Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Investor Presentation (February 2015)
78 slides from Bluescope Steel's investor presentation, Feb 23, 2015
Slide 1: Investor Introductory Pack
For personal use only Investor Introductory Pack February 2015 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: Contents
Contents This pack provides a strategic and operational introduction to BlueScope and its reporting segments. For personal use only It should be read in conjunction with BlueScope’s 1H FY2015 Financial Results Presentation Company overview Australian Steel Products New Zealand & Pacific Steel Buildi
Slide 4: Company Overview
For personal use only COMPANY OVERVIEW
Slide 5: Overview of BlueScope
Overview of BlueScope BlueScope is a steel producer for the domestic Australian, New Zealand and US markets For personal use only and is a leading international supplier of steel products and solutions principally focused on the global building and construction industries • Australia’s and New Zeala
Slide 6: Indicative end market exposures
Indicative end market exposures For personal use only Australia New Zealand (flat products) ASEAN 13% 10% 20% 11% 7% 20% 60% 69% 90% China North America (ex North Star) North Star USA 10% 25% 20% 100% 100% 45% Building and construction Auto Manufacturing Agriculture and mining 6
Slide 7: Business segments – description
Business segments – description For personal use only External segment reporting structure1 BlueScope Australia & New Zealand Building Products Global Building Hot Rolled Products ASEAN, North Australian Steel New Zealand and Solutions North America America and India Products Pacific Steel • Largest
Slide 8: Business segments – contribution
Business segments – contribution For personal use only Revenue Underlying EBITDA Net operating assets (pre tax) 100% 100% 100% ASP 43% ASP 53% ASP 49% NZS 9% NZS 11% NZS 14% BP 20% BP 19% BP 20% GBS 10% GBS 14% GBS 17% HRPNA 18% HRPNA 3% 1H FY2015 1H FY2015 1H FY2015 Shows proportion of pre-eliminat
Slide 9: Products and end markets
Products and end markets Product Primary end use markets Applications Iron sands • Internal and export steel manufacturers • Crude steel manufacturing For personal use only Plate • Manufacturing, building and construction • Infrastructure projects, mining equipment and structural applications and mi
Slide 10: Strong brand recognition and value-added products
Strong brand recognition and value-added products For personal use only • BlueScope Steel’s brand portfolio contains many well-known and respected names including − Australia: COLORBOND® steel, ZINCALUME® steel, ZINCALUME® steel with Activate™ technology, GALVASPAN® steel, LYSAGHT® building products
Slide 11: Global manufacturing footprint at December 2014
Global manufacturing footprint at December 2014 Kalama Kalama North North Star (2) Star (2) For personal use only • Cold Rolling 455kt • Raw Steel 2.2mt • Metal Coating 235kt • Hot Rolling 2.0mt • Painting 110kt India (1) India (1) • Metal Coating 250kt United States • Painting 150kt • Buildings sit
Slide 12: Balance sheet – low gearing maintained
Balance sheet – low gearing maintained For personal use only Net debt ($M) Net debt / EBITDA Gearing (ND/ND+E) $408.1M net debt comprised of: 1 • $798.4M gross debt, less 8.0% 0.6x 1 4.4% 5.5% This result • $390.3M cash 0.4x 0.4x benefitted by $103M from favourable timing 1H FY14 FY14 1H FY15 Dec-13
Slide 13: BlueScope has a suite of strong businesses
BlueScope has a suite of strong businesses For personal use only BlueScope Australia & New Zealand Building Products • Only local flat products producer in Australia & NZ • Leader in high quality coated and painted steel in • Leading coating & painting capability Asia • Leading brands • Depth of pro
Slide 14: … together with exposures to growing markets
… together with exposures to growing markets For personal use only BlueScope Australia & New Zealand Building Products • Levered to domestic / export mix improvement • Positioned in growing construction markets in ASEAN, India and North America • Levered to building sector recovery (both Aus & NZ) •
Slide 15: BlueScope Australia & New Zealand (BANZ)
For personal use only BLUESCOPE AUSTRALIA & NEW ZEALAND (BANZ)
Slide 16: BlueScope Australia & New Zealand Strategy
BlueScope Australia & New Zealand Strategy For personal use only We’re recharging BANZ to deliver long term sustained profitability TARGET WINNING MARKETS and cash generation We want to be the most successful steel business in Australia GET LEAN, FIT TRIPLE A and NZ with efficient channels to market
Slide 17: Australian Steel Products
For personal use only AUSTRALIAN STEEL PRODUCTS
Slide 18: Australian Steel Products – Segment overview
Australian Steel Products Segment overview For personal use only • Leading supplier of flat steel products in Australia with 70-75% market share • Largest supplier of metal coated and painted steel in Australia • Port Kembla Steel Works is a high quality producer of steel – 2.5Mtpa mix adjusted stee
Slide 19: Strategy & earnings drivers
Australian Steel Products Strategy & earnings drivers For personal use only Strategy Key earnings drivers • Target winning markets • Selling prices – Maintain or build on market positions in Australian flat steel products • Material costs – including iron ore, coal, fluxes, alloys, and coating mater
Slide 20: Australian Steel Products Locations
Australian Steel Products Locations Legend •9 Mills & service centres For personal use only •45 Building Components •71 BANZ Distribution 2 1 1 12 26 1 1 6 12 5 4 3 11 10 6 16 Port Kembla 3 Western Port 3 2 20
Slide 21: Fundamental drivers of profitability
Australian Steel Products Fundamental drivers of profitability For personal use only Domestic Demand Domestic Domestic Mix Volume / Mix Market Share ASP Profitability Spread Margins Domestic Value Proposition 21
Slide 22: Market channels
Australian Steel Products Market channels For personal use only Processing & Manufacturing End Markets Distribution Building Component Manufacturers Market Segments (including Building Components Australia) Residential Steel Distribution Non-Dwelling (including Domestic Steelmaking & Coating BANZ Di
Slide 23: Despatch mix (Mt)
Australian Steel Products Despatch mix (Mt) For personal use only 1.41 1.34 1.31 1H FY2015 Product Mix 0.34 Export 0.25 0.24 Export 0.13 0.12 Domestic - 0.14 externally sourced HRC Metal Coated Plate Painted CRC Other inc ext sourced 0.95 0.95 0.93 Domestic - BSL manufactured Domestic 1H FY14 2H FY1
Slide 24: Annual capacities of key manufacturing plants
Australian Steel Products Annual capacities of key manufacturing plants Port Kembla Steelworks (Wollongong, New South Wales, Australia) #5 Blast Furnace For personal use only 2,600 Slab Casters 2,600 Slab Plate Mill Plate 450 Hot Strip Mill HRC 2,900 Coupled Pickled Cold Mill CRC 990 Metal Coating L
Slide 25: Building Components: overview
Australian Steel Products Building Components: overview For personal use only • Nearly 50 locations and approximately 1,300 employees around Australia, providing a unique service capability unsurpassed by our competitors • Manufacture and market an extensive range of roll formed steel products for t
Slide 26: Building Components: channels to market
Australian Steel Products MARKET SUB-SEGMENTS Building Components: channels to market For personal use only Residential building Construction industry Commercial • Roofing contractors building LYSAGHT, Fielders & • Building contractors Permalite • Fencing contractors Roll formed product Sheds • Ranb
Slide 27: Building Components: core products and brands
Australian Steel Products Building Components: core products and brands For personal use only • Roofing for the residential and commercial segments in profiles such as CUSTOM ORB® Night Sky TM CUSTOM ORB®, TRIMDEK® and KingKlip® • A walling range that gives flexibility to suit any architectural styl
Slide 28: BANZ Distribution: overview
Australian Steel Products BANZ Distribution: overview For personal use only • Around 70 locations and approximately 1,500 employees Australia wide, providing quality steel solutions to the residential, non residential, engineering construction, automotive, transport, manufacturing, mining and agricu
Slide 29: Distribution: core products
Australian Steel Products Distribution: core products Steel & tube Sheet & coil For personal use only Plate Hot rolled Hot rolled structural Cold rolled Tube Galvanised Merchant bar ZINCALUME® steel Pipe, valves & fittings TrueCore® steel Reinforcing & rural COLORBOND® steel aluminium 29
Slide 30: Distribution: processing services
Australian Steel Products Distribution: processing services For personal use only Value added processing services provided include: • Plate profiling • Slitting • Drilling • Shearing • Cutting & sawing • Recoiling • Routing 30
Slide 31: Flat products: better profitability in coated & painted products
Australian Steel Products Flat products: better profitability in coated & painted products For personal use only Category Summary Hot rolled coil • Intermediate products, typically substantially transformed into final Limited goods Plate product • BSL offer principally differentiated by service, sup
Slide 32: External forecasters’ outlook for key end-use segments
Australian Steel Products External forecasters’ outlook for our key end-use segment exposures For personal use only Residential construction Non-residential construction Engineering construction Change in real value of work done HIA Forecast (Nov 2014) Annual % Change Annual % Change Annual % Change
Slide 33: Approvals of new detached houses have lifted strongly
Australian Steel Products Approvals of new detached houses have lifted strongly in the last 18 months For personal use only Australian residential construction approvals Change in Australian residential construction approvals (private sector) – ‘000 units (private sector) – ‘000 units 15 110 14 Othe
Slide 34: Commencements lag approvals
Australian Steel Products Commencements lag approvals, and have only achieved full momentum in the last 12 months. Further, BSL despatches lag commencements (eg roof, gutter and fence installation) For personal use only Australian residential construction commencements Change in Australian residenti
Slide 35: Global crude steel capacity utilisation update
Australian Steel Products Global crude steel capacity utilisation update For personal use only Monthly crude steel capacity utilisation1 (%) 110% World 105% China World (Excl China) 100% 95% 90% 85% 85% 80% 77 75% 73 70% 68 65% 60% 55% 50% Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan
Slide 36: Spread continues to be a major determinant of segment profitability
Australian Steel Products Spread continues to be a major determinant of segment profitability East Asia HRC price (US$/t) and indicative steelmaker HRC spread (A$/t) For personal use only Spread: SBB East Asia HRC price less cost of 1.5t iron ore fines and 0.71t hard coking coal $800 SBB East Asia H
Slide 37: New Zealand and Pacific Steel
For personal use only NEW ZEALAND AND PACIFIC STEEL
Slide 38: New Zealand & Pacific Steel – Segment overview
New Zealand & Pacific Steel Segment overview For personal use only New Zealand Steel Pacific Steel Pacific Islands Minerals • Only fully integrated flat steel • Coil and wire manufacturer • Rollforming business • Iron sands exports maker in New Zealand, with • Two sites – Otahuhu • Six sites across
Slide 39: Strategy and earnings drivers of each business
New Zealand & Pacific Steel Strategy and earnings drivers of each business For personal use only New Zealand Steel Pacific Steel Pacific Islands Minerals • Grow export volumes and • Maximise domestic volumes through the Pacific Steel acquisition optimise use of resource Strategy base • Grow into our
Slide 40: New Zealand market at a glance
New Zealand & Pacific Steel New Zealand market at a glance For personal use only NZ Steel value stream Rollformers & Building & Construction Distributors Installers Builder/Developer Building Owner Manufacturing (Agriculture Included) Distributors Manufacturers Reseller Distributor End User Council/
Slide 41: New Zealand Steel despatch mix
New Zealand & Pacific Steel New Zealand Steel (flat products) despatch mix (kt) – excludes Pacific Steel For personal use only 1H FY2015 Product Mix 290.3 295.7 251.1 Export 155.9 Export 159.5 119.4 HRC CRC Painted Plate Metal Coated Other Domestic 130.8 139.8 131.7 Domestic 1H FY2014 2H FY2014 1H F
Slide 42: Pacific Steel despatch mix
New Zealand & Pacific Steel Pacific Steel (long products) despatch mix (kt) For personal use only 1H FY2015 Product Mix 135.9 Export Export 49.4 Rod Coil wire Coil reinforcing Domestic 86.5 Domestic 1H FY2015 42
Slide 43: Better profitability in coated & painted products
New Zealand & Pacific Steel Better profitability in coated & painted products For personal use only Category Summary Hot rolled coil • Intermediate products, typically substantially transformed into final Plate Limited goods product Cold rolled coil • NZS offer principally differentiated by service,
Slide 44: Agreement to acquire rolling and marketing operations of Pacific Steel
New Zealand & Pacific Steel Agreement to acquire rolling and marketing operations of Pacific Steel For personal use only • Announced agreement 17 February 2014; completed on 3 June 2014 • Producer and marketer of long products such as reinforcing steel, rod and wire, in NZ and Fiji. 119kt domestic (
Slide 45: Overview of Pacific Steel’s downstream operations
New Zealand & Pacific Steel Overview of Pacific Steel’s downstream rolling & marketing operations For personal use only Key points Manufacturing facilities End use segments (domestic) • Producer and marketer of long products (reinforcing Fiji Rural Infrastructure steels, and zinc/aluminium coated ma
Slide 46: NZ construction and manufacturing outlook remains strong
New Zealand & Pacific Steel NZ construction and manufacturing outlook remains strong For personal use only Residential building consents – running strong Non-residential construction consents – strong growth ‘000 units Moving annual total of value of consents 2,500 5.5 (NZ$Bn) 2,000 5.0 1,500 4.5 1,
Slide 47: Unique direct reduction process using captive iron sands resource
New Zealand & Pacific Steel Unique direct reduction process using captive iron sands resource For personal use only 47
Slide 48: Steelmaking raw materials
New Zealand & Pacific Steel Steelmaking raw materials For personal use only Iron Sand Concentrate (Waikato North Head Mine) Iron sand mined and concentrated on site – 58.5% Fe Sufficient resource for long term steel making operations Concentrate is slurry pumped 18km underground to Glenbrook
Slide 49: Annual steel capacities
New Zealand & Pacific Steel Note: Annual steel capacities Numbers reflect mill capacity in kilotonnes per annum New Zealand Steel, Glenbrook Steelworks Steelmaking For personal use only 670 Slab casters 670 Slab Hot strip mill Hot rolled coil 750 Coupled pickled cold mill Cold rolled 380 coil Metal
Slide 50: Taharoa mining and shipping
New Zealand & Pacific Steel Taharoa mining and shipping For personal use only Mining and processing • Mining land and mineral title owned by a Maori trust • Mining sands via buried feeders and dredge • Magnetics vary across the site and are between 20- 40%. Ferrous magnetic content is around 56% • T
Slide 51: Waikato North Head – different mining methodology
New Zealand & Pacific Steel Waikato North Head – different mining methodology given different sand structure For personal use only • Consolidated dry mining method via bucket wheel excavator • Deposit is very different to the Taharoa deposit – Lower valuable mineral content – But higher Fe product •
Slide 52: Iron sands exports
New Zealand & Pacific Steel Iron sands exports For personal use only Taharoa iron sands exports (kt) 1,648 Upgrade to larger, more efficient 1,380 ship (Taharoa Destiny) 1,100 927 819 634 FY2010 FY2011 FY2012 FY2013 FY2014 1H FY2015 Note: annual single ship export capacity of ~1.3Mtpa exceeded in FY
Slide 53: Building Products ASEAN, North America & India
For personal use only BUILDING PRODUCTS ASEAN, NORTH AMERICA & INDIA
Slide 54: Building Products ASEAN, North America and India – Segment overview
Building Products ASEAN, North America and India Segment overview For personal use only • Comprises the building products businesses in Southeast Asia and North America which have similar product manufacturing characteristics and market end uses – Operates metallic coating and painting lines in Thai
Slide 55: Long established position in Asia
Building Products ASEAN, North America and India Long established position in Asia For personal use only • Long established position in Asia with coated and painted steel building products – First Asian facility was established in Singapore in 1965 • New joint venture partnership with Nippon Steel a
Slide 56: Growth of core business, before benefits of working with NSSMC
Building Products ASEAN, North America and India Growth of core business, before benefits of working with NSSMC For personal use only • The main financial performance drivers of the segment are sales volumes and margin made on end- product over input feed. The latter is influenced by the level of lo
Slide 57: Joint venture with Nippon Steel & Sumitomo Metal Corporation
Building Products ASEAN, North America and India Joint venture with Nippon Steel & Sumitomo Metal Corporation For personal use only • Established 50/50 joint venture over BlueScope’s building products business in ASEAN and the U.S. on 28 March 2013 with NSSMC, called NS BlueScope Coated Products • P
Slide 58: NS BlueScope Coated Products geographic spread
Building Products ASEAN, North America and India NS BlueScope Coated Products geographic spread For personal use only BSL NSSMC 50% 50% NS BlueScope Coated Products ASEAN1 North America Thailand Indonesia Malaysia Vietnam Steelscape ASC Profiles (80%) (100%) (100%) 2 (100%) (100%) (100%) • Metallic
Slide 59: Why have we partnered with NSSMC?
Building Products ASEAN, North America and India Why have we partnered with NSSMC? For personal use only • Strong, long-standing relationship with NSSMC through many technical collaborations (over 65 projects since 1970) – Worked with NSSMC on next generation COLORBOND® and ZINCALUME® • Both compani
Slide 60: Opportunities from working with NSSMC
Building Products ASEAN, North America and India Opportunities from working with NSSMC For personal use only • New products and solutions for customers utilising NSSMC’s comprehensive solution technologies – Home appliance segment applications of SuperDyma® and VIEWKOTE® will be priorities – SuperDy
Slide 61: Initially quantified opportunities focused in home appliance manufacture
Building Products ASEAN, North America and India Initially quantified opportunities focused in home appliance manufacture For personal use only Target-case indicative earnings uplift to JV by identified opportunity • Availability of stable feed coil supply from NSSMC – Thailand and Steelscape 5% 10%
Slide 62: Global Building Solutions
For personal use only GLOBAL BUILDING SOLUTIONS
Slide 63: Global Building Solutions – Segment overview
Global Building Solutions Segment overview For personal use only Unique set of capabilities • Global designer and manufacturer of engineered building systems Technology Sales & marketing Engineering system Global building solution Product development Global sales network • In North America, BlueScop
Slide 64: Strategy for growth
Global Building Solutions Strategy for growth For personal use only • GBS has a broad base of global customers, a broad operating footprint delivering an efficient cost base, and IP and brands to support its competitive market offer • It has the aspiration to grow revenue and earnings through contem
Slide 65: Earnings drivers
Global Building Solutions Earnings drivers For personal use only Key earnings drivers • Sales volumes – which could be influenced by the rate of non-residential construction growth particularly in China and the U.S., and by Global Accounts’ ability to create new sales channels • Margins – which coul
Slide 66: Unrivalled manufacturing, engineering and sales footprint
Global Building Solutions Unrivalled manufacturing, engineering and sales footprint For personal use only China • 4 x Buildings manufacturing facility • 1 x Metal coating/painting facility • 20 x Sales offices • 1 x Global Engineering Centre North America Saudi Arabia • 8 x Buildings manufacturing f
Slide 67: Global accounts team
Global Building Solutions Global accounts team The Global Accounts team leverages our strong brand reputations and operating footprint to deliver For personal use only engineered building solutions on a global scale Recent projects Ghana Customer HQ: London Sector: Brewing and Beverage Supply from:
Slide 68: Comparative benefit of an engineered building solution
Global Building Solutions Comparative benefit of an engineered building solution For personal use only Engineered Building Solution Conventional steel building • Fit-for-purpose structural system • Conventional design using leveraging tapered frame concept standard hot rolled sections • Design each
Slide 69: ‘Breakthrough’ results
Global Building Solutions ‘Breakthrough’ results For personal use only 110,000 sqm facility erected in 28 working days 69
Slide 70: Current and past project customers
Global Building Solutions Current and past project customers For personal use only 70
Slide 71: A Global Accounts example – Span/Costco
Global Building Solutions A Global Accounts example – Span/Costco For personal use only BlueScope, Span Construction and MulvannyG2 design and build Costco warehouse outlets worldwide Membership warehouse retailer – Strategic partnership since 1989 seventh largest retailer in the world Over 1,05
Slide 72: Example projects – manufacturing
Global Building Solutions Example projects – manufacturing For personal use only 72
Slide 73: Example projects – Switch SUPERNAP data centers
Global Building Solutions Example projects – Switch SUPERNAP data centers For personal use only 73
Slide 74: Example projects – retail / warehousing
Global Building Solutions Example projects – retail / warehousing For personal use only 74
Slide 75: Hot Rolled Products North America
For personal use only HOT ROLLED PRODUCTS NORTH AMERICA
Slide 76: Hot Rolled Products North America – Segment overview
Hot Rolled Products North America Segment overview For personal use only • Primarily comprises BlueScope’s 50% interest in the joint venture with Cargill Inc. which owns the North Star steel mini-mill in Delta, Ohio – Production capacity of 2.0Mtpa (100%) – Sale product is hot rolled coil which is s
Slide 77: Strategy & earnings drivers
Hot Rolled Products North America Strategy & earnings drivers For personal use only Strategy Key earnings drivers • Maintain profitability with low cost, highly flexible • Steel ‘spread’ (the difference between U.S. Midwest operations commodity HRC price and the cost of mini-mill • Maintain strong f
Slide 78: Investor Introductory Pack
For personal use only Investor Introductory Pack February 2015 BlueScope Steel Limited. ASX Code: BSL
BlueScope Steel — Investor Presentation (February 2015) on 6ix