Bluescope Steel Limited · ASX:BSL
Bluescope Steel — FY2024 Earnings Presentation
34 slides from Bluescope Steel's earnings presentation, Aug 19, 2024
Slide 1: FY2024 Financial Results Presentation
FY2024 Financial Results Presentation Mark Vassella Managing Director and Chief Executive Officer David Fallu Chief Financial Officer 19 August 2024 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058 Pictured: Level 24, 181 William Street, Melbourne, VIC, 3000 Waco Aircraft Corporation hange
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 b
Slide 3: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY BlueScope acknowledges the Traditional Custodians of the land on which we work, live and operate. We recognise our First Nations Peoples who have inhabited Australia for millennia, their enduring connection to Country, sky, and waterways and their rich and vital cultures.
Slide 4: FY2024 Highlights
FY2024 HIGHLIGHTS Resilient performance despite volatile conditions Underlying EBIT of $1.34Bn and ROIC of 11.9% in volatile conditions • Delivered over $500M in shareholder returns; $364M net cash balance sheet • Announced 30 cps dividend and extension of current buy-back tenor Delivering on our st
Slide 5: Health, Safety & Environment Starts With All of Us
HEALTH, SAFETY & ENVIRONMENT STARTS WITH ALL OF US • Our commitment to our culture of learning and people centred approach to Lead Indicators health and safety is unwavering, enabled by a deep focus on engaging our people in designing solutions to deliver effective controls 1,875 Leaders involved in
Slide 6: FY2024 Financial Headlines
FY2024 FINANCIAL HEADLINES Resilient result in a softer macro environment, demonstrating the strength of BlueScope’s diversified business model Underlying EBIT1 Underlying EBIT Return Reported NPAT On Invested Capital2 $1.34Bn 11.9% $806M Down $269M on FY2023 Down from 14.6% in FY2023 Down $204M on
Slide 7: FY2024 Climate Action Update
FY2024 CLIMATE ACTION UPDATE Continuing our pursuit of emissions reduction projects in line with our 2030 steelmaking and non-steelmaking targets and 2050 net zero goal1 FY2024 Highlights Steelmaking target2,3 (92% of Group-wide Scope 1 and 2 emissions) GHG emissions intensity (tCO2-e per tonne raw
Slide 8: FY2024 Sustainability Update
FY2024 SUSTAINABILITY UPDATE Embedding sustainability in all that we do Inclusion & Diversity Sustainable Supply Chain Regulatory Proceedings • Increased female representation • Increase in suppliers being • On 29 August 2023, the Federal to 25%; maintained gender assessed through EcoVadis or Court
Slide 9: Our Purpose and Strategy
OUR PURPOSE AND STRATEGY In place since late 2019, Our Strategy sets out how we will deliver on Our Purpose and drive transformation and growth, while continuing to deliver on core expectations for our stakeholders OUR PURPOSE We create and inspire smart solutions in steel, to strengthen our communi
Slide 10: North Star Debottlenecking
NORTH STAR DEBOTTLENECKING Successfully completed ~45% expansion of our best-in-class mini mill; further unlocking output by an additional ~10% through hot strip mill debottlenecking program Expected North Star production (mt, annualised) 3.5 • Following recent expansion, North Star’s total output i
Slide 11: Progressing North American Value Chain Integration
PROGRESSING NORTH AMERICAN VALUE CHAIN INTEGRATION Continuing feasibility study to further integrate US value chain through addition of cold rolling and metal coating capacity • Progressed feasibility study into integration of relevant components of Capacity (per annum) Location Site Product BlueSco
Slide 12: Update on Projects Underway
UPDATE ON PROJECTS UNDERWAY • Project to secure future of ironmaking at PKSW underway 6BF • Expected total capital cost of ~$1.15Bn, partly offset by $136.8M grant from Australian Government Reline & • Early works well advanced and site contractors mobilised; key long lead items well progressed Upgr
Slide 13: Business performance
Business performance por
Slide 14: Australia
AUSTRALIA Softer 2H FY2024 performance on below historical bottom of cycle spreads; margins supported by solid volume of premium products Underlying EBIT ($M) • Domestic despatches softened during 537 the half, predominantly on reduced activity across all building and 263 377 construction sub-segmen
Slide 15: Australia
AUSTRALIA Reduced despatches in 2H FY2024 across all segments, more pronounced in construction segments on cyclical pull back in activity Total Australian domestic despatch volumes (kt) Dwelling • Approximately half of product goes to Alterations & Total construction % shown in dark red Additions (A
Slide 16: Australia
AUSTRALIA Through-cycle margins supported by focus on shift towards premium branded products combined with a strong cost focus in steelmaking Asian steel spread1 & indicative steelmaking Asian steel spread1 & ASP EBITDA per tonne ($A/t) cash breakeven2 (US$/t) 550 Underlying EBITDA per tonne (A$/t)
Slide 17: North America
NORTH AMERICA Stronger result in 2H FY2024 compared to prior half, with improved performance at North Star on higher spreads and at Buildings North America and West Coast businesses on volume and margin Underlying EBIT1 ($M) North Star 965 935 EBIT $494M in FY2024; $293M in 2H FY2024 • Stronger spre
Slide 18: North America
NORTH AMERICA Economy now growing closer to trend, helping to control inflationary pressures. Auto demand resilient, while non-residential sector strength reflects public investment plans Non-residential construction1 Automotive2 Manufacturing3 (Value of work put in place, US$Bn; ABI) (Light vehicle
Slide 19: Asia
ASIA Softer 2H FY2024 performance on seasonally lower earnings from China; Southeast Asia result stable supported by continued strength in Thailand Underlying EBIT ($M) Southeast Asia1 160 EBIT $107M in FY2024; $54M in 2H FY2024 142 64 2H • Similar result to 2H FY2024, with slightly higher volumes a
Slide 20: New Zealand and Pacific Islands
NEW ZEALAND AND PACIFIC ISLANDS Softer 2H FY2024 result on softer demand and elevated costs Underlying EBIT ($M) 129 • Softer domestic despatches across 43 2H FY2024 on softer macroeconomic conditions and 44 86 lower levels of construction activity 18 2H 26 1H • Costs remained elevated during the FY
Slide 21: Underlying Group EBIT Variance
UNDERLYING GROUP EBIT VARIANCE Robust result in FY2024, however down on FY2023 on higher costs, lower volumes and softer spreads FY2024 vs FY2023 ($M) 2H FY2024 vs 1H FY2024 ($M) Net spread decrease $28M 1,608 39 (188) 1,339 (76) 23 Conversion & other costs ($M) (732) 665 Cost improvement initiative
Slide 22: Financial framework
Financial framework 22
Slide 23: Financial Framework Underpinning Resilience
FINANCIAL FRAMEWORK UNDERPINNING RESILIENCE Strong focus on driving financial performance and disciplined allocation of capital Disciplined Returns Focus Robust Capital Structure Capital Allocation • ROIC > WACC on average through • Strong balance sheet, with a target • Invest to maintain safe and r
Slide 24: Returns Focus: Strong Focus on ROIC; Maximising Cash
RETURNS FOCUS STRONG FOCUS ON ROIC; MAXIMISING CASH Targeting returns above cost of capital through the cycle; strong operating cash flow funding investment in the portfolio and returns to shareholders Group ROIC1 (%) and invested capital2 ($Bn) Net cash flow ($M) (before investment exp and financin
Slide 25: Robust Balance Sheet: Net Cash Position; Ample Liquidity
ROBUST BALANCE SHEET NET CASH POSITION; AMPLE LIQUIDITY Strong balance sheet providing the foundation to deliver long term sustainable earnings and growth Net cash / (debt)1 ($M) Liquidity ($M) 703 (undrawn facilities and cash) 606 614 3,655 3,317 367 364 3,117 3,172 3,1322 Net Debt Target Range ~$4
Slide 26: Disciplined Capital Allocation: Capital Expenditure
DISCIPLINED CAPITAL ALLOCATION CAPITAL EXPENDITURE Investing for sustainable earnings and growth Capital allocation framework CAPEX spending and forecast1 ($M) Major projects in forecast include: • MCL7 in Western Sydney (growth) Operating 6BF reline & upgrade2 Asset Sales Divestments • North Star d
Slide 27: Disciplined Capital Allocation: Shareholder Returns
DISCIPLINED CAPITAL ALLOCATION SHAREHOLDER RETURNS $3.5Bn returned since FY2017; 30 cps fully franked final dividend and extension of the buy-back to allow remaining $270M to be bought over the next 12 months Dividends paid and buy-backs4 ($M) EPS • BlueScope’s capital management policy is to distri
Slide 28: 1H FY2025 Guidance and Summary
1H FY2025 Guidance and Summary 28
Slide 29: Current Trading Conditions
CURRENT TRADING CONDITIONS Convergence of external challenges reinforces the importance of BlueScope’s strategy to maintain a globally competitive cost base and drive the shift to domestic, value-add products to support margins Current external challenges BlueScope’s response Asia spread stagnant at
Slide 30: 1H FY2025 Group Outlook
1H FY2025 GROUP OUTLOOK1 • Underlying EBIT in 1H FY2025 is expected to be in the range of $350M to $420M, representing a resilient performance in the context of the challenging trading conditions • For the purposes of the outlook, the Company has made the following 1H FY2025 average assumptions: – L
Slide 31: 1H FY2025 Regional Guidance
1H FY2025 REGIONAL GUIDANCE Outlook subject to assumptions and qualifiers referenced on page 30 North • Expect a result around half that of 2H FY2024 Australia • Expect a moderately softer result than 2H FY2024 as America • North Star – expect a result around one-third that stronger benchmark spread
Slide 32: A Resilient Business Delivering Returns Through the Cycle
A RESILIENT BUSINESS DELIVERING RETURNS THROUGH THE CYCLE Diversified business delivering quality through-cycle earnings – Leading positions in Australia and NZ; best-in-class steelmaking in the US – Suite of premium branded products and solutions that enhance margins Performance underpinned by qual
Slide 33: Questions
Questions 33
Slide 34: FY2024 Financial Results Presentation
FY2024 Financial Results Presentation Mark Vassella Managing Director and Chief Executive Officer David Fallu Chief Financial Officer 19 August 2024 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058 Pictured: Level 24, 181 William Street, Melbourne, VIC, 3000 Waco Aircraft Corporation hange