Bluescope Steel Limited · ASX:BSL
Bluescope Steel — JP Morgan NYC presentation (September 2006)
66 slides from Bluescope Steel's conference presentation, Sep 27, 2006
Slide 1: BlueScope Steel JP Morgan presentation
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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: Introduction
Slide 4: Our Bond - what we value
Our Bond what we value oo = Our customers are our partners = Our people are our strength = Our shareholders are our foundations =» Our communities are our homes Page 4
Slide 5: Our customers - serving them in over countries
- Our customers —serving themin over 20 countries = ~* Over 30,000 customers using BlueScope Steel products with confidence PRODUCT OFFER + Services . * Solutions + Technical support North America- + Warranty PEB/Roll formed Slab NSBSS + C&BPNA 15% o7°h + Just nTime Delivery XN N Americas 20% Austra
Slide 6: Our employees - zero harm is our goal
Lost time injuries per milllon man-hours worked Our employees - zero harm is our goal for our team and communities Medically treated injuries per 1983 1904 1985 1906 1997 1998 1909 2000 2001 2002 2003 2004 2005 2006 1963 1904 1905 1906 1907 1968 1909 2000 2001 2002 2003 2004 2005 2006 includes Contr
Slide 7: Our shareholders - continuing to reward our shareholders as we grow
Our shareholders - continuing to reward our shareholders as we grow Total return to shareholders since BSL’s | public listing (July 2002): = Share buybacks $ 707m 30% " Dividends paid $ 1,409m 54% are Buybacks - Public listing to 30 June 2006 » Purchased and cancelled 116m shares ~\ — on market — 90
Slide 8: Our communities - the world's largest and fastest growing construction markets
Our communities - the world’s largest and fastest Smwng construction. markets with over 3 billion people MC 250kt Painting 150kt 3 Butler PEB India Vietnam (50:50 JV with Tata Steel) MC. 125kt MC 250kt (100%) Painting 50kt Painting 150kt (100%) 9 2 Roll forming sites ; | Bulor PEB Brisbane Painting
Slide 9: Upstream - steel making
Upstream ~steel making _ Statistics Products Slab " Raw steel capacity (mtpa) ' - PKSW 5.1 - NZS 0.6 «NS (50%) 09 66 Hot Rolled Coil « Cost curve (HRC) im - PKSW & NZS - lowest quartile - NS- most efficient EAF « Turnover (FY2006) - PKSW A$3,472m - North Star BlueScope (50%) A$712m Performance FY200
Slide 10: Midstream - cold rolled, metallic coating and painting network
Midstream — cold rolled, metallic coating and painting network _ Products __ Statistics COLORBOND® * Capacity (ktpa) growing * Asia FY06 FYO7 FY09 - Coid Rolled Coii 300 300 350+ « Metallic Coating 490 745 990+ « Painting 175 280 420+ + Australia - Cold Rolled Coil 1,930 1,930 1,930+ « Metallic Coat
Slide 11: Downstream - metal building products and solutions
Downstream - metal building products and solutions Lysaght roll formed steel components Butler Pre-Engineered Buildings (PEB) BlueScope Water _ Products | Statistics : * Market leader in - Australia - China - South East Asia - and No. 2 in USA (PEB) * Feed - Australia - internal - Asia - internal -
Slide 12: Our strategy remains unchanged and is focused on growing value
Our strategy remains unchanged and is focused on growing value and diversification and a more stable revenue fi earnings profile _ Midstream vee Asia » Thailand — start-up second metal coating line (MCL2) ~ramp up CRC. » Vietnam ~ start-up metal coating (MCL) and paint line (PL) » China ~ start-up p
Slide 13: Global group revenue sales mix growing - downstream quadruples
Global group revenue sales mix growing - downstream quadruples _ +300% Downstream ly Midstream +12% 0, Upstream A$4,321M 429% Less internal / (A$1,689M) (A$2,057M) other Total revenue A$5,272M > A$8,013M +§2%
Slide 14: Pricing over the cycle
Pricing over the cycle _ Indicative Tee _— - 7 7 a <. ie ee ae oa a a — — a
Slide 15: Global steel industry is consolidating - Smorgon Steel stake
The Global steel industry is consolidating and BlueScope Steel has repeatedly stated the existing Australian structure works effectively and that we would not initiate a change A change is now occurring Smorgon Steel has indicated a preparedness to sell and break-up its business The proposed merger
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Slide 17: Group financial headlines FY2006 vs. FY2005
Group financial headlines FY2006 vs. FY2005 “= Revenue A$8,031 million Up 1% = External despatches 7.5 million metric tonnes Up 5% " EBITDA A$850 million Down 49% = EBIT A$556 million Down 59% = NPAT A$338 million Down 66% = EPS = Reported 48¢ Down from 134¢ = Before June 06 one-off restructuring 67
Slide 18: Underlying FY06 BSL financial performance
Underlying FY06 BSL financial performance June ’06 restructuring includes: A$m ~ PP impairment and closure costs 120 - Staff and executive restructuring 32 - Taiwan closure 8 - CPL7 closure 13 ~ Rail operation outsourcing 9 - Other _3 185 Other unusual and one-off adjustments include: Reported Yune0
Slide 19: New reporting business segments
New reporting business segments Australia New Zealand 4 » Lowest quartile ~ Largest supplier of — . Only fully integrated * Pre-eminent seller of + 50:50 joint venture _* Pre-eminent global producer metallic coated and flat steel maker in branded steel in Asia__ with Cargill Inc. designer / supplier
Slide 20: EBIT variance FY2005 to FY2006 by reporting business segment
/EBIT variance FY2005 to FY2006 by reporting business segment = aw 800 + <= jad & 600 + irr) 400 200 J Co a .... .} }8}38©§©§©] . | 0 FY 2005 Hot Rolled Coated & New Zealand & Coated & Hot Rolled Coated & Corporate & FY 2006 Products Building Pacific Steel Building Products North Building Group Aust
Slide 21: Hot Rolled Products Australia (PKSW) - higher raw material costs
ae role es Australia a (PKSW) - higher raw material costs = FY2006 vs. FY2005 = Sales revenue down 7% to A$3,472m = EBIT down 60% to A$456m » FY2006 return on net assets (pre-tax) 24% EBIT A$ Millions FY June 03 FYJune04 FY June 05 Raw Export Domestic Volurne Mix Conversion Other FY2006 Pre One-offs
Slide 22: Hot Rolled Products Australia - markets and business improvement
Hot Rolled Products Australia - “markets and business j nprovement = Markets © Slab - Global demand and prices stronger in Q4 Lower conversion costs ® HRC - Tight global market and stronger prices in Q4 = Plate - Domestic demand stronger, but domestic sales down due to: - offshore fabrication - lowe
Slide 23: Coated and Building Products Australia - another difficult year
Coated and Building Products Australia (excluding ees Products) — ; - another difficult: ear EBIT A$ Millions FY June 03 FYJune 04 FYJune05 — Export Domestic Mix Conversion Raw Prices Prices & Oth Cosis Materials - Zinc & Auminium « FY2006 vs. FY2005 — Lower export prices and steel input costs refle
Slide 24: Coated and Building Products Australia - closure of tinplate
Coated and Building Products Australia — . J eg pode ed 29 Jur Closure of tin EBIT AS Millions -50 -100 -150 -200 -250 FY June 03 FY June 04 = FY June 05 Prices Volume Conversion & FY2006 Pre Oth Costs Other One-offs One-offs FY June 06 « FY2006 vs. FY2005 — Significant impairment and restructuring
Slide 25: New Zealand and Pacific Steel Products - second best year
‘New Zealand and Pacific Steel Products - second best year. « FY2006 vs. FY2005 " Sales revenue down 5% to A$709m " EBIT down 44% to A$105m — second best year ever " FY2006 return on net assets (pre-tax) 32% EBIT A$ Millions FY June 03 FY June 04 FY June 08 Prices Volume Conversion & Raw Material Ot
Slide 26: Coated and Building Products Asia
- itis time todeliver . FY2006 vs. FY2005 * Main variances Sales revenue up 5% to A$1,075m, including — Lower sales prices across Asia A$227m from BlueScope Butler China _ Higher unit costs from ramp-up of new » EBIT down 101% to (A$1m) facilities (Thailand, Vietnam & China) « FY2006 return on net a
Slide 27: Asian Coating / Painting / Roll-Forming / PEB Capacity
ot Asian Coating / Painting / Roll- “Forming. / PEB Capacity — Y2 By Region TTT . 1 — . oo (k tonnes) oe _ a — Oo. oe oo FY2006 FY2007 FY2008 FY2009 @ Metal coating E] Painting
Slide 28: Hot Rolled Products North America - another excellent year
Hot Rolled Products North America - another excellent year = FY2006 vs. FY2005 (North Star BlueScope 50% only) " Sales revenue down 7% to A$712m " New reporting segment comprising: * North Star BlueScope Steel (50% interest) * Castrip LLC and North American and European sales offices " EBIT down 13%
Slide 29: Coated and Building Products North America
= Comprises: " Performance * Butler buildings " FY2006 vs. FY2005 » Vistawall — Buildings — Increased despatches — Higher transition costs 50 Fe. + + + associated with closing * FY2006 vs FY2005 EBIT variance Galesburg and opening new Tennessee plant 5 — Vistawall 2 — Higher sales = — Partly offset
Slide 30: Balance sheet - BlueScope to focus on working capital
Balance sheet - BlueScope to focus on working capital A$ Millions 30 June 2006 31 December 2005 Assets Cash 62 79 Receivables 1,344 1,081 Inventory 1,329 1,439 Other Assets 783 732 Net Fixed Assets 3,743 3,592 Total Assets 7,261 6,923 Liabilities Creditors 959 728 Interest Bearing Liabilities 1,952
Slide 31: Cash - $551 million to shareholders and $816 million in capex
‘Cash - $551 milion to shareholders and $816 million in capex $ millions 2002") 2003 2004 2005 | 2006-1H 2006-2H 2006 ee Cash from operations 795 1,012 1,671 569 334 903 Working Capital Movement (31) (94) (432) | (222) 122 (100) Net operating cashflow before borrowing 381 764 918 1,239 | 347 456 803
Slide 32: Global steel industry squeezed by China's increased steel making capacity
Global steel industry currently squeezed by China's. increased steel _ making capacity. and higher raw material costs 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sources: iiSi, BSL Research ussimt Asian HRC Benchmark Price ‘SBB HRC East Asia Import CFR $500 3400 $200 $100 ource:
Slide 33: World crude steel production - China driving growth
World crude steel production - 1950 to 2005 - China driving growth Compound Annual Growth Rates 1200 1000 800 600 Million Tonnes China: 1.2% | - (1995-2005) ee 400 World Excluding USSR: 1,1% Japan: 6.9% _ (1980-1995) 700 World Excluding - Japan: 1.8% 1965-1980) es Zz 2 Oo 1950 1960 1970 1980 1990 20
Slide 34: Global steel industry consolidation into mega companies
Global steel industry consolidation into “mega companies” 120 100 80 60 40 20 Arcelor + Mittal POSCO JFE Nippon Steel Baosteel US Steel Nucor Corus Severstal Thyssen Krupp Evraz Gerdau ChinaSteel Maanshan BlueScope CSN SSAB Tata Steel 27) Base Production (Mt) —&— Revenue (US$m)
Slide 35: Current industry issues and likely long term outcomes
Current industry issues: Likely industry outcomes long term: = China — steel reform initiatives taken / exports discouraged = China's capacity growth / fragmentation = Higher raw material costs = China — increased demand / steel . displaces other materials = Higher energy and other costs (coating me
Slide 36: Value added solutions - Olympic in China
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Slide 37: BlueScope Coated Steel China - June 2006
~ BlueScope Coated Steel China - June 2006
Slide 38: Questions
Questions Profitable Way Dynamic — _ Throughthe “Global Steel _ Cyl C Lo Market _— Strong Board & Sa NalueAdded “ _ Management | Branded L Jor / . Products a Govt > A VERY DIFFERENT "grea Opportunities in KIND OF STEEL Operating . on COMPANY racks exible Capital Low Cost _ Structure - y . Producer F
Slide 39: Appendix
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Slide 41: Employee profile by country - June 2006
Employee profile by country — 30 June 2006 Other SE Asia 70 2342 | China 1969 . Australia North America __ —— 8445 Total 18,276 1384 New Zealand and Pacific Islands
Slide 42: Hot Rolled Products Australia - product flow FY2006
Hot Rolled Products Australia - product flow (Indicative) FY2006. Port Kembla Steelworks Approximately 50% 5.3mt slab FY2006 a Approximately 50% sold externally / (5 4mt slab FY2005) . Further processed internally Hot Strip Mill) -_ oF Notes: (1) +400kt HSM expansion was completed July 2006. Technic
Slide 43: New Zealand Steel product flow (FY2006)
New Zealand Steel product flow" (FY2006) Mine Sites “tron Sand Concentrate * Indicative annual prime 24Amt / production and sales (t) New Zealand Stee! 0.6mt Slab 0. 6mt Hot Rolled Cold Strip Mill Domestic’ Pipe | | Domestic Hot Rolled 4% ae co Coating lines co (External % + Internal %) inted
Slide 44: North Star BlueScope Steel - EAF operational excellence
_ North Star BlueScope Steel - Natural Gas Consumption (MMBTU per ton, FY) 2002 2003 2004 2005 Tap to Tap Time (minutes) 2006 EAF operational excellence _ ocus on energy management given recent spike in electricity and natural gas prices Electricity Consumption (KWH per ton, FY) 2002 2003 2004 2005
Slide 45: Castrip - scale comparison with current casting technologies
Castrip - scale comparison with current casting technologies Conventional Slab Casting 1-2m/minute Rougher yj Run out table va cutter g Coil box Finisher cooling cooling 4 : we 0p thiok + 200-300 mim thick t ~% Coiter Reheat furnace Th i n-Slab Casti ng 500-800 m 20-40 metric ton coil we Run out tab
Slide 46: Coated and Building Products Australia - packaging products material flow
Coated and Bullding Products Australia - ~ packaging products material 4, Temper Rolling Single Reduce (TM1) or Double Reduce (TM2) 2. 5. Electrolytic Tinning ET2 i “igh Yoon ld cig Ma —_ ET3 3. Annealing 6. Final Processing Continuous or Cleaning.. GA
Slide 47: From construction to production
From construction to production Major project capital spending profile Thailand ~ Coating expansion 80 78 2 - - - Vietnam — Coating / Painting” 136 116 20 - - - indonesia — Coating / Painting® 145 - 10 - - - (deferred in April 2006) China - Coating and Painting Facility®) 280 155 101 24 - - - Guangz
Slide 48: India - Pune project operational ahead of schedule
India - Pune Pro ct operational ahead of schedule _ : BUTLER™ PEB facility and Design Centre LYSAGHT™ rollforming facility Original scheduled completion second half CY2006 Commissioning commenced April 2006 First order despatched May 2006 ch
Slide 49: ron in
ron in #4 worldwide #1 worldwide #1 worldwide - == o EEE ~~ ~ Ey = oo EEE 2 = ueynAy ueysuy You vs (993g EULYD aqwnpag Ixuag OOSIN 48390] AON 3‘<=ayT adoaganig 5 oO D = ry — a oO £ — so = rt) o 2 = oO 2 . Sas 2 i= SO ey WSOHoyuBeH coe xs oOo F = © pee] eisionss = Ss o ee 8 D> a=] ° pum] 0980d = — S
Slide 50: Continued focus on branding of products and provision of solutions
Continued focus on branding of products and the provision of solutions / BLUESCOPE STEEL
Slide 51: Value-added solutions
Value-added solutions Why harvest rainwater? Wore ty a~/ XN MARTRUS ANI OUR VALUE CHAIN
Slide 52: Value added PEB solutions - speed, cost effectiveness, broad application
Value added PEB solutions - speed, cost effectiveness, broad application so Caaniciiny
Slide 53: Metallic coated and painted value added products
"Metallic coated and painted value added products. “Framework for the future” TrueCore = TRUECORE™ steel launched to market in (ve ofe July 2005, Made Only By BlueScope Steel = Product designed specifically for use in the Residential Framing market = TRUECORE™ steel will become synonymous with the c
Slide 54: Ongoing growth also expected in South East Asia
Ongoing growth | is also expected | in South ae. a es Oy Hate GDP - - Thailand — Annual % Change oe & & = BB 95 96 97 98 99 00 O1 02 03 04 05 06 O7 Inward Foreign Direct Investment GDP- Indonesia and Vietnam _ Talend, Malaysia, Indonesia, and Vietnam] |Pecast | TT ™ : 9 96 97 98 99 00 01 02 03 04 05
Slide 55: Growth in China and India has stabilised at a high level
ius Pedi growth i in China and India has stabilised at a high level, 0 Sn ee ee ee 0 SS 9 96 97 98 99 00 Of 02 03 04 05 06 07 95 96 97 98 99 00 01 02 03 04 05 06 07 Gross Fixed Investment Inward Foreign Direct Investment 20 a ons a sed i 80 4... L 10 2 i 6 . 5 S 12 China f. cd | -& p90 | __ india ir
Slide 56: Indonesia - Our markets
Indonesia — Our markets * Construction sector accounts for 99% of sales + Approximately 50/50 split between industrial & commercial and residential segments + Market share is growing through industry leadership in intermaterial growth, ie steel replacing timber trusses and concrete roof tiles. Inter
Slide 57: Thailand - Our markets
- Thailand - Our markets = BlueScope Steel Thailand principally targets the industrial / commercial construction segment = In FY05 approximately 55 % of domestic prime sales went to this segment, with the balance spread between manufacturing (30%) and residential (15%). = This segment is expected to
Slide 58: Vietnam - Our markets
| Vietnam —Our markets Vietnam Construction Growth 20% k i 18% 10% 5% 0% {HE ba Ee Se ee 2 Ee 2002 2003 2004 2005 2006e 2007fcast Source: Genera! Statistics Office & Shrapnef Inter-material Share FYO6 - Roofing & Walling Market Tiles, 5% Concrete, 20% aN " iin Others, 16% Steel, 59% {Asbestos/ Fibre
Slide 59: India - Our markets
nda - Our markets Construction Sector Growth - India Intermaterial Share* 2003/4 Asbestos Sheet 21% einforced Concrete Others 5% June Sep Dec Mar June Sep _ Dec Q'04 04 04 04 105 05 05 Steel 29% Source: Reserve Bank of india * industrial Building, Roofing and Walling (Source: Tata BlueScope Steel an
Slide 60: Our record since public listing - revenue & EBITDA
Our record since public listing - revenue & EBITDA [ _ @™ Revenue (A$m) —@-EBITDA (A$m) __| < 2 g < & = é & FY2003 FY2004 FY2005 FY2006 Despatches (net) 6.76 6.93 7.16 7.59 Revenue (A$m) §,302 5,770 7,965 8,031 EBITDA (A$m) 881 1,104 1,655 850
Slide 61: Australian despatches decline on weak manufacturing / strong A$
- Australian despatches decline on weak manufacturing / strong AS mt FY2005 Sales Tonnes FY2006 Manufacturing 16% Auto & Transport 11% Packaging 9% 2.965 mt Manufacturing 15% Despatches 2.375mt = Australian sales tonnes lower across all segments in FY2006 to varying degree. = Western Port fire affec
Slide 62: Huge increase in FY2006 Zinc and Aluminium costs
Huge increase in FY2006 Zinc and Aluminium costs Tonnes Zinc Aluminium AUSTRALIA Springhill 21,250 10,000 Western Port 17,500 9,500 Sub-total 38,750 19,500 NEW ZEALAND 6,500 3,500 NORTH AMERICA Vistawall - 30,000 ASIA 12,250 11,250 TOTAL 57,500 64,250 Note: In future years BSL Asia’s usage will incr
Slide 63: Port Kembla Steelworks despatches
Port Kembla Steelworks des aiches — _ stronger Pes — Australian external demand ower 2 (ktonnes) FY05-1H FY05-2H FY06-1H FY06-2H @ internal & Domestic Exports * * Including BlueScope Steel Asia feed External Product Slab 34% 51% 54% 42% Sales Mix HRC 48% 36% 35% 45% Plate/Other 18% 13% 11% 13%
Slide 64: EBIT remains sensitive to realised hot rolled coil prices and raw materials
EBIT remains: sensitive fo realised hot rolled coil De and raw ‘materia oe both were adv rse in FY2006 _ Estimated impact on forecast EBIT (A$mil) Assumption (euren) (previous) +/- US$25 / tonne movement in BlueScope’s average realised export 86 76 HRC price”) +/— 1¢ movement in Australian dollar /
Slide 65: Improved disclosure - new Slab and HRC price benchmarks
Improved disclosure - new Slab and HRC price benchmarks Previously recommended the Japan to Korea HRC price as being a reasonable public benchmark for BlueScope’s domestic and Asian HRC sales - still valid and Continue to recommend the following better benchmarks HRC Steel Business Briefing HRC East
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BlueScope Steel — JP Morgan NYC presentation (September 2006) on 6ix