Bluescope Steel Limited · ASX:BSL
Bluescope Steel — FY2012 Earnings Presentation
33 slides from Bluescope Steel's earnings presentation, Aug 13, 2012
Slide 1: FY2012 Preliminary Unaudited Results Update and Coated Products Joint Venture
For personal use only Establishment E t bli h t off ASEAN & U U.S. S CCoated t d Products Joint Venture with Nippon Steel and FY2012 Preliminary Unaudited Results Update Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 13 August 2012 ASX Code: BSL P
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
Agenda For personal use only 1 US$1.36 1. US$1 36 Billion Coated Products Joint Venture 2. FY2012 results update 3. Key joint venture terms 4 Summary 4. Page 3
Slide 4: US$1.36 Billion Coated Products Joint Venture
For personal use only US$1.36 US$1 36 Billion Coated Products J i tV Joint Venture t Page 4
Slide 5: $1.36 Billion Joint Venture with Nippon Steel Corporation (NSC)
For personal use only $1.36 Billion Joint Venture with Nippon Steel Corporation (NSC) y Establishment of 50:50 joint venture over BlueScope’s building products business in ASEAN and the U.S. (Steelscape and ASC Profiles businesses) y Joint venture business to be called NS BlueScope Coated Products y
Slide 6: Why we are partnering with Nippon Steel Corporation
For personal use only Why we are partnering with Nippon Steel Corporation • St Strong, long-standing l t di relationship l ti hi with ith NSC th throughh many ttechnical h i l collaborations ll b ti ((over 65 projects since 1970) – Currently working with NSC on next generation COLORBOND® and ZINCALU
Slide 7: This JV fits with our strategy
For personal use only This JV fits with our strategy • Global brands – COLORBOND®, COLORBOND® Lysaght® Lysaght®, Butler® – Underpinned by leading edge technologies like Vision Engineering System and next generation products • Global partnerships – Cargill, Tata, NSC, Costco, P&G – Enables us to pros
Slide 8: NS BlueScope Coated Products geographic spread
For personal use only NS BlueScope Coated Products geographic spread BSL NSC 50% 50% FY2012 unaudited underlying results for JV: Revenue: A$1,644M NS BlueScope Bl S Coated C t d Products P d t EBITDA: A$115M EBIT: A$68M ASEAN1 North America Thailand Indonesia Malaysia2 Vietnam Steelscape ASC Profile
Slide 9: Why did NSC partner with BlueScope?
Why did NSC partner with BlueScope? For personal use only • Well established manufacturing footprint including eight metal coating lines and ten paint lines ((includes in-line ppaintingg facilities)) • Comprehensive network of rollforming facilities • Established marketing capability and deep channe
Slide 10: Growth of the Coated Products business, before creation of the JV
Growth of the Coated Products business, before creation of the JV For personal use only • Anticipated volume and top-line growth driven by: – Expansion of downstream manufacturing facilities in domestic markets – Best-in-class technology (including in-line painting), quality, product range and R&D c
Slide 11: Significant opportunities from this JV
Significant opportunities from this JV For personal use only • Stronger platform to capture growth in existing markets, especially Southeast Asia – On going BSL 50% interest On-going – Quicker ramp up to 100% utilisation of existing coating and painting capacity • Enhancement of existing product mix
Slide 12: Evaluating the opportunities of NS BlueScope Coated Products
Evaluating the opportunities of NS BlueScope Coated Products For personal use only • New products and solutions for customers utilising NSC’s comprehensive Initially quantified solution technologies opportunities to – Home appliance segment applications of SuperDyma® and d li an expected deliver t d
Slide 13: Initially quantified growth opportunities focused in home appliance sector
The initially quantified growth opportunities are focused in home pp appliance manufacturingg sector For personal use only Composition of US$75M FY2017 target-case indicative earnings uplift to JV by identified opportunity • Availability of stable feed coil supply from NSC 5% – Thailand and Steelsca
Slide 14: Thailand is the key market for initial growth opportunities
Thailand is the key market in which initial growth opportunities are p expected to be delivered For personal use only Estimate of FY2012 market size in which main growth Composition of US$75M FY2017 target-case target case opportunities will be pursued indicative earnings uplift to JV by geography 5
Slide 15: Quantified opportunities expected to deliver US$30-75M by FY2017
Initially quantified opportunities arising from partnership expected to deliver US$30-75M by FY2017 above the existing business growth profile For personal use only Indicative Incremental EBITDA to JV (100%, US$M) US$M 80 75 Target 70 60 50 Indicative incremental 50 earnings range 40 35 30 Base 20 3
Slide 16: Japan's share of FDI into the ASEAN region is large and increasing
Japan’s share of Foreign Direct Investment (FDI) into the ASEAN g is large region g and increasingg Current BSL sales to Japanese companies operating in the region For personal use only are less than 5% of revenue for our ASEAN business US$ M FDI into ASEAN 5 (US$ M) Source of FDI into ASEAN 5 (%) %
Slide 17: Japan's investment weighted towards Indonesia and Thailand
Japan’s investment in ASEAN countries is weighted towards Indonesia and Thailand where NS BlueScope Coated Products is well positioned For personal use only US$ M FDI into Indonesia (US$ M) US$ M FDI into Thailand (US$ M) 35,000 35,000 30,000 30,000 25,000 25,000 20 000 20,000 20 000 20,000 15,000 1
Slide 18: FY2012 Results Update
For personal use only FY2012 Results Update Page 18
Slide 19: Company has delivered on its FY2012 targets
In addition to the material cost reduction initiatives delivered in Australasia, Asia and North America since 2008, the Company has delivered on its FY2012 targets For personal use only Coated & Industrial Products Australia restructure Asian growth 5 Successful equipment closures between mid August
Slide 20: FY2012 results update
For personal use only FY2012 results update • Unaudited FY2012 results: – Approximate reported net loss after tax of $1 billion is expected. In large part reflects the cost of the major Australian steel making business restructure which we announced in August 2011 and impairment charges steel-making
Slide 21: Coated & Industrial Products Australia segment update
For personal use only Coated & Industrial Products Australia segment update • Expect CIPA to deliver positive underlying EBITDA in FY2013, with a positive contribution in 2H FY2013, and neutral to negative contribution in 1H FY2013 (subject to spread, FX and domestic margin and demand) Improvements
Slide 22: Summary of Key Joint Venture Terms
For personal use only S Summary off Key Joint Venture Terms Page 22
Slide 23: Key transaction terms
For personal use only Key transaction terms Transaction valuation • US$1,360M enterprise value (1) Joint venture earnings • A$115M FY2012 underlying EBITDA Expected cash to be • US$540M (2) received by BSL Expected completion • During March 2013 quarter • Conditions typical of a transaction of this
Slide 24: Summary of key JV terms for NS BlueScope Coated Products
For personal use only Summary of key JV terms for NS BlueScope Coated Products • The BlueScope Building Solutions businesses (PEBs) in ASEAN and Indian joint venture are not Structure included in the JV • NSC to appoint the Chairman of the JV • BlueScope to appoint CEO. Initial CEO to be Sanjay Daya
Slide 25: Summary of key JV terms (cont'd)
For personal use only Summary of key JV terms for NS BlueScope Coated Products (cont’d) • JV partners will generally not compete with the JV in building and construction products during the term of the JV • Recognises the existing business interests of the JV partners. Focuses on: Scope and – Manufa
Slide 26: Summary
For personal use only Summary Page 26
Slide 27: Summary
Summary For personal use only • Choose to partner with NSC because of deep mutual respect and confidence based on our long long- standing relationship • NSC’s NSC s investment highlights the long-term strategic value created by BlueScope over many years through the strength of our brands, the streng
Slide 28: Appendices
For personal use only pp Appendices Page 28
Slide 29: NS BlueScope Coated Product's footprint and facilities
For personal use only NS BlueScope Coated Product’s footprint and facilities Kalama • Cold Rolling 455kt • Metal Coating 235kt • Painting 110kt North America • ASC Profiles sites 9 • Steelscape coating and painting sites as shown Thailand • Cold Rolling 360kt Vietnam Rancho Cucamonga • Metal Coating
Slide 30: NSC's SuperDyma technology
For personal use only NSC’s SuperDyma® technology SuperDyma®, a highly corrosion-resistant coated steel sheet developed by NSC. Applications will be in home appliances and building & construction markets Example applications Geographic target markets Potential Customers SuperDyma® • Air-conditioners
Slide 31: Financial history of NS BlueScope Coated Products businesses
Financial history of NS BlueScope Coated Products businesses For personal use only A$m 1H FY2011 2H FY2011 FY2011 1H FY2012 2H FY2012 FY2012 Sales Revenue 738 794 1,532 814 829 1,644 EBITDA - reported 51 67 118 46 - underlying 51 83 133 49 65 115 EBIT - reported 28 45 73 23 - underlying 28 61 88 26
Slide 32: Repurchase of U.S. Private Placement Notes
Repurchase of U.S. Private Placement Notes For personal use only • BlueScope Steel repurchased a further US$88.2M of U.S. Private Placement Notes on 7 August 2012 at par, plus accrued interest • Funded F d d in i US dollars d ll using i existing i ti undrawn d lines li under d ththe C Company’s ’ sy
Slide 33: FY2012 Preliminary Unaudited Results Update
For personal use only Establishment E t bli h t off ASEAN & U U.S. S CCoated t d Products Joint Venture with Nippon Steel and FY2012 Preliminary Unaudited Results Update Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 13 August 2012 ASX Code: BSL P