Bluescope Steel Limited · ASX:BSL
Bluescope Steel — H1 FY2005 Earnings Presentation
33 slides from Bluescope Steel's earnings presentation, Feb 21, 2005
Slide 1: BlueScope Steel Half Yearly Results Presentation
BLUESCOPE STEEL Kiry Adams, aoe Deer and Chief Executive Officer Brian | Kruger, Chief Financial Officer a oa) 2005
Slide 2: Important Notice
- Important Notice THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE. RELIANCE SHOULD NOT
Slide 3: Rewarding Shareholders As We Grow
Slide 4: Safety - Taking Care as we grow - Our goal remains Zero Harm
Safety -Taking Care" as we grow - Our goal remains Zero Harm 2 £ 5 g 2 g Co 2 = 5 = 5 JIS! Member Companies (2004) ~ 7.8 wemeroccco He: a7} gag ey Medically treated injuries per million man-hours worked injuries resulting in lost time per mi Ss 0 1903 1904 1995 19968 1907 1098 1909 2000 2001 2002 20
Slide 5: First Half FY2005 Group Result - Another Record
- First Half FY2005 Group Result - Another Record 6 months + Revenue A$3,890 million Up 49% - record even with A$ strength + Despatches 3,457 million metric tonnes Up 7% « EBITDA A$811 million Up 84% * EBIT A$666 million Up 121% * NPAT A$485 million Up 114% to record * EPS 65.7¢ Up 121% + After tax
Slide 6: Capital management - continued focus on returns to shareholders
- Capital management - continued focus on returns to shareholders Total return to shareholders since * Share Buybacks public listing: - On-market > FY’s 03 and 04 - purchased/cancelled 60.7m shares * On-market buybacks $ 360m > FY05 - 9.5m of 17.1m purchased/cancelled as at 31/12/04 | » Dividends pa
Slide 7: Growing for the future benefit of shareholders
- Growing forthe future benefit of shareholders > Thailand - second metal coating facility (July 2005) > Vietnam — new metal coating and paint line facility (early CY2006) > China — new metal coating and paint line facility (mid CY2006) — BlueScope Butler integration and growth > Hot Strip Mill upgr
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Slide 9: Butler breakeven and on target
tion breakeven andontarget = tS FY2004 FY2005 US$m EBIT (normalised) 1H 2H 1H North America (3) | (42) J 2m) China 6 6 6 Total (2) (6) 8 {) All EBIT numbers normalised (to exclude one-off acquisition costs, integration costs and discontinued businesses). ) Reported EBIT is breakeven, the difference
Slide 10: Strong performance across all geographical regions
Strong performance across all geographical regions «Port Kembla 6004 «coated & Building Products Australia EBIT A$ Millions «North Star BlueScope (50%) * Coated and Building Products North America + NZ Steel * Coated & Building Products Asia Australia New Zealand Asia Americas
Slide 11: Current period EBIT strong in upstream segments
Current period E EBIT sronge ‘in upstream segments © FY04-1H @ FY05- 1H 2 Record EBI T for PKSW, NSBSS & NZS. A, G A, North Star 600 - ee BlueScope Stee! ‘ + Higher slab / HRC feed prices push | Ps Coated and Building Products Australia 7. 2 500 - into EBIT ios f= 400 * itler North America ynaround.
Slide 12: Hot Rolled Products - Tier suppliers with world class results
Hot Rolled Products - Tier 1 suppliers with world class results f FY04-1H mi FY04-2H & FY05-1H North Star |e? BiueScope Steel | Port Kembla Steelworks EBIT A$ Millions * 1H FY2005 return on net assets annualised (pre-tax) 70% + Sales revenue (excluding NSBSS) = A$1,742m, up 41% Markets - Continued s
Slide 13: New Zealand Steel - an outstanding team effort
- New Zealand Steel - an outstanding team effort Markets GI FYO4-1H Mm FYO42H Bi FYOS-1H - Record domestic despatches, up 19%, in both residential and non-residential sectors - Higher export prices - Stronger export demand 39 Performance - Record EBIT - 6 month slab production record - Metal coating
Slide 14: Coated and Building Products Australia - dealing with massive feed cost
alla — dealing with massive teed cost FY04-1H ME FY04-2H © FY05-1H ‘0 95 50 EBIT A$ Millions 50 ~100 * 1H-FY2005 return on net assets annualised (pre-tax) (14)% “90 * Sales revenue = A$1,509m, up 7% Markets and Performance - Record half year sales revenue Strong domestic demand continued Springhill
Slide 15: Coated and Building Products Asia - investing for growth
Coated and oe ducts Asia - investing for growth Markets - Successfully integrated Butler/BlueScope China - India — broadening market reach -77/| BlueScope Butler| Performance 45 45 - Full period contribution from BlueScope Butler a Z “¢|_| - Strong domestic despatches ae - Higher domestic prices unr
Slide 16: Why divergence between Asia and Australia Coated business EBIT?
"Why divergence between Asia and Australia Coated business EBIT? _ ~~ Two principal reasons: 1. Contract Terms Asia: - does not have fixed contracts Australia: - — significant portion under contract — auto, packaging & manufacturing - _ typically one year or more - pricing changes on rollover 2. Mar
Slide 17: North America - foundations
Orin Amenica—toundationS EH) FY04-1H = FY04-2H &FY05-1H Markets - Non-residential market improved 0 - Quote activity improved BlueScope acquired Butler - Order back log robust y 0 Performance / Progress , - Integration largely completed 40 - 5 regional profit centres established “11 (0) - Re-organis
Slide 18: Our markets - managing diversification
Our markets — managing a diversification North America - Exports NSBSS + C&BPNA 25% * \ 15% Americas : 8% Europe/Africa 4% Asia 13% 0 Asia/Pacific 10% New Zealand 5% Australia 45% Construction - Engineering 10% (10%) Agriculture & Mining 5% (10%) Auto/Transport 15% (10%) Construction - Dwelling 15%
Slide 19: Financials
Slide 20: Continued strong earnings performance
_ Continued strong earnings performance A$ Millions 2001 2002 2003 20040 2004-1H 2004-2H®) 2005-1H Revenue 4941 4503 5302 5,770 ! 2619 3151 3,800 EBITDA?) 58412, BBtSs«1,105 ! 440 665 8i1 EBIT2) 818 ! 302 516 666 Net Profit 584 ! 27 357 485 EPS (¢) 778 ! 298 48.0 65.7 (1) 2001 and 2002 normalised. (
Slide 21: EBIT variance - December half FY2004 vs. December half FY2005
_ EBIT variance - December half FY2004 vs. December half FY2005 02m 900 800 | '$170m 700 ; $369m = [i TT $34m 9m: wn | ($34m) “(§9m) 500 » Scrap - PKS (52) 400 * Coal (44) * Iron Ore (26) ; . ri 300 + Asia Purch. Feed (32) + Repas & Maintenance (30) * Coating Metals (16) rei an (25) 200 | * Industri
Slide 22: Balance Sheet - strength and flexibility
- Balance Sheet — strength and flexibility As At A$ Millions 30 June 2004 31 December 2004 Assets Cash 119 107 Receivables 996 838 Inventory 963 1,079 Other Assets 415 491 Net Fixed Assets 3,289 3,336 Total Assets 5,782 §,854 Liabilities Creditors 728 646 Interest Bearing Liabilities 593 651 Provisi
Slide 23: Capital expenditure projects
All in A$million Total Est. | Actualto | FY2005 FY2006 | FY2007 Capex/Cost | 31/12/042) | Balance Mid and Downstream Projects Vietnam — Coating / Painting” 160 81 52 27 - Thailand - Coating) 80 50 30 - - China") - Coating and Painting Facility 280 64 122 94 - Guangzhou Butler / Lysaght 45 - 12 33 In
Slide 24: Cash flow summary
. A$ millions 2001") 2002) 2003 2004 2004-1H 2004-2H 2005-1H Net operating cashflow 631 381 763 893 357 536 578 before borrowing costs : and income tax Net investing cashflows - Capital expenditure (105) (162) (183) (290) (99) (191) (260) - Other (6) 8 18 (288): (3) (285) (8) Net cashflow before 520
Slide 25: New Standards will be effective FY2006, with FY2005 comparatives restated
7 New Standards will be effective FY2006, with FY2005 comparatives to be restated Opening transition balance date (1 July 2004) adjustments through retained earnings identified three significant opening balance sheet net asset changes: 1. Unfunded Defined Benefit Pension Funds in Australia and New Z
Slide 26: Results remain sensitive to realised hot rolled coil prices and exchange rates
Restits remain sprsiive D eo Ste! s realised hot rolled or Estimated impact on forecast EBIT (A$mil ) for FY05 Assumption +/— US$25 / tonne movement in BlueScope’s average realised export HRC price") 73 (75) +/ 1¢ movement in Australian dollar / US dollar exchange rate) 18 (13 +/—- US$10 / tonne mov
Slide 27: Looking forward
‘Looking forward | Global steel industry - BlueScope Steel strategy continues its transformation Raw material costs — significant increase
Slide 28: Transformation of the global steel industry
Transformation of the global steel ~ Late 20" Century Largely government owned Over-supply Apprehensive Fragmented Focused within nations Divesting raw material interests to raise cash Operating for cash and employment Chapter 11 bankruptcies Production Early 21%t Century Largely privatised China...
Slide 29: Strategy unchanged and implementation well underway
~ Strategy unchanged and implementation well underway Metallic Coated (ee eee ae eee ioe alam aia aa aia a naial an ‘Hot Rolled Coil, Plate _
Slide 30: Financial Outlook FY2005
~ Financial Outlook FY2005 oe Record FY2005 anticipated * — Second Half NPAT similar to First Half NPAT - continued strong demand - robust global product pricing environment - price increases implemented offset by: - raw materials / scrap costs - A$ strength - cost of industrial disruption in Austra
Slide 31: Raw material costs - significant increase for FY2006
_ Raw material costs — significant increase forFY2006 * — BlueScope’s raw material consumption at full capacity: > Port Kembla - iron ore 7.6mtpa - — coal 3.3mtpa (dry) > coking 2.8mtpa — freight advantage > PCI 0.5mtpa (lower quality / lower price) - — scrap 1.0mtpa (50% sourced internally) > New Z
Slide 32: Rewarding Shareholders As We Grow
_ Rewarding Shareholders As We Grow A VERY DIFFERENT KIND OF STEEL COMPANY
Slide 33: BlueScope Steel
BLUESCOPE STEEL Kiry Adams, aoe Deer and Chief Executive Officer Brian | Kruger, Chief Financial Officer a oa) 2005