annual results presentation period ended 30 june 2003€¦ · to the fullest extent permitted by...

Annual Results Presentation Period Ended 30 June 2003Kirby Adams, Managing Director and Chief Executive OfficerBrian Kruger, Chief Financial Officer28 August, 2003

ASX Code: BSLOriginally issued by BHP Steel. On 17 November 2003 BHP Steel became BlueScope Steel Limited.

BSL Annual 02/03 Presentation

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 BSL SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE. RELIANCE SHOULD NOT BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN THIS PRESENTATION AND, SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BSL DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR INVESTOR.

TO THE FULLEST EXTENT PERMITTED BY LAW, BSL AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS.


BHP Steel Limited


Creating Shareholder Value in a Difficult Industry

Improved Global Steel

Market

Improved Global Steel

Market

Geographic and Product

Diversity

Geographic and Product

Diversity

Strong Board & Management

Team

Strong Board & Management

Team

Growth Opportunities in

Asia

Growth Opportunities in

Asia

Low Cost Producer

Low Cost Producer

Strong and Flexible Capital

Structure

Strong and Flexible Capital

Structure

Profitable Through the

Cycle

Profitable Through the

Cycle

Consistently Strong Cash

Flows

Consistently Strong Cash

Flows

Strong Operating

Track Record

Strong Operating

Track Record

Value Added Branded Products

Value Added Branded Products

A DIFFERENT KIND OF STEEL COMPANY


FY2003 – A Very Good Start for BSL

Seized market opportunities and drove business improvements

• Revenue $5.3 billion First time above $5.0 billion.

• Despatches 6.8 million metric tonnes Record shipments.

• NPAT $452 million

• EPS 57.1¢

• DPS 22¢ Fully Franked Scheme Booklet Forecast was 20¢ 0/40% Franking.

• Special Dividend 7¢ Fully Franked

• Return on Invested Capital 14.5%

• Net Cash Flow $598 million

• Buyback (30 June 2003) 8.3 million shares 27 August 2003 21.9 million shares.

• Debt Reduced By $540 million To $168 million.

• Gearing (net debt) 2.4%


Safety – World Class Performance

1.82.73.443.74.88

16

29

3533

14

0

5

10

15

20

25

30

35

40

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Further 30% improvement in Lost Time Injury Frequency Rate . . .

Our Goal is Zero Harm

Inju

ries r

esul

ti ng

in lo

s t ti

me p

e r m

il lion

man

- hou

rs w

orke

d

* Includes contractors from 1996


Increased Financial Performance Across All Segments

97

12

57 71

471

44

11984

0

100

200

300

400

500FY02 FY03

Hot Rolled Products New Zealand Steel Coated Products Australia Coated Products Asia

A$ M

illion

s

• PKSW- Slab- HRC- Plate

• NSBHP (50%)• Castrip

• Western Port• Springhill• Packaging Products• Service Centres• Lysaght

EBIT Growth +386% +267% +109% +18%Return on Net Assets (Pre-Tax) 25.7% 10% 9.3% 18.9%


Driving Business Improvement Across All Segments

HEALTH SAFETY & ENVIRONMENT

CONV

ERSIO

N COST

S/COST

REDU

CTIO

NCOST OF POOR QUALITY

• Business excellence framework

Inventory Turnover

Delivery Performance

Capacity at minimal cost


Geographic Diversity: Flexibility, Strength and Platform for Growth

Shift in mix towards Asia on 12% overall increase in despatches

Australia 41%

USA (NSBHPS)13%

Total Export38%

NZ4%

Australia 41%

Asia Pacific4%

NZ4%Asia Pacific

5%

Total Export37%

USA (NSBHPS)13%

Americas 14%

Other 10%

Asia 14%

Americas 13%

Other 5% Asia

19%

FY02TOTAL EXTERNAL SALES – 6,028kt

FY03TOTAL EXTERNAL SALES – 6,754kt


Australian Market Diversity Remains a Strength

Construction remains at 46% as Australian Despatches Increase by 12%

Packaging8%

Automotive & Transport13%

Manufacturing22%

Mining8%

Rural3%

Construction Infrastructure

6%

ConstructionDwellings

18%

ConstructionNon-Dwellings

22%

Packaging9%

Automotive & Transport13%

Manufacturing22%

Mining8%

Rural3%

Construction Infrastructure

6%

ConstructionDwellings

17%

ConstructionNon-Dwellings

22%

FY02 (tonnes)SALES – 2,425kt

FY03 (tonnes)SALES – 2,710kt


Downstream Product Diversity Sets Us Apart

Vertical Integration Provides Flexibility to Respond to Market Demand

0.3 0.5

1.21.4

0.50.5

2.62.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2001/2002 2002/2003

Coated, Tin, Painted & Roll Formed

CRC & Plate

HRC

Slab

A$ B

illion

s

SALES REVENUE$4.6 billion

SALES REVENUE$5.3 billion


Improved Global Steel Market and Industry Structure

North AmericaEurope

Asia / Australia / NZChina- Japan consolidation- Korea strong growth- China key market for region- Australia/NZ strong growth

- Steel consumption growth continues- Tariffs- New capacity- Net importer- Olympics and World Expo

- Consolidation continues- Scrap/energy prices- Section 201- Weak demand

- Stronger Euro/higher imports- Weak demand- Consolidation benefits- Russia/Ukraine

BSL is Geographically Well Positioned in Global Steel Markets


Strategy

Create Shareholder Value –Total Shareholder Return

Downstream Growth –Value Added Branded Products

Regional Focus – Our Footprint


Strategy – Shifting Product Mix Downstream

• Value added coated, painted and roll-formed branded products, solutions and services

- Pre-Engineered Buildings- Smartruss™- Powerdek™- Tileform® - Automotive Blanking


Strategy – Building Upon Unique Production and Marketing Footprint

IndonesiaMetal Coating 90ktPainting 25kt +25kt

Western PortHot Rolling 1.43mtCold Rolling 1.0mt

MC (3 lines) 830kt +58ktPainting (2 lines) 330kt +23kt

BrisbanePainting 88kt

New ZealandIronsand MiningRaw Steel 625ktHot Rolling 750ktCold Rolling360kt

Metal Coating 210kt +24ktPainting 60kt

North Star JVHot Rolling 1.62mt (100%)Castrip JV

Annualised production capacities and approved growth

VietnamMC 125kt

Painting 50kt

Asia / Pacific23 Roll Forming Sites

ThailandCold Rolling 300kt

Metal Coating 175ktPainting 90kt

Port Kembla / SpringhillRaw Steel 5.1mtHot Rolling 2.4mt

Plate 320ktCold Rolling 930kt

Tinplate/Blackplate 450ktMC (3 lines) 750kt +34ktPL (2 lines) 193kt +50kt

MalaysiaMetal Coating 160kt

Painting 70kt

Australia7 Service Centres

17 Roll Forming Sites


Vietnam – Strategy in Action

Hanoi Airport with Clean Colorbond® Roof

METALLIC COATING & PAINTING SITE

LYSAGHT BIEN HOA FACTORY

LYSAGHT HA TAY FACTORY

SALES OFFICES

Lysaght Pre-Engineered Building


First Year Journey

August 2002

October 2002

June/July 2002- ASX Listing- Board- Corporate Governance- Roadshow

Our First Twelve Months July 2002

September 2002

November 2002

December 2002January 2003February 2003

August 2003

February/March 2003Half Year- Interim Dividend (100% Franked)- NPAT >$400m- Buy-back 10% shares- 2 China Roll-formers

May 2003- West Sydney Colorbond® Steel Centre- NZS +24kt Metal Coat Line- Confirmation of NPAT >$400m

August 2003- Annual Release- Higher Final Dividend (100% Franked) - Special Dividend (100% Franked)- Vietnam Coating & Painting Facility- Employee Share Plan

March 2003

April 2003

May 2003

June 2003

July 2003

November 2002AGM- Final Dividend (100% Franked)- NPAT $400m- Downstream Australian Brownfield Growth


Financials


Profitable Through the Cycle

• Capitalising on strong market and operational performance

A$ Millions 1999(1) 2000(1) 2001(1) 2002(1) 2003

Revenue 4,849 4,898 4,941 4,593 5,302

EBITDA(2) 525 711 568 412 881

EBIT(2) 257 445 305 160 611

Net Profit 452(3)

EPS (¢) 57.1(4) (1) 1999 to and including 2002 normalised.(2) Includes net profit/loss for North Star.(3) First half $242m and second half $210m.(4) Weighted average shares on issue 791,544,061.


EBIT Variance – FY2003 vs. FY2002

0

100

200

300

400

500

600

700

800

900

1000

June 02 YTDActual

ExportPrices

DomesticPrices

Volume /Mix

NSBHPS Conversion& OtherCosts

RawMaterialCosts

ExchangeRates

Other June 03 YTDActual

A$ M

illion

s

$160m

$393m$611m

($88m)

$103m

($90m)

$17m

($78m)

$67m

$127m

Superannuation - $32mName Change - $20mRestructuring - $21m


Balance Sheet – Strength and Flexibility

As at 30 June A$ Millions Pro-Forma 2002 2003

Assets Cash 155 91 Receivables 625 650 Inventory 678 698 Other Assets 221 228 Net Fixed Assets 3,223 3,086

Total Assets 4,902 4,753

Liabilities Creditors 557 493 Interest Bearing Liabilities 754 168 Provisions 801 998

Total Liabilities 2,112 1,659

Net Assets 2,790 3,094

• Net Debt / (Net Debt + Equity) 17.7% 2.4%(excluding off balance sheet items)


Improved and Tax Effective Returns to Shareholders

• Share buyback– Up to 10% of ordinary shares (79.3m)– 12 months to March 2004 – Purchased to:

30 June 2003 - 8.3m shares 27 August 2003 - 21.9m shares

• Ordinary Dividend– Interim – 9¢ fully franked – Final – 13¢ fully franked / payable on 10 October 2003

• Special Dividend– 7¢ fully franked / payable on 10 October 2003


Consistently Strong Cash Flows

A$ millions 1999(1) 2000(1) 2001(1) 2002(1) 2003 Net operating cash flow before borrowing costs and income tax

725 715 631 381 763

Net investing cash flows - Capital expenditure - Other

(191) (20)

(90) 10

(105)

(6)

(162)

8

(183) 18 (2)

Net cash flow before financing & tax 514 635 520 227 598 Net financing cash flow (493) (3) Payment of income tax (29) Net dividends (75) Net increase in cash held 1

(1) 1999 to and including 2002 normalised.(2) Includes impact of North Star loan repayment of A$36m.(3) Includes repayment of A$540m of debt, A$26m to purchase shares under the buy-back, A$24m of

net borrowing costs and A$97m associated with the Demerger.


Results Remain Sensitive to BSL’s Realised Hot Rolled Coil Prices

(1) The sensitivity assumes an equivalent impact on the price of export cold rolled coil, and a 75% impact on the price of export slab. Export metallic coated, painted steel products and plate as well as Australian domestic pipe and tube products are assumed to move to a lesser extent due to the existence of other market factors. The decrease between 2003 and 2004 is due to both exchange rate and mix improvement.

(2) The movement in the Australian dollar/US dollar exchange rate includes the restatement of US dollar denominated receivables and payables.

A$ millions

Impact on forecast EBIT for the year ending 30 June 2003 2004

Assumption

+/– US$25 / tonne movement in BSL’s average realised HRC price(1) 104 76 +/– 1¢ movement in Australian dollar / US dollar exchange rate(2) 10 13

+/– US$10 / tonne movement in NSBHP scrap to HRC price spread 16 13

+/– 2% movement in slab production in Australia and New Zealand 14 14

+/– US$1 / tonne movement in coking coal costs 7 5

+/– US$1 / tonne movement in iron ore costs 14 11


Financials


Outlook


A Very Good Start For . . .

• SHAREHOLDERS • CUSTOMERS

• COMMUNITIES • EMPLOYEES

Annual Results Presentation Period Ended 30 June 2003Kirby Adams, Managing Director and Chief Executive OfficerBrian Kruger, Chief Financial Officer28 August, 2003

ASX Code: BSLOriginally issued by BHP Steel. On 17 November 2003 BHP Steel became BlueScope Steel Limited.

annual results presentation period ended 30 june 2003€¦ · to the fullest extent permitted by...

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