Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Investor Presentation (June 2017)
37 slides from Bluescope Steel's investor presentation, Jun 13, 2017
Slide 1: NS BlueScope Coated Products North America
For personal use only NS BlueScope Coated Products North America Paul Warme, Vice President Finance (North America) Nobuo Okochi, Chief Financial Officer (NS BlueScope) 9 June 2017 BlueScope Steel Limited. 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: Introducing our management team
Introducing our management team For personal use only John Cross President ASC Profiles & Steelscape Janine Rogers Executive Assistant Sarah Deukmejian Ruthe Wynne Sarah Deukmejian Scott Cooley Michael Buckentin Vacant Mike Nelson Paul Warme General Manager Regional VP Steelscape VP Operations VP Ma
Slide 4: Safety
Safety World class performance; striving for zero harm For personal use only Lost time injury frequency rate Medically treated injury frequency rate Medically treated injuries per million man-hours worked Lost time injuries per million man-hours worked 6.9 BlueScope group average 1H FY17: 5.4 4.3 3.
Slide 5: A key part of BlueScope's strategy
A key part of BlueScope’s strategy For personal use only Grow Deliver Ensure ongoing premium branded steel businesses competitive commodity steel supply financial strength with strong channels to market in our local markets Coated & Painted Building Buildings North Star Australia & NZ Balance Sheet
Slide 6: North America's position in BlueScope's Building Products segment
North America’s position in BlueScope’s Building Products segment For personal use only BlueScope NSSMC 1 BlueScope Tata Steel 50% 50% 50% 50% NS BlueScope Coated Products (NBCP) Tata BlueScope Steel (TBS) A BlueScope controlled, and therefore consolidated, joint venture Thailand Indonesia Malaysia
Slide 7: North America footprint
North America footprint Alaska U.S. West Coast For personal use only • Business consists of Steelscape (metal coating & painting) and ASC Profiles (building panels) which has merged WA Kalama Rocky Mountains under unified management since 2012 OR MT ND MN • Employs over 600 permanent employees ID WY
Slide 8: Industry leader with decades of experience in coated steel
We are the industry leader, with almost 50 years of experience in metallic-coating and pre-painted steel for construction • 1968: Reliance Steel & Aluminum commissioned Paint Line in Rancho Cucamonga (CA) For personal use only • 1995: Commissioned ZINCALUME® Steel line in Rancho • 1997: Commissioned
Slide 9: Steelscape value proposition
Steelscape value proposition For personal use only • Creating unique value as the leading supplier of coated and painted steel in the West Coast market • Local ZINCALUME® steel and galvanised coated products supplier for West Coast customers • Single-bill painted packages – easier to do business wit
Slide 10: Product range
Product range • TruZinc® Steel – primarily for decking, steel framing and HVAC applications For personal use only • ZINCALUME® Steel – primarily for roofing and walling applications • Resin – acrylic coated ZINCALUME® and TruZinc® • Painted – galvanised and ZINCALUME® Blaze Pizza, CA • Vintage® – ag
Slide 11: North American projects
North American projects Tesla’s Gigafactory Apple’s Campus For personal use only -Sparks, Nevada -Menlo Park, California New University of Washington undergraduate Featured Parade of Homes model apartments (Mercer Court) -Billings, Montana -Seattle, Washington 11
Slide 12: Kalama, Washington
Kalama, Washington For personal use only • Built and commissioned in 1997 • Access to deep water dock on the Columbia River • Production processes: – Pickling 545ktpa – Cold reduction mill 455ktpa – TruZinc® (galvanised steel) 235ktpa – Painting 110ktpa – Cut-to-Length – Slitter 12
Slide 13: Rancho Cucamonga, California
Rancho Cucamonga, California For personal use only • Paint Line installed in 1968 • Added ZINCALUME® manufacturing capability in 1995 • Production processes: – ZINCALUME® (Galvalume Steel) 220ktpa – Painting 100ktpa – Slitter – Embosser 13
Slide 14: World class facilities operated by world class people
World class facilities operated by world class people For personal use only • Quality – high, consistent line yields; experienced technical staff • On-time delivery – our 95% performance is of the best in the US steel industry • Equipment reliability and operational performance – rank in the top qua
Slide 15: Production and despatch flow
Production and despatch flow For personal use only Customer ~50% (Bare TruZinc®) (Bare TruZinc®) ~60% Kalama Metal ~50% Kalama Paint Line Coated Line Steel feed (Painted TruZinc®) (CRC; HRC to Kalama CR mill) ~40% Rancho Metal ~45% Rancho Paint Line Customer Coated Line (Bare ZINCALUME®) (Painted ZI
Slide 16: West Coast market and industry dynamics
West Coast market and industry dynamics For personal use only Market • West Coast population is 23% of the US • Steel demand is <10% of the total US flat rolled steel demand • Non-residential construction and residential housing starts are 20-25% of the US • West has minimal automotive & manufacturi
Slide 17: Channels to market
Channels to market Market / End User Customer Channels For personal use only AEP Span Lunch and Learn Segments Contractors Hotels Offices Engineers Industrial facilities Retail Architects Amusement/Recreation ASC Profiles Plant Tours Education Customer Appreciation Event Lumberyards Healthcare facil
Slide 18: Steelscape – market segments
Steelscape – market segments For personal use only Customer segments represent a vast array of end-users principally within the construction industry: Customer type (by volume) End use segments (by volume) Other Residential 25% 15-20% 40% Rollformers Service centres 15% 80-85% Non-residential 20% Bu
Slide 19: ASC Profiles provides key downstream channels to market
ASC Profiles provides key downstream channels to market For personal use only • ASC Profiles is the downstream business for Coated Products North America and provides clear channels to market for value-added products and services • ASC Profiles includes three separate businesses – AEP Span: focusing
Slide 20: ASC Profiles: three business units
ASC Profiles: three business units For personal use only ASC Building Products – Spirit Bay, AK Project AEP Span – Brasada Ranch in Butte, Oregon ASC Deck – Salesforce.com tower in San Francisco, CA 20
Slide 21: Evolving the organisation's culture
Evolving the organisation’s culture For personal use only “One Company, One Leadership Team, One Culture” Safety Safety and the environment are more than a value or priority…they are a way of life Communication Encourage open communication from the process lines up to the president Continuous Improv
Slide 22: Strategy
Strategy For personal use only • Continued growth and development of specialty finishes & prints Differentiate through products • Cold formed steel buildings, concealed wall panels, architectural decking & channel engagement • Promote to designers, end users and customers via digital engagement and
Slide 23: Underlying performance of the business has improved
Underlying performance of the business has improved For personal use only • Strengthened value proposition in the West Coast, offering leading products and services • Improved operations and continuous cost improvements in Steelscape business • Customer-driven innovation • ASC Profiles providing cle
Slide 24: Market initiatives target growth
Market initiatives target growth For personal use only • Customer-driven Innovation: Design Solution™ product line – Advancing closer customer collaborations and exclusive product offerings – Includes: Dynamic Print, Shadow Line, Fresh Rust, Brushed Look, Wood Grain, and NSF (Antimicrobial) • Target
Slide 25: Cost discipline remains in focus
Cost discipline remains in focus For personal use only • CPNA seeks to offset operational cost increases with continuous improvement initiatives • Areas of focus include: – Yield improvements – Waste – Quality/Claims – Energy – Direct costs – Labor efficiency • Engaged specialist engineering firm to
Slide 26: Impact of anti-dumping and governmental actions
Impact of anti-dumping and governmental actions For personal use only • Steelscape was established at a deep-water port, to receive and use imported steel substrate (cold-rolled full- hard & hot-rolled coil) • Steelscape buys less than 1% of its needs from an affiliated party, North Star BlueScope S
Slide 27: Earnings performance and drivers
Earnings performance and drivers Strong margin improvement in FY2016 and 1H FY2017 Coated Products North America underlying EBIT ($M) For personal use only Broadly, half of the increased annual run rate estimated to be due to margin uplifts in selling prices; other half broadly 48.0 due to timing/pr
Slide 28: Despatch volumes
Despatch volumes Volumes stable with high plant utilisation; focus remains on mix optimisation For personal use only Coated Products North America despatches (kt) Negatively impacted by rapidly declining steel Closure of Fairfield facility prices and higher import activity 436 409 387 373 2H 217 183
Slide 29: Current trading conditions
Current trading conditions For personal use only • Market conditions remain stable and at elevated levels – stronger pricing, volumes and margins in 2H FY2017 vs 2H FY2016 • As expected, benefits from low cost inventory in 1H FY2017 are not repeated in 2H 29
Slide 30: Summary
Summary For personal use only • Coated Products North America provides BlueScope investors with exposure to additional value-added coated metal products in a stable, growing economy • An innovative business with marketing, branding, and intellectual property initiatives aimed at generating sustainab
Slide 31: Questions & Answers
For personal use only QUESTIONS & ANSWERS
Slide 32: Additional Information
For personal use only ADDITIONAL INFORMATION
Slide 33: Pickling process – Kalama
Pickling process – Kalama For personal use only • Pickling, or cleaning, is the first process that the hot band coil undergoes when it arrives at the coating mill • The steel is uncoiled and cleaned in a four-stage hydrochloric acid bath • It is then run through a five-stage rinse process to remove
Slide 34: Cold rolling process – Kalama
Cold rolling process – Kalama For personal use only • The cold reversing mill (CRM) combines speed, automation and the latest technology to reduce the thickness of the steel • The band passes back and forth between the rolls until it reaches the specified thickness. • The CRM employs numerous automa
Slide 35: Metal Coating Process – Kalama and Rancho
Metal Coating Process – Kalama and Rancho For personal use only • ZINCALUME® Steel and TruZinc® are produced in a continuous process by hot-dipping the steel strip in a zinc and/or aluminum-alloy, which provides excellent protection against corrosion Entry Exit Accumulator Accumulator Direct Fire Fu
Slide 36: Painting Process – Kalama and Rancho
Painting Process – Kalama and Rancho For personal use only • Steelscape is able to apply the following paint systems: Polyesters, Silicone Modified Polyesters (SMP), Acrylics, Fluorocarbons (PVDF), Plastisols, Epoxy, Urethanes • These paint systems ensure the finished surface will remain intact duri
Slide 37: NS BlueScope Coated Products North America
For personal use only NS BlueScope Coated Products North America Paul Warme, Vice President Finance (North America) Nobuo Okochi, Chief Financial Officer (NS BlueScope) 9 June 2017 BlueScope Steel Limited. ASX Code: BSL