Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Investor Day (September 2021)
78 slides from Bluescope Steel's investor day presentation, Sep 21, 2021
Slide 1: BlueScope Investor Day Day 2
For personal use only BlueScope Investor Day Day 2 21 September 2021 Pictured: New lodges built along the BlueScope Steel Limited. ASX Code: BSL Three Capes Track in Tasmania featuring COLORBOND® steel ABN: 16 000 011 058 Photo: Brett Boardman Level 11, 120 Collins St, Melbourne, VIC, 3000
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: Agenda Day 2
AGENDA DAY 2 For personal use only Session 1 • BlueScope Strategy Update • Digital Technology • North Star • Q&A Break Session 2 • Australian Steel Products • Buildings North America • Q&A Break Session 3 • Building Products Asia and North America • New Zealand and Pacific Islands • Financial Framew
Slide 4: Our Purpose and Strategy
OUR PURPOSE AND STRATEGY For personal use only OUR PURPOSE We create and inspire smart solutions in steel, to strengthen our communities for the future OUR STRATEGY TRANSFORM GROW DELIVER DELIVER A STEP CHANGE IN GROW OUR PORTFOLIO OF DELIVER A SAFE WORKPLACE, CUSTOMER EXPERIENCE AND SUSTAINABLE STE
Slide 5: Digital Technology
For personal use only Digital Technology Andrew Garey (Chief Strategy and Transformation Officer) Pictured: Woodcroft Neighbourhood Centre in NSW by Carter Williamson Architects featuring COLORBOND® steel 5
Slide 6: Digital vision and approach
For personal use only OUR VISION OUR APPROACH Deliver the next wave of • Targeted use cases in strategic priority areas customer, growth and • Strengthen foundations – people productivity and technology capabilities improvements through • Transfer solutions and learnings the adoption of digital to a
Slide 7: How We Deliver Our Digital Ambitions
HOW WE DELIVER OUR DIGITAL AMBITIONS Systematic focus on delivering value through use cases, strengthening foundations and transferring For personal use only learnings across the business Use cases delivering value Transfer learnings in strategic Manufacturing Connected Sales and Support focus areas
Slide 8: Use Cases Delivering Value
USE CASES DELIVERING VALUE For personal use only Manufacturing Connected Supply Sales and Support Functions Excellence Chain Marketing Improve employee Step change in quality, Improve service levels Drive growth and experiences through cost and throughput and optimise inventory profitability with th
Slide 9: Case study: Asset intelligence
For personal use only Case study Asset intelligence Click here to view the video case study 9
Slide 10: Case study: Paint line scheduling optimisation
For personal use only Case study Paint line scheduling optimisation Click here to view the video case study 10
Slide 11: Case Study: Connected Supply Chain
CASE STUDY CONNECTED SUPPLY CHAIN Leveraging advanced analytics to improve demand forecasting and optimise inventory For personal use only • A pilot to explore ways to improve supply chain performance in one Australian business – with digital technology • Introduced advanced analytics techniques to
Slide 12: Case Study: Support Functions
CASE STUDY SUPPORT FUNCTIONS Robotic process automation improving employee productivity For personal use only • Introduced Robotic Process Automation (RPA) to automate certain finance processes and create greater capacity for finance professionals • Piloted RPA with balance sheet reconciliations as
Slide 13: Foundations: Data & Platforms
FOUNDATIONS DATA & PLATFORMS The set of data and technology standards and services that underpin our digital transformation For personal use only • Coordinated strategy and value focused approach across BlueScope linked to strategic priority areas DATA AND PLATFORMS • Investing in modern cloud first
Slide 14: Foundations: People Capabilities
FOUNDATIONS PEOPLE CAPABILITIES Strengthening our ability to deliver digital For personal use only Investing in new roles and capabilities • Global roles to identify and scale opportunities across BlueScope • Regional hubs established in NZ, ASEAN and Australia • Advanced Analytics Centre of Excelle
Slide 15: North Star
For personal use only North Star Pat Finan (Chief Executive Hot Rolled Products North America) Click here for a video overview of North Star 15
Slide 16: North Star Overview
NORTH STAR OVERVIEW Industry leading hot rolled coil producer; competitive advantage in safety, quality, service and delivery For personal use only Facility overview North Star’s competitive advantage • Industry leading hot rolled coil producer, established in 1996 in Delta, Quality OH as a twin EAF
Slide 17: Products and Customers
PRODUCTS AND CUSTOMERS Serving a diversified range of end-use segments and products, predominantly through For personal use only service centre channels Product range Local customer base End-use segment exposure • 25-30 grades of HRC, produced at a • Product sold to over 100 customers, consistently
Slide 18: Strong Conditions Across End-Use Segments
STRONG CONDITIONS ACROSS END-USE SEGMENTS An improved COVID-19 situation, low interest rates and significant infrastructure program supporting For personal use only improved optimism and robust economic momentum; manufacturing activity remains elevated Automotive1 Non-residential construction2 Manuf
Slide 19: US Steel Industry Rationalisation
US STEEL INDUSTRY RATIONALISATION US steel industry consolidation and rationalisation have continued, supporting an improved For personal use only industry structure US hot strip mill capacity consolidation (%, mt) Total producers 20 10 9 Gulf States 75mt Closed or consolidated producers Acme Steel
Slide 20: Regional HRC Capacity
REGIONAL HRC CAPACITY In the region in which North Star operates, blast furnace closures will more than offset the return of For personal use only temporarily idled mills and new capacity projects coming online ME VT Permanent Distance from HRC Capacity NH Closures / Additions North Star Change (on
Slide 21: Regional Supply / Demand Outlook
REGIONAL SUPPLY / DEMAND OUTLOOK Supply and demand in the region in which North Star operates is expected to be For personal use only largely in balance in 2023 Regional flat rolled supply and demand balance (million metric tonnes) 2.2 No demand 0.2 ~33 2.0 (2.4) 33.0 increase assumed (0.4) on pre-C
Slide 22: Cost Competitiveness
COST COMPETITIVENESS Strong EBITDA and cash generation through the cycle; industry leading margins and consistently full For personal use only utilisation US$M EBITDA and spread (100% basis)1 755 EBIT margins3 (%) 28.9% 700 U.S. mini-mill spread EBITDA (100% basis) 600 14.7% Cash flow (EBITDA less c
Slide 23: Raw Materials Strategy
RAW MATERIALS STRATEGY Diversifying metallics supply to provide flexibility and security for ongoing growth For personal use only Scrap – well located for local supply; testing Pig iron – diversify supply from Brazil, CIS broader supply options for flexibility and growth • Strong existing supply bas
Slide 24: Expansion Progress
EXPANSION PROGRESS Project well-progressed and on track for first coil in 2H FY2022 For personal use only • Project well progressed1 – Melt Shop commissioning well underway with numerous heats successfully completed – Equipment installation substantially complete for the ladle metallurgy furnace; se
Slide 25: North Star Debottlenecking Project
NORTH STAR DEBOTTLENECKING PROJECT Assessment of the 500ktpa incremental debottlenecking opportunity to begin as we For personal use only progress through the ramp up period of the expansion project • Commissioning of new furnace and slab North Star mill schematic showing possible debottlenecking ta
Slide 26: Q&A
For personal use only Q&A Mark Vassella (Managing Director and Chief Executive Officer) Tania Archibald (Chief Financial Officer) Andrew Garey (Chief Strategy and Transformation Officer) Pat Finan (Chief Executive Hot Rolled Products North America) 26
Slide 27: Australian Steel Products
For personal use only Australian Steel Products John Nowlan (Chief Executive Australian Steel Products) Gerald Cornelius (General Manager Australian Steel Markets) Kylie MacKenzie (Marketing Manager Australian Steel Markets) 27
Slide 28: Segment Overview
SEGMENT OVERVIEW Integrated producer of premium branded flat steel products for domestic Australian markets For personal use only • Produces hot rolled coil and plate through to branded, Footprint value-added metallic coated and painted products • Established steelmaking asset at Port Kembla, with M
Slide 29: Key End-Use Segments
KEY END-USE SEGMENTS Approximately a third of domestic volumes are exposed to high margin and robust outlook A&A and For personal use only detached residential end-use segments Domestic end-use segment exposure Alterations & additions (A&A) A&A building approvals and house prices1 • Indicatively con
Slide 30: ASP Strategy & KPIs
ASP STRATEGY & KPIS How we measure success For personal use only Sustainability & • Constantly improving measures of customer Community & Carbon Reduction Governance satisfaction Superior Customer Experience Safety & • Maintaining steelmaking at above cash breakeven at Wellbeing bottom of cycle cond
Slide 31: Growth in Domestic Steel Volumes
GROWTH IN DOMESTIC STEEL VOLUMES BlueScope’s product-specific initiatives and end-use segment demand growth have For personal use only delivered strong growth in Australian domestic steel product sales ASP domestic sales – FY2013 to FY2021 (mt) ~2.5mt Other uncoated products (e.g. HRC, CRC) Closure
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Slide 33: COLORBOND Steel Growth
COLORBOND® STEEL GROWTH Planned ongoing investment in our COLORBOND® steel product and brand continues to deliver For personal use only inter-material growth COLORBOND® steel in-market activity • In final year delivering on a five-year growth strategy, already exceeding the business case • Focused m
Slide 34: TRUECORE steel video
For personal use only Click here to view a video on TRUECORE® steel 34
Slide 35: Light-Gauge Steel Framing Growth
LIGHT-GAUGE STEEL FRAMING GROWTH TRUECORE® steel demand for light-gauge framing is growing in both residential and commercial For personal use only applications Residential steel framing Capacity growth initiative • Sales of TRUECORE® steel for framing • Previously idled MCL5 in Western continue to
Slide 36: TRU-SPEC Steel Coil Plate
TRU-SPEC® STEEL COIL PLATE Strong growth in superior coil plate product; commissioned second line to meet continued growth For personal use only TRU-SPEC® steel tension-levelled coil plate Second coil plate line to support growth • In 2014, BlueScope invested in a 113kt coil plate processing line in
Slide 37: Innovation Laboratories
For personal use only Innovation Laboratories Click here to view a video overview of the Innovation labs 37
Slide 38: Automation and Robotics
AUTOMATION AND ROBOTICS Robotics and automation opportunities unlocking the next wave of productivity improvements For personal use only and cost savings Investment in automation at Steelmaking ladle turn over Western Port Service Centre • Cost reductions and productivity • Automation is improving t
Slide 39: Leveraging New Technology
LEVERAGING NEW TECHNOLOGY Machine learning offers opportunity to further improve already advanced For personal use only manufacturing processes Slabmaking temperature model using machine Metal coating line product flow simulation and learning machine learning • Piloted a machine learning model to ac
Slide 40: Cost Competitiveness
COST COMPETITIVENESS Overarching focus is to retain cost competitiveness – including steelmaking assets’ breakeven cost For personal use only position at the bottom of the cycle Asian steel spread1 & estimated steelmaking cash breakeven2 (US$/t) 800 700 600 500 2015 indicative steelmaking breakeven
Slide 41: Value of ASP's Vertical Integration
VALUE OF ASP’S VERTICAL INTEGRATION Significant value in the integration of steelmaking assets with downstream manufacturing and For personal use only channels to market • Clear objective of optimising profitability across the entirety of Port Kembla operations Synergies • Units fully integrated acr
Slide 42: Buildings North America
For personal use only Buildings North America Susan Stark (President, BlueScope Buildings North America) Matthew Roth (President BlueScope Properties Group) 42
Slide 43: Segment Overview
SEGMENT OVERVIEW Buildings North America designs and supplies engineered building solutions into the large and stable For personal use only low-rise non-residential US construction segment, under leading brands Butler® and Varco Pruden® • Engineering and technology company with competitive advantage
Slide 44: Examples of Buildings & Projects
EXAMPLES OF & PROJECTS For personal use only 44
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Slide 48: Builder Network
BUILDER NETWORK Our 2,000+ strong network of builders use our premium brands and proprietary design software in the For personal use only construction segment to win work and add value in the construction process Strength of builder network built on differentiation Builder network • National network
Slide 49: End-Use Segments
END-USE SEGMENTS BlueScope Buildings North America is exposed to end-use segments that are well positioned to For personal use only benefit from trends End-use segment exposure Well positioned to benefit from trends • Strength in e-commerce: Agriculture, Export & Other – Focus on data centres, wareh
Slide 50: Driving Efficiency and Growth
DRIVING EFFICIENCY AND GROWTH Leveraging technologies, including robotics and automation, to enhance For personal use only manufacturing and engineering productivity; focused organic growth Modernising and upgrading manufacturing equipment • Automating welding, adding new paint capabilities and an a
Slide 51: BlueScope Properties Group
BLUESCOPE PROPERTIES GROUP BPG utilises BBNA’s capabilities and strong builder network relationships to develop For personal use only Class-A industrial properties What we do Clearly defined risk appetite and tolerance measures • BPG develops, leases and sells Class A industrial warehouse and Risk M
Slide 52: Upscaling BPG
UPSCALING BPG BPG has a proven and successful track record; upscaling the business, tapping into For personal use only key trends in US industrial properties such as the growth in warehousing and logistics Proven and successful track record Upscaling the opportunity Profitably completed 10 projects
Slide 53: Q&A
For personal use only Q&A Mark Vassella (Managing Director and Chief Executive Officer) Tania Archibald (Chief Financial Officer) John Nowlan (Chief Executive Australian Steel Products) Susan Stark (President, BlueScope Buildings North America) Alec Highnam (Chief Executive, BlueScope Buildings) 53
Slide 54: Building Products Asia and North America
For personal use only Building Products Asia and North America Connell Zhang (Chief Executive NS BlueScope) Xu Huang (President BlueScope China) Pictured: STEAK On.3 Coffee & Wine in Chum Phon, Thailand featuring Clean COLORBOND® steel 54
Slide 55: Segment Structure
SEGMENT STRUCTURE An outstanding suite of assets and strong partnerships in high growth regions: Southeast Asia For personal use only China, India, US West Coast BlueScope NSC1 BlueScope BlueScope Tata Steel 50% 50% 100% 50% 50% NS BlueScope Coated Products (NBCP) BlueScope China Tata BlueScope Stee
Slide 56: Positioned Well in a High-Growth Region
POSITIONED WELL IN A HIGH-GROWTH REGION BlueScope has significant opportunity in large and growing markets across Southeast Asia and India, For personal use only with large and growing populations and relatively low steel consumption levels Population size Finished Steel Consumption per Capita Milli
Slide 57: A Multitude of Opportunities in the Regions in Which We Operate
A MULTITUDE OF OPPORTUNITIES IN THE REGIONS IN WHICH WE OPERATE For personal use only Southeast Asia / India West Coast US China • Rising middle class and rapid • Infrastructure program increasing • Industry transformation continues urbanisation driving infrastructure construction demand and consume
Slide 58: NS BlueScope Coated Products
NS BLUESCOPE COATED PRODUCTS Outstanding footprint with potential to accommodate growth across Thailand, Malaysia, Indonesia, For personal use only Vietnam and the US West Coast • NS BlueScope Coated Products is a ASEAN region US West Coast Spokane 50:50 joint venture enterprise Tacoma between BlueS
Slide 59: Suite of Brands Tailored to Serve Different Segments
SUITE OF BRANDS TAILORED TO SERVE DIFFERENT SEGMENTS NS BlueScope uses a multi-tiered brand strategy, to provide specified-for-purpose products to its key For personal use only segments Segment Split Projects Brands • Large building projects such as government, FDI, large private Projects domestic i
Slide 60: NS BlueScope Strategy
NS BLUESCOPE STRATEGY VISION For personal use only A premium branded steel building products company delivering innovative & sustainable building solutions, safely and responsibly OUR STRATEGY TRANSFORM GROW Deliver a step change in customer experience and business performance Solutions focus to str
Slide 61: BlueScope China
BLUESCOPE CHINA A premium producer of metal coated and painted steel building products and For personal use only engineered building solutions • BlueScope China employs over 1200 people and Footprint comprises three business units: – Coated China, with capacity to produce up to 250kt of metal coated
Slide 62: In China for China
IN CHINA FOR CHINA BlueScope China has been operating in China for more than 30 years, serving local customers with For personal use only domestic supply chain 100% domestic China customer base Well-established local supply chain in China • 30+ years operation in China with 5000+ customers in Indust
Slide 63: BlueScope China Success
BLUESCOPE CHINA SUCCESS A focus on growth, delivering customer-specific solutions and leveraging innovation has underpinned For personal use only recent performance Recent performance underpinned by Lysaght and Butler China – Order Intake Growth by Segment Targeted • Target customer segments that ar
Slide 64: BlueScope China Future Growth
BLUESCOPE CHINA FUTURE GROWTH BlueScope China is well positioned to capture future growth For personal use only Pre-engineered building (PEB) segment outlook Future growth strategy • Demand continues to grow, driven by increasing • Build further capability to achieve sustainable growth: penetration
Slide 65: New Zealand and Pacific Islands
For personal use only New Zealand and Pacific Islands Gretta Stephens (Chief Executive, New Zealand and Pacific Islands) 65
Slide 66: Segment Overview
SEGMENT OVERVIEW Produces flat and long steel in New Zealand, and building components in the Pacific Islands For personal use only Description Footprint New Zealand • Only steel producer in New Zealand Koné • Produces a range of flat and long steel products for domestic and Nouméa Otahuhu export use
Slide 67: Strategic Principles
STRATEGIC PRINCIPLES Our vision is a sustainable steel making future For personal use only in New Zealand • Deliver a safe, engaged and progressive workplace Our people • Value diversity and foster inclusive, respectful and engaged teams • Increase avenues for employee collaboration • Sustain COLORS
Slide 68: End-Use Segments
END-USE SEGMENTS Mainly serving robust construction segments, with manufacturing exposure also For personal use only linked to construction activity Domestic end-use segment sales mix Residential Building Consents Rolling 12 months1 (‘000) 50 Mainly construction-related 40 manufacturing, such as pai
Slide 69: Strategic Review
STRATEGIC REVIEW Some initiatives have been paused to take advantage of strong demand underpinned by robust macro For personal use only environment Implemented initiatives Paused initiatives • Eliminated a range of loss-making • Approximately 40 production roles set products for redundancy. These ro
Slide 70: Supporting Painted Product Demand with Additional Capacity
SUPPORTING PAINTED PRODUCT DEMAND WITH ADDITIONAL CAPACITY Investing to upgrade the paint line to meet increasing demand For personal use only Strong demand for painted products driven by Investing to unlock capacity • Evolved brand visual identity & communication strategy • Capacity is now restrict
Slide 71: Financial Framework
For personal use only Financial Framework Tania Archibald (Chief Financial Officer) 71
Slide 72: Financial Framework Underpinning Resilience
FINANCIAL FRAMEWORK UNDERPINNING RESILIENCE Strong focus on driving financial performance and disciplined allocation of capital For personal use only Disciplined Returns Focus Robust Capital Structure Capital Allocation • ROIC > WACC on average through • Strong balance sheet, with a target • Invest
Slide 73: Returns Focus
RETURNS FOCUS Targeting returns above cost of capital through the cycle, which underpins objective of delivering top For personal use only quartile shareholder returns Group ROIC Performance (%) Net cash flow ($M) Average 18.1% (before investment exp and financing) 24.8% 20.0% 19.5% 1,304 18.5% Aver
Slide 74: Robust Capital Structure
ROBUST CAPITAL STRUCTURE Strong balance sheet providing foundation for increased returns and capacity for growth For personal use only • Maintained investment grade credit Net debt / (cash) ($M) Liquidity ($M) ratings (undrawn facilities and cash) Target ~$400M 3,6941 • Strong balance sheet and cash
Slide 75: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Framework evolved to better integrate climate-related considerations; investing to sustain and grow For personal use only the business Capital allocation framework Future investment priorities1 Shareholder returns Dividends announced2 ($M) Operating ~$1.6 – 1.7bn Asset
Slide 76: Q&A
For personal use only Q&A Mark Vassella (Managing Director and Chief Executive Officer) Tania Archibald (Chief Financial Officer) Connell Zhang (Chief Executive NS BlueScope) Gretta Stephens (Chief Executive, New Zealand and Pacific Islands) 76
Slide 77: BlueScope: A Different Kind of Steel Company
BLUESCOPE: A DIFFERENT KIND OF STEEL COMPANY For personal use only What makes us different? 1 PURPOSE-LED AND SUSTAINABILITY FOCUSSED 2 HIGH-QUALITY ASSET PORTFOLIO 3 LEADING PRODUCT TECHNOLOGIES, BRANDING & CHANNELS 4 FINANCIAL STRENGTH & COST COMPETITIVENESS 5 DEPLOYING FINANCIAL STRENGTH FOR LONG
Slide 78: BlueScope Investor Day Day 2
For personal use only BlueScope Investor Day Day 2 21 September 2021 Pictured: New lodges built along the BlueScope Steel Limited. ASX Code: BSL Three Capes Track in Tasmania featuring COLORBOND® steel ABN: 16 000 011 058 Photo: Brett Boardman Level 11, 120 Collins St, Melbourne, VIC, 3000