Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Goldman Sachs JBWere Fourth Annual Australasian Forum, New York (March 2008)
100 slides from Bluescope Steel's conference presentation, Mar 14, 2008
Slide 1: Goldman Sachs JBWere Fourth Annual Australasian Forum, New York
For personal use only Goldman Sachs JBWere Fourth Annual Australasian Forum, New York Paul O’Malley, Managing Director and Chief Executive Officer 13, 14 March 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
For personal use only Introduction 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 18 70 16 NSW Manufacturing 16 60 Medically treated injuries per million man-hours worked 27.9 in 2005 & 24.4 in 2006 60 14 Lost time injuries per million man-hours work
Slide 5: Sustainability - water conservation
Sustainability - water conservation 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 Water Fresh Water Government. 2% 2% Project
Slide 6: PKSW Cogeneration plant – technology led solution displacing greenhouse gas emissions
PKSW Cogeneration plant – technology led solution that will displace For personal use only greenhouse gas emissions… Proposed Port Kembla Steelworks Surplus process gas Co-Generation Plant from iron & steel making 12 months feasibility study underway Reduce approximately 800,000 tpa CO2 equivale
Slide 7: A unique global production footprint
A unique global production footprint For personal use only Asia China • Coated and Building 24 Lysaght and MC 250kt PEB Sites Painting 150kt Products North America - Butler Buildings - HCI Steel India - IMSA Steel Corp Metal Coating 250kt Vietnam •North Star BlueScope JV Painting 150kt MC 125kt Hot
Slide 8: Employee profile by country December 2007
Employee profile by country 31 December 2007 For personal use only Other SE Asia 70 2,820 China 1,947 Australia North America 9,876 4,804 Total 20,966 1,449 New Zealand and Pacific Islands Page 8
Slide 9: External sales despatches by destination – broad geographic spread
External sales despatches by destination – broad geographic spread 1H-FY2006 1H-FY2007 1H-FY2008 For personal use only Exports Exports Exports 12% 32% 15% 38% 33% 16% 15% Exp orts 16% 9% Am rth a 21% eric No - Am Expo rts R e ri c 7% O W as 3% Exports - Asia 12% 9% Australia ia 14% As 37% 34% 38% NZ
Slide 10: Total Australian despatches by segment
Total Australian despatches by segment SALES TONNES For personal use only 1H FY2007(1) 1H FY2008(1) Principal variances: Construction 1,600 External sales volumes from our new 60% Distribution business included 1H08 60% 1,400 ¾sales, into all segments, principally Non-dwelling 26% construction and
Slide 11: BlueScope’s steelmaking – expected raw material usage in FY 2008
BlueScope’s steelmaking – expected raw material usage in FY 2008 1. Port Kembla Steelworks, NSW, Australia For personal use only Iron Ore: approximately 7.7mtpa indicative mix – 20% lump, 50% fines and 30% pellets principally sourced from BHP Billiton. Other suppliers include OneSteel, Savage
Slide 12: Financial Headlines – 1H 2008
For personal use only Financial Headlines – 1H 2008 Page 12
Slide 13: Group financial headlines 1H FY2008 vs. 1H FY2007
Group financial headlines 1H FY2008 vs. 1H FY2007 For personal use only Six months ended 31 December Variance 2008 2007 % Revenue A$4,734M A$4,528M Up 5% External despatches 4.0M tonnes 3.7M tonnes Up 6% EBITDA – Reported A$502M A$794M - – Underlying A$668M A$785M Down 15% EBIT – Reported A$328M A$6
Slide 14: High level reconciliation between Reported and Underlying NPAT
High level reconciliation between Reported and Underlying NPAT EBIT ($M) NPAT ($M) EPS (cps) For personal use only 1H 2008 1H 2007 1H 2008 1H 2007 1H 2008 1H 2007 Reported 328 635 116 388 0.16 0.55 Unusual or non-recurring events: ¾ Asset impairment(1) 251 0 247 0 0.34 0.00 ¾ Profit on sale of Smorg
Slide 15: Asset impairment process
Asset impairment process For personal use only Detailed business and market review undertaken as part of the half year process. Based on higher of: ¾estimated future cashflows discounted at WACC plus country risk premium; or ¾estimated recoverable value Subject to scrutiny by external auditors
Slide 16: Business segment earnings variance – Underlying EBIT
Business segment earnings variance – Underlying EBIT 700 For personal use only $626m 600 $12m ($7m) $15m $494m 500 ($60m) ($9m) ($65m) ($18m) 400 EBIT A$ Millions 300 200 100 0 - H a lf y e a r H o t R o lle d C o a te d & B ld g N Z & Pa c if ic C o a te d & B ld g H o t R o lle d C o a te d & B ld
Slide 17: Underlying EBIT variance 1H FY2007 to 1H FY2008 by item
Underlying EBIT variance 1H FY2007 to 1H FY2008 by item For personal use only Net Spread improvement $62m Escalation (47) Price (42) Improvement initiatives 46 800 $128m $10m Scrap (22) One off/discretionary (47) Other (mainly freight) (7) 700 $626m ($76m) ($11m) 600 ($64m) $494m EBIT A$ Millions 50
Slide 18: Continuing to reward our shareholders as we grow
Continuing to reward our shareholders as we grow For personal use only Shares on issue at listing (July 2002) 793m Total return to shareholders since BSL’s Share buy backs to 31/12/07 (116)m public listing (July 2002): ¾ on market – 90m shares 677m Share buybacks $ 707m Av price paid Dividen
Slide 19: Cash – strong operating cash flows have been reinvested in the business
Cash – strong operating cash flows have been reinvested in the business A$ millions 2003 2004 2005 2006 2007 2007-1H 2008-1H For personal use only Cash from operations 795 1,012 1,671 901 1,364 752 617 Working Capital Movement (31) (94) (432) (98) (21) (55) (17) Net operating cash flow 764 918 1,239
Slide 20: Balance sheet – lower gearing even with acquisition of Smorgon Steel distribution
Balance sheet – lower gearing even with acquisition of Smorgon Steel distribution As at For personal use only A$ Millions 30 June 2007 31 December 2007 Distribution SSX Distribution Assets Acquisition Total offset by reduction in other Cash 36 41 receivables Receivables 1,269 262 1,274 Inventory 1,2
Slide 21: Strategy
For personal use only Strategy Page 21
Slide 22: Strategy for longer term earnings growth
Strategy for longer term earnings growth – as introduced on 29 For personal use only November 2007 Reinvigorate our position in the Australian/NZ markets, through ongoing focus on strengthening our customer relationships, product and service innovation and driving operational efficiency. Continu
Slide 23: Acquisitions in the last months
Acquisitions in the last 8 months For personal use only ¾ Smorgon Distribution Australia, (August 2007) ― integration process on schedule ¾ HCI Steel Building Systems, Inc USA (October 2007) ― steel pre-engineered buildings (PEB) business ― adds geographic spread to our existing PEB business ― integ
Slide 24: IMSA Steel Corp Acquisition
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 America: – Varco Pruden (VP) Buildings: manufact
Slide 25: IMSA Steel Corp Acquisition (cont….)
IMSA Steel Corp Acquisition (cont….) For personal use only Recap the deal ¾cost US$730m (A$815m as at 1 February 2008) ¾funded by a 12 month bridge facility ―gearing will increase to approx 40% ¾expected EPS outcome ―EPS neutral, pre-AIFRS adjustments, in FY 2008 ―EPS accretive from FY 2009 ¾expec
Slide 26: BlueScope Steel North American footprint
BlueScope Steel North American footprint – recently expanded with the acquisition of IMSA Steel Corp. 1H FY 2008 REVENUE: A$661M For personal use only EBITDA: A$98M EMPLOYEES: 2,421 incl. North Star INVESTED CAPITAL: A$359M NB: Revenue excludes BSL’s 50% interest in North Star BlueScope Steel. WA ME
Slide 27: It is all about supply & demand
It is all about supply & demand “CHINA & EMERGING only “POST WAR INDUSTRIALISATION” “OIL SHOCKS” ECONOMIES” 1,200,000,000 World steel demand 1,000,000,000 DEMAND 800,000,000 “5% 600,000,000 personal use “5-8% GROWTH” “NO GROWTH” GROWTH” 400,000,000 200,000,000 0 1944 46 48 50 52 54 56 58 60 62 64 66
Slide 28: Previous super cycle resulted in 30 years of 5-8% growth in demand
Previous super cycle (fuelled by Japan’s industrialisation) resulted For personal use only in 30 years of 5-8% growth in demand Historic world steel production evolution* World steel demand Tonne Industrialisation fuelled by Japan Post industrialisation Chinese growth era 1,200,000,000 1,000,000,000
Slide 29: During periods of demand growth, healthy spreads have prevailed
… and during periods of demand growth, healthy spreads have prevailed, For personal use only noting spreads are not at historic highs in real terms Historic global steel spreads**over raw materials Industrialisation fuelled by Japan Post industrialisation China growth Real spreads** 180 1945 = 100 1
Slide 30: Steel supply - global steel industry consolidation continues
Steel supply - global steel industry consolidation continues For personal use only 120 100,000 Europe 90,000 / Americas Crude Steel Production (MT) 100 Europe / Asia Revenue (US$m) 80,000 70,000 Asia 80 60,000 Australia, Asia, Americas 60 50,000 Europe 40,000 40 30,000 Americas 20,000 20 10,000 0 0
Slide 31: In summary – the outlook is
In summary – the outlook is China Rest of World For personal use only Steel demand remains strong Consolidation to continue Raw steel production growth slowing Continued production discipline Evidence of higher spot raw material Russian economy using more steel costs making some provinci
Slide 32: Blueprint Update
For personal use only Blueprint Update Page 32
Slide 33: “Blueprint” – recap on my approach to doing business at BlueScope
“Blueprint” – recap on my approach to doing business at BlueScope and significantly improving shareholder value A. Reinvigorate our Australian and New Zealand For personal use only businesses What we will Areas of B. Continue the improvement process across our do … focus Asia and North America busin
Slide 34: Continued focus on the Building and Construction Markets
BlueScope Steel will continue its focus on the Building and Construction For personal use only Markets whilst concurrently looking after all of its customers in all segments Residential and commercial construction is a large and growing market for BlueScope. However, there is a high degree of va
Slide 35: Improving our delivery performance will better position us
Improving our delivery performance will better position us to improve cost For personal use only efficiency and customer service… Customers note “delivery performance as the second most important reason for switching to imports” Weekly DP (Business A) Percentage 100 90 80 70 60 50 40 30 20 Week 15,
Slide 36: Australia - Residential framing is one opportunity to increase steel penetration
Australia - Residential framing is one opportunity to increase steel For personal use only penetration Framing and roofing can pull through …and will make a step-change in overall most tonnes (2007E)… steel penetration per home (2007E) • Residential Building Potential tonnes/home Steel usage on new
Slide 37: “Manufacturing excellence” - key manufacturing outcomes
“Manufacturing excellence” - BSL will execute against key manufacturing For personal use only outcomes at all operations BlueScope’s Operating System Key Outcomes • Improve total cost per tonne produced Management • Decrease variable costs infrastructure • Increase uptime Technical system • Optimise
Slide 38: Further opportunity to improve uptime performance
As an example, there is further opportunity to improve uptime performance For personal use only even relative to internal best practice… BSL has significantly lifted its production levels … with further potential to meet benchmark uptime over time … performance Indexed production (Australian manufac
Slide 39: Balance Sheet - particular areas of opportunity
Balance Sheet - particular areas of opportunity are… For personal use only Assessment Potential opportunities • BlueScope has an extensive • Sale, lease or development of under Property property portfolio associated with its utilised or not required properties manufacturing locations which has not b
Slide 40: Global leader in steel product innovation
… and being a global leader in steel product innovation will greatly For personal use only enhance our growth opportunities. We will invest more in this area • CASTRIP® LYSAGHT TRIMDEK® – Is a technology that allows steel – Is a modern ribbed roofing makers to produce thin flat- profile with subtle
Slide 41: “Blueprint” - update
“Blueprint” - update For personal use only Progress report – 29 November to present: Program Management Office established ¾ reporting to Managing Director & CEO ¾ track and report on: ― over 200 business improvement initiatives identified during the “test & refresh” review; and ― synergy initiati
Slide 42: Summary
For personal use only Summary Page 42
Slide 43: Summary / Outlook
Summary / Outlook Reasonable start to FY 2008 For personal use only ¾ underlying first half profit in line with market expectations Asia – detailed performance review in progress with management changes to bolster capability. Very pleased with the 3 acquisitions ¾ Smorgon Distribution ¾ HCI In
Slide 44: Questions & Answers
For personal use only Questions & Answers Page 44
Slide 45: Goldman Sachs JBWere Fourth Annual Australasian Forum, New York
For personal use only Goldman Sachs JBWere Fourth Annual Australasian Forum, New York Paul O’Malley, Managing Director and Chief Executive Officer 13, 14 March 2008 ASX Code: BSL
Slide 46: Supporting Information
For personal use only Supporting Information
Slide 47: Reporting Segment Performance
For personal use only Reporting Segment Performance Page 47
Slide 48: External reporting business segments for 1H FY2008 results
External reporting business segments for 1H FY2008 results Corporate / Group For personal use only Australia New Zealand Asia North America Hot Rolled Coated & New Zealand & Coated & Hot Rolled Coated & Building Products Building Pacific Islands Building Products Products Australia Products Products
Slide 49: Australia
For personal use only Australia Hot Rolled Products Australia Coated and Building Products Australia Page 49
Slide 50: Hot Rolled Products Australia (PKSW) – operational strength continues
Hot Rolled Products Australia (PKSW) – operational strength continues to meet strong demand Markets Domestic For personal use only 600 ¾ HRC to pipe and tube sales - remained strong (1) ¾ Plate - increased market share, driven by continued strong 500 demand from mining, port infrastructure and oth
Slide 51: Hot Rolled Products Australia (PKSW) – underlying EBIT variance analysis
Hot Rolled Products Australia (PKSW) – underlying EBIT variance analysis 1H FY2008 vs. 1H FY2007 For personal use only Underlying EBIT down 14% to A$354M Iron Ore (44) Coal 26 Spread improvement +$8m Inventory 600 movement/revaluation (10) Discretionary R&M, consumables Scrap (16) & Other (31) A
Slide 52: Port Kembla Steelworks - despatches by half year
Port Kembla Steelworks - despatches by half year 3000 2,689 2,609 2,608 use only 2800 2,579 2,600 2600 2400 2200 40% 32% 32% 37% 2000 41% 1800 For personal(ktonnes) 1600 1400 21% 18% 16% 15% 18% 1200 1000 800 600 43% 45% 47% 50% 45% 400 200 0 FY06-1H FY06-2H FY07-1H FY07-2H FY08-1H External Product
Slide 53: Hot Rolled Products Australia – net annual movements in PKSW raw material costs
Australia Hot Rolled Products Australia – net annual movements in PKSW raw material costs (2) -2% For personal use only +2% +34% +36% -3% (1) FY2003 FY2004 FY2005 FY2006 FY2007 FY2008E S&A Conversion Costs Despatch & Freight Raw Materials * (1) Includes iron ore, coal, scrap and alloys but not scrap
Slide 54: Hot Rolled Products Australia - product flow (Indicative)
Australia - Hot Rolled Products Australia - product flow (Indicative) For personal use only 1H FY2008 Port Kembla Steelworks 2.6mt slab 1H FY2008 (2.7mt slab 1H FY2007) C&BP Australia (1) Hot Strip Mill Export Slab Plate Mill (Western Port) 53% 17% 9% 21% (53%) (16%) (9%) (22%) C & BP Australia (1)
Slide 55: Port Kembla Steelworks – Blast Furnace No. 5 reline and cogeneration plant
Port Kembla Steelworks – Blast Furnace No. 5 reline and cogeneration plant For personal use only 1. Blast Furnace No. 5 Reline remains on target for March 2009 (CURRENT EXPECTATION) Total capital cost A$370m ($106m spent by end of FY 2007). The increase from $330m to $370m reflects expected increa
Slide 56: Port Kembla Steelworks - Blast Furnace No. 5 reline
Port Kembla Steelworks - Blast Furnace No. 5 reline For personal use only Page 56
Slide 57: Port Kembla Steelworks – Sinter Plant Upgrade
Port Kembla Steelworks – Sinter Plant Upgrade For personal use only 3. Sinter Plant Upgrade (CURRENT EXPECTATIONS) Sinter Main shutdown planned for April – May 2009 (approx. 35 days) Coincide with BF No. 5 reline, when demand for sinter is reduced. Total capital cost A$134m. What is planned?
Slide 58: Port Kembla Steelworks – Sinter Plant upgrade
Port Kembla Steelworks – Sinter Plant upgrade For personal use only Exit End Entry End • Rebuild cooler • New Ignition Furnace • Increase Width • New Strand Feeding Device • Increase Fan Power • Relocate Lowering wheel and extend building • New cooler feed chute Precipitators • Refurbish zones 2, 3
Slide 59: Slab and HRC price benchmarks
Australia – Hot Rolled Products Australia - Slab and HRC price For personal use only benchmarks 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
Slide 60: Coated & Building Products Australia – Improved margin management
Coated & Building Products Australia – Improved margin management Reconciliation from Reported to Underlying EBIT For personal use only $6m Reported Unusual and non-recurring items in reported EBIT: ―Closure of PK Service Centre paint line $11m 75 $23m ―Lysaght asset impairment ―SSX dist. integratio
Slide 61: Coated and Building Products Australia - underlying EBIT variance analysis
Coated and Building Products Australia - underlying EBIT variance For personal use only analysis 1H FY2008 vs. 1H FY2007 Underlying EBIT up 32% to A$50m Higher units costs Spread Improvement +$43m ― Packaging cold mill & West 140 Sydney ramp up (27) Cost reductions 11 120 Other 4 $19m 100
Slide 62: Coated & Building Products Australia – Smorgon Distribution review
Coated & Building Products Australia – Smorgon Distribution review For personal use only BlueScope took ownership of Smorgon Distribution in early August 2007. Also very pleased that Mark Vassella and his team have joined BlueScope Financial performance (5 months): Reported EBIT $3m Unusual an
Slide 63: Coated Australia – Project update
Coated Australia – Project update For personal use only West Sydney Colorbond Facility ¾Plant handed over to manufacturing team and paint on strip August 2007 ¾Capital cost $150m (including land, buildings and processing equipment) ¾Nameplate capacity up to 120,000 tpa − technical ramp up is expec
Slide 64: Our customers are our partners
Our customers are our partners For personal use only Our Market Offer ¾High quality products XLERPLATE® ¾Advertising / promotional support ¾Service ¾Delivery ¾Satisfaction ¾Warranty ¾Technical Support Creating ¾New products TUBEFORM® ¾New markets Page 64
Slide 65: New Zealand Steel & Pacific Islands Products
For personal use only New Zealand New Zealand Steel & Pacific Islands Products Page 65
Slide 66: New Zealand and Pacific Islands Products – improved front end operating performance
New Zealand and Pacific Islands Products – improved front end operating performance continues Reconciliation from Reported to Underlying EBIT For personal use only Reported A$44m Unusual and non-recurring items in reported EBIT: 100 - Redemption of preference shares by MIL investment A($11m) - Fiji
Slide 67: New Zealand and Pacific Islands Products – underlying EBIT variance analysis
New Zealand and Pacific Islands Products – underlying EBIT variance analysis 1H FY2008 vs. 1H FY2007 For personal use only Underlying EBIT down 16% to A$36m Spread contraction ($7m) 60 Coal (10) $3m $43m $3m 40 $3m $36m EBIT A$ Millions ($10m) ($5m) ($1m) 20 0 Half year ended Export Prices Domes
Slide 68: New Zealand Steel and sustainability – benefits of cogeneration
New Zealand Steel and sustainability – benefits of cogeneration For personal use only NZ STEEL – EXTERNALLY PURCHASED AND INTERNALLY COGENERATED ELECTRICITY 1200 1000 800 Internal GWh 600 Cogeneration 400 Purchased 200 Energy 0 1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07
Slide 69: New Zealand Steel (FY2007) product flow
New Zealand Steel (FY2007) product flow* Mine Sites Iron Sand Concentrate * Indicative annual prime For personal use only production and sales (t) 2.0mt Export Export New Zealand Steel Iron Sand Vanadium Slag 0.6mt Slab Concentrate 15 kt 0.6mt Hot Rolled 0.8mt Export Hot Rolled Cold Strip Mill Domes
Slide 70: NZ Iron Sands feasibility studies underway
NZ Iron Sands feasibility studies underway, project teams are For personal use only revitalised Glenbrook Taharoa The abundant iron sand resource at New Zealand Steel is an increasingly valuable asset in the BlueScope Steel portfolio There are a number of “brownfield” opportunities to better exp
Slide 71: Asia – Coated & Building Products Asia
For personal use only Asia Coated & Building Products Asia Page 71
Slide 72: Coated and Building Products Asia – market development and margin management
Coated and Building Products Asia – its all about market development and margin management For personal use only Reconciliation from reported to underlying earnings: Reported (A$195m) 75 Unusual and non-recurring items 50 31 39 30 in reported EBIT: 25 11 13 Asset Impairment 0 (1) ―China A$190m -25 ―
Slide 73: Coated and Building Products Asia – underlying EBIT variance analysis
Coated and Building Products Asia – underlying EBIT variance analysis For personal use only 1H FY2008 vs. 1H FY2007 underlying EBIT down 23% to A$30m Spread Contraction ($12m) 70 60 Steel feed costs (18) 50 $2m $4m $13m $39m 40 $4m EBIT A$ Millions $30m 30 ($10m) ($2m) ($2m) 20 ($18m) 10 0 Half
Slide 74: Coated and Building Products Asia – regional performance
Coated and Building Products Asia – regional performance For personal use only Thailand Vietnam ¾ general election 23 Dec 2007 & coalition ¾ intense competition and unfavourable tariffs government formed Jan 08 ¾ outstanding operations performance with metal ¾ increased exports to India & Europe
Slide 75: BlueScope Steel China footprint
BlueScope Steel China footprint For personal use only 1H FY 2008 REVENUE: A$234M EBITDA: (A$174M) EBITDA – Underlying: A$9M EMPLOYEES: 1,940 INVESTED CAPITAL: A$207M SUZHOU BlueScope Steel in China 1 Metal Coating/Painting Line Facility 4 Lysaght Manufacturing Facilities 3 Butler PEB Manufacturing F
Slide 76: North America
For personal use only North America Hot Rolled Products Coated & Building Products Page 76
Slide 77: Hot Rolled Products North America – Scrap to HRC price spread squeezed
Hot Rolled Products North America – Scrap to HRC price spread squeezed in 1H FY 2008 Markets For personal use only This segment includes: Softening, albeit North Star despatches increased 4% on 1H 2007. ¾North Star BlueScope Steel (50% interest) ¾Castrip LLC and North American and Underlying per
Slide 78: Hot Rolled Products North America – underlying EBIT variance analysis
Hot Rolled Products North America – underlying EBIT variance For personal use only analysis This segment comprises: North Star BlueScope Steel (50% interest) Castrip LLC and North American and European sales offices 1H FY2008 vs 1H FY2007 EBIT variance analysis 140 120 $112m $2m EBIT A$ Mill
Slide 79: North Star BlueScope Steel – EAF operational excellence
North America - North Star BlueScope Steel – EAF operational For personal use only excellence 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 80: Castrip - Scale comparison with current casting technologies
Castrip - Scale comparison with current casting technologies For personal use only Conventional Slab Casting 1-2m/minute Gas cutter Rougher Finisher Run out table Coil box cooling Cooling 1-10mm thick 200-300 mm thick Coiler Reheat furnace 500-800 m 20-40 metric ton coil Thin-Slab Casting 4-6 m/minu
Slide 81: Coated and Building Products North America – a very strong half
Coated and Building Products North America – a very strong half For personal use only Markets (100% sales to non-residential) HCI Steel Building Systems, a steel PEB company in North Non-residential market remained strong for most of half. America, was acquired by BSL in October 2007. Building
Slide 82: Coated and Building Products North America – underlying EBIT variance analysis
Coated and Building Products North America – underlying EBIT For personal use only variance analysis Comprises: Butler buildings 1H FY2008 vs. 1H FY2007 underlying EBIT variance Spread improvement +$17m 60 50 $5m $20m $2m EBIT A$ Millions $38m 40 ($4m) ($3m) ($5m) 30 $23m 20 10 0 Half year end
Slide 83: Why PEBs? Speed, Cost Effectiveness, Broad Application
Why PEBs? Speed, Cost Effectiveness, Broad Application For personal use only Example: 110,000m2 facility, erected in 28 working days Wal*Mart Stores Distribution Centre (Arkansas) July 9 July 23 1 2 July 30 August 6 3 4 Page 83
Slide 84: North America – acquisition of HCI Steel Building Systems, Inc
North America – acquisition of HCI Steel Building Systems, Inc On 1 November 2007 BlueScope acquired privately owned HCI Steel Building For personal use only Systems Inc. (a pre-engineered steel buildings business) ¾ HCI designs & manufactures steel PEB’s for heavy industry, commercial and communi
Slide 85: Other Supporting Information
For personal use only Other Supporting Information Page 85
Slide 86: Major approved capital projects and investments summary
Major approved capital projects and investments summary For personal use only PROJECTS Total Est. Actual to FY2008 FY2008 FY2009 FY2010 All in A$million Capex / Cost 30/6/07 1H Actual 2H Projects completed Thailand – Coating expansion 80 80 - - - Vietnam – Coating / Painting 136 136 - - - China - Co
Slide 87: BlueScope’s global debt facilities – maturity schedule
BlueScope’s global debt facilities – maturity schedule For personal use only Amount ($m) Maturity date Working Capital Facilities AUD 350 Oct-08 Loan Note Facility Tranche 1 - 364 day AUD 92 Dec-08 Tranche 2 - 3 year AUD 550 Dec-08 Tranche 3 - 5 year AUD 550 Dec-10 1,192 US Private Placement Series
Slide 88: Indicative FY2008 Zinc and Aluminium usage vs FY2007
Indicative FY2008 Zinc and Aluminium usage vs FY2007 For personal use only Tonnes Zinc Aluminium FY2008(E) FY2007 FY2008(E) FY2007 AUSTRALIA Springhill 21,423 22,787 11,281 10,632 Western Port 22,261 21,800 11,284 10,900 Sub-total 43,684 44,587 22,565 21,532 NEW ZEALAND 7,300 6,800 3,700 3,500 ASIA
Slide 89: China is at a very early stage in steel intensity
China is at a very early stage in steel intensity providing significant upside potential… Crude steel intensity For personal use only Kg/capita Taiwan (1970-2006) 1200 South Korea (1970-2006) 1000 800 600 Japan (1955-2006) China (1970-2006) 400 USA (1900-2006) 200 0 0 5000 10000 15000 20000 25000 30
Slide 90: China should reach peak crude steel intensity at earliest in 10 years
…and it should reach peak in crude steel intensity at earliest in 10 years For personal use only time Crude steel intensity Kg/capita 850 China following Japan 800 intensity curve 750 700 650 600 550 China following slope 500 of US intensity curve China reaches 450 maximum steel 400 intensity by 202
Slide 91: China’s continued urbanisation and industrialisation key enablers for steel demand
China’s continued urbanisation and industrialisation are the key enablers for For personal use only continued steel demand growth Real GDP growth Urbanisation Industry and service output Annual GDP growth rate Urbanisation rate GDP structure % Agri- 11 8 culture 51.5% 51 54 Industry 43.9% 10.7% 7.7%
Slide 92: Internal business structure reorganised to focus on strategic priorities
Internal business structure has been reorganised to focus on our strategic For personal use only priorities and execution Managing Director and CEO Legal (Michael Barron) CFO (Charlie Elias) Paul O’Malley People and Organisational Performance (Ian Cummin) Aus/NZ Steel Australian Coated Australian Co
Slide 93: Marine freight continues to be one of the most volatile commodities
Marine freight continues to be one of the most volatile commodities in the world – expect further rate hikes this CY BUT BlueScope largely insulated Marine freight market volatility For personal use only ¾ all time high in Dec 2007 ¾ to some of the biggest one-day falls ever seen (in Jan) o The ex
Slide 94: BlueScope Steel’s Financial Results
For personal use only BlueScope Steel’s Financial Results Page 94
Slide 95: 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 - underlying - - 1,308 966 924 Net profit - reported 436 859 792 413 414 - underlyi
Slide 96: Earnings performance leveraged to steel price spreads
Earnings performance leveraged to steel price spreads For personal use only A$ Millions FY2003 FY2004 (2) FY2005 FY2006 FY2007 2007-1H 2008-1H (4) Revenue 5,302 5,770 7,964 8,031 8,913 4,528 4,734 EBITDA (1) 881 1,104 1,655 850 1,423 794 502 EBIT (1) – Reported 611 818 1,358 556 1,099 635 328 – Unde
Slide 97: Reported EBIT variance 1H FY2007 to 1H FY2008 by item
Reported EBIT variance 1H FY2007 to 1H FY2008 by item For personal use only Net Spread improvement $62m $128m $10m 800 700 $635m ($76m) ($11m) 600 ($64m) EBIT A$ Millions 500 ($55m) ($40m) 400 ($24m) 300 $328m 200 ($175m) 100 0 Half year ended Dec 2006 Domestic Prices Volume / Mix Conversion & Other
Slide 98: Reconciliation from Reported to Underlying EBIT for first half FY2008
Reconciliation from Reported to Underlying EBIT for first half FY2008 For personal use only Integration costs 5 Profit in stock eliminations 19 West Syd P/L Pre-ops 3 Smorgon Brand impairment 2 M&A costs 3 EBIT $M $13m $6m $3m $494m China MCL 190 $11m $26m Vietnam MCL 35 $251m Lysaght Australia 23 F
Slide 99: EBIT remains sensitive to realised HRC prices, raw material costs and US$
EBIT remains sensitive to realised hot rolled coil prices, raw material costs and US$ movements For personal use only Estimated impact on forecast EBIT (A$mil) FY08 FY08 Full Year Full Year Assumption (current) (previous) +/– US$25 / tonne movement in BlueScope’s average realised export 85 85 HRC pr
Slide 100: Goldman Sachs JBWere Fourth Annual Australasian Forum, New York
For personal use only Goldman Sachs JBWere Fourth Annual Australasian Forum, New York Paul O’Malley, Managing Director and Chief Executive Officer 13, 14 March 2008 ASX Code: BSL