERATING ASSETS (PRE-TAX): A$149M SUZHOU BlueScope Steel in China 1 Metal Coating/Painting Line Facility 4
Slide 98: New combined Butler PEB and Lysaght 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’an. The plant will be similar to existing plant in Guangzhou • Plant expected to
Slide 99: BlueScope Steel North America footprint FY2011
BlueScope Steel North America footprint FY2011 REVENUE: A$1,312M EBITDA (reported): A$76M EMPLOYEES: 3,803 incl. North Star NET OPERATING ASSETS (PRE-TAX): A$772M For personal use only NB: Revenue excludes BSL’s 50% interest in North Star BlueScope Steel of A$697M. HQ Key ASC ASC Metl-Span Steelscap
Slide 100: Calendar year earnings
Calendar year earnings For personal use only A$ 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 101: 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 101
Slide 102: 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 30 A$M 6 -3 -9 -16 -35 -41 -49 -51 -90 -105 -135 1H FY08 2H FY08 FY08 1H FY09 2H FY09 FY09 1H FY10 2H FY10 FY10 1H FY11 2H FY11 FY11 Comprised of: Corporate Cos
Slide 103: Movement in total Australian external despatches FY2011 vs. FY2010
Supporting information explaining the movement in total Australian external despatches FY2011 vs. FY 2010 For personal use only Total Australian External Gross Despatches by Reporting Segment (kt), last four half years 1H FY2010 867 376 1,243 2H FY2010 1,003 378 1,381 Coated & Industrial Products Au
Slide 104: 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 $A Millions Capex / Cost 30 Jun 11 FY2012 FY2013 FY2014 Projects completed Thailand – Coating expansion 80 80 - - Vietnam – Coatin
Slide 105: Committed Debt Facilities as at June 2011
Committed Debt Facilities as at 30 June 2011 For personal use only Maturity Committed Drawn US$ / THBm / MYRm A$m A$m Syndicated Facility Tranche 1 Dec-13 675 479 Tranche 2 Dec-15 675 0 2004 US Private Placement Notes Series A (1) Jul-11 US$100 94 94 Series B Jul-14 US$200 187 187 2008 US Private Pl
Slide 106: 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 share plan issues +34 y Institutional share placement, Dec 2008 +97 y Share purchase plan issue, Feb 2
Slide 107: Australian Governments climate change plan – Securing a Clean Energy Future
Australian Governments climate change plan - “Securing a Clean Energy Future” For personal use only On 10 July 2011, the Australian government released its climate change plan: Securing a Clean Energy Future. • The plan aims to reduce carbon emissions to at least 5% below 2000 levels by 2020, which
Slide 108: Proposed Carbon Pricing Mechanism
The Australian Federal Government’s Proposed Carbon Pricing Mechanism For personal use only • The mechanism is scheduled to commence on 1 July 2012 • BlueScope Steel will be a liable entity under the scheme • The “fixed price” phase will be for three years ¾ “Fixed Price” means the price is set by t
Slide 109: Steel Transformation Plan (STP)
Steel Transformation Plan (STP) For personal use only A Steel Transformation Plan will materially reduce the impact of the carbon pricing mechanism on BSL for the first four years. The STP will provide $300M of funding to the steel industry: • provides $75M per year for four years to minimise the im
Slide 110: Who are the global big polluters?
For personal use only Some context - who are the global “big polluters”? Total Carbon Dioxide Emissions from the Consumption of Energy 2009 8,000 7,707 7,000 6,000 5,425 Million Metric Tonnes 5,000 4,000 3,000 2,000 1,591 1,557 1,098 1,000 766 541 529 528 520 451 444 438 425 418 415 - Source : US Go
Slide 111: Off shoring emissions
Some context - Off shoring emissions For personal use only Percentage change in GHG Emissions 1990-2006 Emissions Produced and Consumed -100 -50 0 50 100 150 200 Russia* Production Germany Consumption UK EU-6 France South Africa** Japan Italy Netherlands USA Canada Mexico Australia Spain Brazil Turk
Slide 112: Port Kembla Steelworks ranks in top third of carbon efficiency
Some context – BlueScope’s Port Kembla Steelworks ranks in the top third of carbon efficiency. For personal use only • Port Kembla Steelworks is in the top third of carbon efficiency among 84 global integrated steelworks, as surveyed by the World Steel Association (2008 data) Crude Steel Production
Slide 113: FY2011 Results and Business Update Presentation
For personal use only FY2011 Results and Business Update Presentation Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 22 August 2011 ASX Code: BSL Page 113