first half fy2008 results presentation period …...first half fy2008 results presentation period...
TRANSCRIPT
First Half FY2008 Results Presentation Period Ended 31 December 2007Paul O’Malley, Managing Director and Chief Executive OfficerWayne Armour, Acting Chief Financial Officer 25 February 2008
ASX Code: BSL
Page 2
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 BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN THIS PRESENTATION
AND,
SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BLUESCOPE STEEL 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, BLUESCOPE STEEL 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.
Page 3
Introduction and Introduction and HeadlinesHeadlines
Page 4
3.54.1
3.52.8
1.8 1.50.9 0.8 0.4 0.6
4.8
8.0
14
16
0
2
4
6
8
10
12
14
16
18
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YTD
Lost
time i
njurie
s per
milli
on m
an-h
ours
worke
d
Includes Contractor performance from 1996Includes Butler performance from May 2004Includes Smorgon performance from Aug 2007
Medically Treated Injury Frequency RateLost Time Injury Frequency Rate
8.2 9.36.5 5.3
1217
2222
29
9.46.5
47
52
60
0
10
20
30
40
50
60
70
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YTD
Medic
ally t
reate
d inju
ries p
er m
illion
man
-hou
rs wo
rked
Includes Contractor performance from 2004Includes Butler performance from May 2004
Includes Smorgon performance from Aug 2007
Reported performance for IISI member companies (employees & contractors)
Safety –
Our target remains Zero Harm
NSW Manufacturing
27.9 in 2005 & 24.4 in 2006
Page 5
Sustainability –
continues to be a core activity
Water conservationclear focus on continuing to reduce fresh water consumption excellent initiatives been taken at both Port Kembla and Western Port
Greenhouse gas emissions have and will continue to be proactive and work with governments on
practical ways of reducing emissions, eg:1.
cogeneration facility in New Zealand
2.
feasibility study being progressed for a facility at Port Kembla
Further information on our progress in the “Supporting Information” section of this presentation
Page 6
Six months ended 31 December Variance2008 2007 %
Revenue A$4,734M A$4,528M Up 5% External despatches 4.0M tonnes 3.7M tonnes Up 6% EBITDA –
Reported A$502M A$794M -–
Underlying A$668M A$785M Down 15%EBIT –
Reported A$328M A$635M -–
Underlying A$494M A$626M Down 21%NPAT – Reported A$116M A$388M -
– Underlying A$305M A$384M Down 21%EPS – Reported 15.7¢ 54.7¢ -
– Underlying 41.4¢ 54.3¢ Down 24%After Tax Return on Invested Capital* 5.8% (12.6%) 17.0% (16.9%) -Return on Equity* 6.0% (15.9%) 24.0% (23.7%) -Net Operating Cashflow-
From operating activities A$600M A$697M Down 14%-
After capex / investments A$116M A$133M Down 13%Interim ordinary dividend (fully franked) 22cps 21cps Up 5%Gearing (net debt) 31.8% 35.6% -
Group financial headlines 1H FY2008 vs. 1H FY2007
* ( ) Underlying Returns
Page 7
High level reconciliation between Reported and Underlying NPAT
EBIT ($M) NPAT ($M) EPS (cps)
1H 2008 1H 2007 1H 2008 1H 2007 1H 2008 1H 2007
Reported 328 635 116 388 0.16 0.55
Unusual or non-recurring events:
Asset impairment(1) 251 0 247 0 0.34 0.00
Profit on sale of Smorgon shares(2) (128) 0 (90) 0 (0.12) 0.00
Restructure & redundancy costs 24(3) (5) 17(3) (3) 0.02(3) 0.00
Integration of Smorgon Steel’s distribution business(4)
26 0 18 0 0.02 0.00
Other (7) (4) (3) (1) (0.00) (0.01)
Underlying Operational Earnings 494 626 305 384 0.41 0.54
(1) Impairment of:China (190) – outlook for coated margins remains very tightVietnam (35) – no resolution to the tariff statusLysaght Australia (23) and Lysaght Fiji (3) – systems write-off and under performing assets
resulting in a reassessment of the future cash flows and need to impair the assets(2) Associated with the acquisition of Smorgon Distribution(3) Redundancy costs associated with closure Port Kembla No. 1 paint line ($11m) and internal restructuring
costs ($13m).(4) Integration of SSX Distribution ($7m) and recognised inter-company profit eliminations in inventory ($19m)
Page 8
Continuing to reward our shareholders as we grow
Shares on issue at listing (July 2002)
Share buy backs to 31/12/07
on market – 90m shares
off market – 26m shares
Dividend reinvestment scheme to 31/12/07
Employee share plan issues to 31/12/07
Shares on issue 31/12/07
22
18
24
7 1020 2120
9 1218
2624
13
05
101520253035404550
Interim Final Special
FY2003 FY2004 FY2005 FY2006 FY2007
22 / 7¢
30 / 10¢
42 / 20¢ 44 / 0¢
FY2008
47 / 0¢
Av price paid $6.10 / share
793m(116)m677m
+ 36m+29m742m
Total return to shareholders since BSL’s public listing (July 2002):
Share buybacks $ 707mDividends paid $ 1,621mInterim dividend (to be paid 1 April 08) $ 164m
$ 2,492m
$3.37 per share or 79% payout ratio (NPAT)
Page 9
15%
37%
4%
12%
9%
12%
11%
16%
34%
4%8%
14%
3%
21%
Exports -
Americas
Exports -
Asia
Exports –
Europe/Med/Middle East/India Australia
NA (HRPNA + C&BPNA) New Zealand/Pacific
Asia
ExternalDespatches
Key
External sales despatches by destination
Domestic sales (produced and sold within country)
Exports38%
15%
38%
4%
7%
9%
16%
11%
Exports33%
Australia
NZ
Asia
Exports - Americas
Exports ROW
Exports - Asia
Exports32%
3,544kt 3,740kt 3,989kt
North
Ameri
ca
(inc. 195kt long product sales principally into Australia (191) from Smorgon Distribution not previously included)
Note:
Percentages have been rounded.
1H-FY20081H-FY2006 1H-FY2007
Page 10
SALES TONNESPrincipal variances:
External sales volumes from our new Distribution business included 1H08
sales, into all segments, principally construction and manufacturing.improvement in manufacturing due to Distribution sales.
When you normalise, the despatch variance is explained by lower unpainted sales into the distribution channel.However, strong share recovery evident from Q2 FY2008.
Total Australian despatches by segment
Construction
60%
1H FY2007(1) 1H FY2008(1)
Non-dwelling 25%
Dwelling 23%
Engineering 12%
Manufacturing 14%
Agriculture & Mining 12%
Auto & Transport 8%Packaging 6%
Desp
atch
es ‘0
00 to
nnes
200
400
600
800
1,000
1,200
1,400
1,600
Notes: (1)
Percentages have been rounded and worked off Gross Despatches.
(2)
Stopped producing tinplate for the packaging segment in FY 2007.
Non-dwelling 26%
Dwelling 22%
Engineering 12%
Manufacturing 19%
Agriculture & Mining 12%
Auto & Transport 9%
60%
(1H08 inc. 191kt of long products sales from Smorgon Distribution)
1,415kt +5% 1,487kt(91kt) (191kt)
1,324kt (2%) 1,296kt
Gross DespatchesLessNormalised Despatches
(packaging sales)(2)
Page 11
Strategy for longer term earnings growth –
as introduced on 29 November 2007
Reinvigorate our position in the Australian/NZ markets, through ongoing focus on strengthening our customer relationships, product and service innovation and driving operational efficiency.
Continue to improve our position in select geographies in Asia and North America where we can develop a sustainable competitive advantage through a focus on profitable differentiated products and solutions for the Building & Construction sector
As in Australia, we will strengthen our market offers, improve our operations and supply chain, build our downstream businesses, support growth in Indonesia and India, in particular, and focus on improving the capability of our organisation
Evaluate further growth opportunities with priority on:Brownfield capacity expansions and M&A rather than greenfieldExpand presence in North America building products and solution markets Expanding our downstream capability in Australia and Asia New Zealand minerals development Target growth opportunities −
across our total value chain−
within our current geographic footprint
New products and solutions with a focus on sustainability.
Page 12
Other headlines
Acquisitions Smorgon Distribution (August 2007)―
integrations process on schedule
HCI Steel Building Systems, Inc (October 2007)―
integration process on schedule
IMSA Steel Corp, USA ―
closed the deal on 1 February 2008
―
toured operations and commenced integration process
Global Steel Industry Steel prices are responding to tighter supply / demand and higher raw material costs
Page 13
Blueprint UpdateBlueprint Update
Page 14
“Blueprint”
–
recap on my approach to doing business at BlueScope and significantly improving shareholder value
What we will do …
A.
Reinvigorate our Australian and New Zealand businesses
B.
Continue the improvement process across our Asia and North America businesses
C.
Grow, or acquire, new businesses that build on our distinct competitive advantage
Areas of focus
How we will do it …
1.
Increasing customer and market focus2.
Improving productivity year on year3.
Optimising return on capital
Execution excellence
4.
Building an integrated BlueScope operating system5.
Further develop organisational capability Business essentials
What we will be known for …
6.
Improve on our world class safety performance
Safety
7.
Become a recognised leader in sustainability
Sustainability
8.
Increasing shareholder value
Shareholder value
Categories of Initiatives
•
Grow domestic markets and steel penetration
•
Drive manufacturing excellence
•
Enhance the supply chain
•
Continue focus on productivity
•
Procurement optimisation
•
Improve capital planning and execution
•
Monetise surplus assets
•
Disciplined growth
Page 15
“Blueprint”
-
update
Progress report –
29 November to present:Program Management Office established
reporting to Managing Director & CEOtrack and report on:―
over 200 business improvement initiatives identified during the “test & refresh”
review; and―
synergy initiatives emanating from recent acquisitions
Project teams, to deliver key initiatives, established, eg. integrated BSL operating system, procurement optimisation and manufacturing line productivity
Performance management and incentive systemsaligned to revised KPI’sconsistent with 8 Blueprint Basics (referenced previous slide)driving accountability for all initiatives and execution plans
Generating an additional A$200m in cash from the balance sheet during FY 2009initiatives underway to deliver this target through working capital reductions and/or property sale(s)
Page 16
Reporting SegmentReporting SegmentPerformancePerformance
Page 17
0
1 0 0
2 0 0
3 0 0
4 0 0
5 0 0
6 0 0
7 0 0
H a lf y e a re n d e d D e c
2 0 0 6
Ho t R o lle dPr o d u c tsA u s tr a lia
Co a te d & B ld gPr o d u c ts A u s t
N Z & Pa c if icS te e l Pr o d u c ts
Co a te d & B ld gPr o d u c ts A s ia
H o t Ro lle dPr o d u c ts N th
A m e r ic a
C o a te d & B ld gPr o d u c ts N th
A m
Co r p o r a te &G r o u p
D is c o n tin u e dB u s in e s s e s
Ha lf y e a re n d e d De c
2 0 0 7
-
EBIT
A$ M
illion
s
$626m $12m
($7m)($60m) ($9m)($65m) ($18m)
$15m $494m
Business segment earnings variance –
Underlying EBIT
EBIT Movements From 1H FY2007 $414M $38M $43M $39M $112M $23M $(43)M $0M
To 1H FY2008 $354M $50M $36M $30M $47M $38M $(61)M $0MImproved
spread –
higher steel prices –
partly offset by higher iron ore & scrap
Offset by -higher freight & R&M costs -
mix –
higher exports after tinplate closure -
stronger A$
Improved spread – higher export prices –lower feed & coating costs
Addition of SSX Dist
Partly offset by -stronger A$-higher units costs
Reduced spread-higher steel prices-Offset by higher coal costs
Unfavourable NZD:US$
Reduced margins, principally in Thailand
Reduced spread North Star
Improved spread
Profit in stock eliminations
Core reasons:
Page 18
Australia Australia Hot Rolled Products AustraliaHot Rolled Products Australia
Coated and Building Products Australia Coated and Building Products Australia
Page 19
438354 354
321 313
414
0
100
200
300
400
500
600
Hot Rolled Products Australia (PKSW) –
operational strength continues to meet strong demand
Underlying performance - First half FY2008vs. 1H FY2007
EBIT reduction largely due to ―
improved spread:•
higher steel prices•
partly offset by higher iron ore and scrap costs ―
offset by•
increased freight and discretionary repairs and maintenance
•
unfavourable domestic/export mix largely due to tinplate closure 2H FY 2007
•
unfavourable exchange rate movement 0.76 to 0.87
Excellent operations performance ―
ironmake, slab and HRC production all at near record levels. Plate –
record.vs. 2H FY2007
Improvement largely due to ―
higher steel prices and increased export sales ―
partly offset by higher raw material costs
EBIT
A$ M
illion
s
MarketsDomestic
HRC to pipe and tube sales - remained strong Plate - increased market share, driven by continued strong demand from mining, port infrastructure and other segments
Exports Global slab and HRC markets - tight supply and higher raw material costs supporting higher prices (2H FY 2008)
FY08-1HFY07-2HFY07-1H
Underlying
Reported
BF No. 5 Reline Capital CostThe latest estimate is $370M (up $40m) due to a reassessment of the labour costs (driven by the current resources boom in Australia)
(1)
Notes:(1) 1HFY07 reported vs underlying variance largely due to
margin loss from exporting product due to packaging closure.
Page 20
Iron Ore:approximately 7.7mtpaindicative mix – 20% lump, 50% fines and 30% pelletsprincipally sourced from BHP Billiton. Other suppliers include OneSteel, Savage River, IOC (Rio) and Vale (CVRD)annual pricing review, with price effective from 1 July (for approx 90%)
Coal:approximately 3.4mtpa (2.7mtpa coking coal and 0.7mtpa PCI coal)principally sourced from local BHP Billiton Illawarra mines (coking coal) and Xstrata Hunter Valley mines (PCI coal)long term contracttypically annual pricing review, with price effective from 1 July
Scrap:approximately 1.0 mtpa40% sourced externally
Port Kembla Steelworks –
expected raw material usage in FY 2008
Page 21
Coated & Building Products Australia –
Improved margin management
Underlying Performance – First half FY2008vs. 1H FY2007
EBIT up 32% largely due to ―
increased spread•
higher sales prices•
lower steel feed & coating costs―
Smorgon distribution contribution―
partly offset by•
adverse mix due to clearance of imported product from 2H FY2007.
•
stronger $A•
higher unit costs―Packaging CRC not operating at capacity―West Sydney ramp-up
Distribution performance below expectations due to margin reduction to compete against imports
vs. 2H FY2007EBIT improvement
―
increased spread―
inclusion of Smorgon Distribution sales
49
-8
6
38
-5
50
-25
0
25
50
75
EBIT
A$ M
illion
s
Reported Unusual and non-recurring items in reported EBIT:―Closure of PK Service Centre paint line―Lysaght asset impairment ―SSX dist. integration ―West Sydney pre production costs Underlying
$6m
$44m$50m
$11m$23m$7m$3m
Notes:(1)
Underlying vs reported variance: -―
Erskine Park sale (-$7m)―
Packaging operating results closure (-$4m)(2)
Includes 5 months of Smorgon Distribution earnings
Reconciliation from Reported to Underlying EBIT
FY08-1HFY07-2HFY07-1H
Underlying
Reported
(1) (2)
Page 22
Coated & Building Products Australia –
Smorgon Distribution review
BlueScope took ownership of Smorgon Distribution in early August 2007.Also very pleased that Mark Vassella and his team have joined BlueScopeFinancial performance (5 months):
Reported EBIT $3mUnusual and non-recurring items in reported EBIT:-
Integration costs $5m
-
Smorgon brand name write-off $2m
$7mUnderlying EBIT $10m
Earnings were down on 1H FY 2007 largely due to margin compression as a result of higher import competition and need to maintain share.Now getting some market traction and expecting an improved second half.Integration is going very well.
Page 23
New Zealand New Zealand New Zealand Steel & Pacific Islands New Zealand Steel & Pacific Islands
Products Products
Page 24
New Zealand and Pacific Islands Products –
improved front end operating performance continues
Underlying performance – First half FY2008vs. 1H FY2007
EBIT down 16%, largely due to ―
reduced spread•
higher prices•
offset by higher coal cost―
unfavourable movement in NZD:USDslab production up 6% - improved operating practices.
vs. 2H FY2007Same as for 1H FY2007
43 47 4443 4736
0
25
50
75
100
EBIT
A$ M
illion
s
MarketsDomestic – conditions softer than 1H FY07, largely due
to import competition and residential slowdown. Export - very strong demand for HRC
FY08-1HFY07-2HFY07-1H
Underlying
Reported
Reconciliation from Reported to Underlying EBIT
Reported A$44mUnusual and non-recurring items in reported EBIT:- Redemption of preference shares by MIL
investment A($11m)- Fiji Asset Impairment
A$
3m
A($8m)Underlying A$36m
Page 25
Asia Asia Coated & Building Products AsiaCoated & Building Products Asia
Page 26
Coated and Building Products Asia –
its all about market development and margin management
MarketsApart from Thailand, all regional markets remain strong.
Underlying performance – First half FY2008vs. 1H FY2007
EBIT reduction of 23% largely due to ― reduced margins, principally in Thailand
operations performance – excellent across the board
vs. 2H FY2007the EBIT increase is largely due to improved performance from the Butler PEB business in China
3111
3913 30
-195-225-200-175-150-125-100-75-50-25
0255075
EBIT
A$ M
illion
s
Reported (A$195m)Unusual and non-recurring items in reported EBIT:Asset Impairment ―China A$190m―Vietnam A$ 35m
A$225mUnderlying A$30m
FY08-1HFY07-2HFY07-1H
Underlying
Reported
Reconciliation from reported to underlying earnings:
Notes:(1)
The FY07-1H Underlying vs Reported variance relates to pre-operating and business development costs (principally China coated development).
(1)
Page 27
Coated and Building Products Asia –
regional performance
Thailandgeneral election 23 Dec 2007 & coalition government formed Jan 08increased exports to India & Europe significant improvement in operationssecond half economic conditions remain soft
Indonesia strong domestic marketoperating at capacity. Sourcing product from BSL Vietnamsecond metal coating line remains on schedule
Malaysia domestic sales down due to flat construction market exports to South Africa increased strong operations performance
Vietnam intense competition and unfavourable tariffsoutstanding operations performance with metal coating line at capacitysupplied 17kt of product to BlueScope’s Indonesian business
China Coated
― improved sales largely due to increased sales force and new products
―margins continue under pressure as feed cost rises
Buildings (PEB)―strong sales and order intake ―stronger margins due to tighter process
controls and financial discipline India
PEB facilities are operating at full capacity due to strong demand. new coating lines now due to be completed in CY 2010.
Page 28
North America North America Hot Rolled Products Hot Rolled Products
Coated & Building Products Coated & Building Products
Page 29
Hot Rolled Products North America –
Scrap to HRC price spread squeezed in 1H FY 2008
MarketsSoftening, albeit North Star despatches increased 4% on 1H 2007.
Underlying performance- First Half FY2008vs. 1H FY2007
North Star BlueScope−
63% EBIT reduction A$38m vs A$102m was due to lower spread•
higher scrap prices •
lower HRC prices −
Continued strong operations performance −
Voted No. 1 in Jacobson Survey for sixth year in a row
Trading offices−
Product sold•
Americas –
512kt (principally slab & HRC)•
Europe –
179kt (HRC & coated)−
Strong demand for BSL products−
Increased HRC sales to Steelscape in 2H FY08 due to IMSA purchase.
Castrip−
Nucor making outstanding progress on both quality and throughput.
vs. 2H FY2007 (North Star)Lower EBIT due to spread contraction
112
68
47
112
68
47
0
20
40
60
80
100
120
140
EBIT
A$ M
illion
s
This segment includes:North Star BlueScope Steel (50% interest)Castrip LLC and North American and European sales offices
FY08-1HFY07-2HFY07-1H
Underlying
Reported
Page 30
Coated and Building Products North America –
a very strong half
Markets (100% sales to non-residential)Non-residential market remained strong for most of half.Building’s market share increased by approx 1%Total despatches up 3% vs 1H FY 2007Softer market conditions expected in 2H
Underlying performance – First half FY2008vs. 1H FY2007
EBIT up 65% largely due to ― Increased spread ie. sales prices increases
exceeding cost raw materials ― lower conversion costs
•
higher volumes; and •
lower costs in the Mexico facility ―partly offset by unfavourable foreign exchange
movement strong operations performance continues
vs. 2H FY2007significant improvement due to
― increase in despatches ― lower conversion costs
IMSA Steel Corp acquisition
2314
43
2314
38
-20
-10
0
10
20
30
40
50
60
EBIT
A$ M
illion
s
HCI Steel Building Systems, a steel PEB company in North America, was acquired by BSL in October 2007.IMSA Steel Corp was acquired by BSL in February 2008.
Notes: (1)
All EBIT numbers normalised to exclude Vistawall business earnings. This business was sold in June 2007.
(2)
1H FY08 difference of $5m represents a write back of over provided liabilities re Butler’s UK pension fund.
FY08-1HFY07-2HFY07-1H
Underlying
Reported
Page 31
Coated & Building Products North America –
IMSA Steel Corp Acquisition
―
BlueScope Steel has acquired the outstanding shares of IMSA Steel Corp from Ternium S.A, a NYSE-listed public company, effective February 2008.
―
IMSA Steel Corp has four distinct businesses in North America:
–
Varco Pruden (VP) Buildings: manufacturer of pre-engineered steel buildings (PEBs) to the non-residential construction market.
–
Steelscape: West coast producer of metal coated and painted steel coils. Steelscape currently sources approximately 50% of its hot rolled coil from BlueScope Steel’s Port Kembla Steelworks.
–
MetlSpan: manufacturer of insulated steel panels for commercial, industrial and cold storage buildings.
–
ASC Profiles: manufacturer of building components including architectural roof and wall systems and structural roof and floor decking.
―
I would like to welcome all employees to the BlueScope Group.
Page 32
Coated & Building Products North America –
IMSA Steel Corp Acquisition (cont….)
Recap the dealcost US$730m (A$815m as at 1 February 2008)funded by a 12 month bridge facility ―gearing will increase to approx 40%
expected EPS outcome―EPS neutral, pre-AIFRS adjustments, in FY 2008 ―EPS accretive from FY 2009
expecting significant synergies to be achieved―EBITDA upside of approx. US$40m p.a. within 3 years
high quality assets providing a platform for further growth in North AmericaPlease refer to 20 December 2007 presentation, available on our web site, for further information.
Page 33
BlueScope’s global debt facilities –
maturity schedule
Maturity date
Working Capital Facilities AUD 350 Oct-08
Loan Note Facility Tranche 1 - 364 day AUD 92 Dec-08 Tranche 2 - 3 year AUD 550 Dec-08 Tranche 3 - 5 year AUD 550 Dec-10
1,192
US Private Placement Series A USD 100 Jul-11 Series B USD 200 Jul-14
300
Bridging Facility USD 730 Feb-09
Amount ($m)
Refinancing required in calendar year 2008
Page 34
0
20
40
60
80
100
120
Arce
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ittal
Nipp
on S
teel
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SSAB
$0
$20
$40
$60
$80
$100
$120
46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 761944 80 82 84 86 88 90 92 94 96 98 200002 04 06 2008780
200,000,000400,000,000600,000,000800,000,000
1,000,000,0001,200,000,000
“POST WAR INDUSTRIALISATION” “OIL SHOCKS”“CHINA & EMERGING
ECONOMIES”
“5-8% GROWTH” “NO GROWTH”“5%
GROWTH”
IndustryConsolidation
Global Steel IndustryGlobal Steel Industry
World steel demand
It is all about supply & demandDE
MAND
SUPP
LY
Page 35
In summary –
the outlook is
China
Steel demand remains strong
Raw steel production growth slowing
Evidence of higher spot raw material costs making some provincial steel plants uneconomic
China’s industrialisation process steaming ahead
China’s steel exports expected to fall significantly in CY2008.
Rest of World
Consolidation to continue
Continued production discipline
Russian economy using more steel
Middle East demand strong
India indicates a potential need to import steel
But, North America outlook uncertain
Steel prices are reacting strongly to raw material cost increases and tighter slab / HRC supply / demand conditions.
Page 36
BlueScope SteelBlueScope Steel’’ssFinancial ResultsFinancial Results
Page 37
Earnings performance leveraged to steel price spreads
(1)
Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue, which was A$38M (1H 2008) vs. A$102M (1H 2007)
(2)
Includes two months of BlueScope Butler financial results.(3)
Operating numbers represent Reported numbers adjusted for unusual or non-recurring events to reflect underlying financial performance from ongoing operations
(4)
Includes five months of Smorgon Distribution financial results.
A$ Millions FY2003 FY2004 (2) FY2005 FY2006 FY2007 2007-1H 2008-1H
Revenue 5,302 5,770 7,964 8,031 8,913 4,528 4,734
EBITDA (1) 881 1,104 1,655 850 1,423 794 502
EBIT (1) –
Reported 611 818 1,358 556 1,099 635 328
–
Underlying (3) 1,559 840 1,057 626 494
NPAT –
Reported 452 584 982 338 686 388 116
–
Underlying (3) 1,129 555 643 384 305
EPS (cps) –
Reported 57.1 77.8 134.0 47.9 95.3 54.7 15.7
EPS (cps) –
Operating (3) 154.0 80.0 89.3 54.3 41.4
(4)
Page 38
Reconciliation from Reported to Underlying EBIT for first half FY2008
EBIT $M
$328m
$251m
$494m$13m $3m
($5m)
$26m
($128m)
$6m$11mChina MCL 190Vietnam MCL 35Lysaght Australia 23Fiji 3
Integration costs 5Profit in stock eliminations 19 Smorgon Brand impairment 2
West Syd P/L Pre-ops 3M&A costs 3
($11m)
Page 39
Asset impairment process
Detailed business and market review undertaken as part of the half year process.Based on higher of:
estimated future cashflows discounted at WACC plus country risk premium; or estimated recoverable value
Subject to scrutiny by external auditors who test forecasts against actual performance
China MCLOutlook for premium product margins remain very tight as competition intensifies
Lysaght Australia Medium term outlook for Lysaght home improvement business is low due to soft NSW building market and loss of business expertise.Movex ERP system impairment due to intention to migrate to BlueScope Distribution ERP
Vietnam MCLNo resolution to the tariff statusPremium product demand growing slowly and margins remain tight
Lysaght Fiji Outlook reflects continued political unrest and low economic growth
Under AIFRS impairment of physical assets can be reversed if conditions improve However impairment of goodwill cannot be reversed.
Page 40
0
100
200
300
400
500
600
700
800
Half year endedDec 2006
Export Prices DomesticPrices
Raw MaterialCosts
Volume / Mix NSBSS Conversion &Other Costs
ExchangeRates
Other Half year endedDec 2007
$626m
$128m
$494m
($76m) ($11m)
($24m)($40m)
($64m)
$10m
($55m)
Underlying EBIT variance 1H FY2007 to 1H FY2008 by itemEB
IT A
$ Milli
ons
Net Spread improvement $62mPrice (42)Scrap (22)
Iron Ore (44)Coal 17Steel Feed
(35)Coating metals
19Scrap/alloys
(21)Inventory movement (12)
Escalation (47)Improvement initiatives 46One off/discretionary (47)Other (mainly freight)
(7)
Volume 27Mix
(38)
Page 41
Cash –
strong operating cash flows have been reinvested in the business
(1)
Purchased 19.9% shareholding in Smorgon Steel in August 2006, disposal in August 2007. (2)
Reflects shares issued under the shareholder dividend reinvestment plan ($49M) and the full underwriting of the FY2006 final ordinary dividend ($119M).(3)
Includes shares issued under the shareholder dividend reinvestment plan ($60m) and general employee share plan ($5m).(4)
Reflects capital injection by minority interests in subsidiaries.(5)
All periods normalised to reflect sale of receivables program cash flow movements as debt.
A$ millions 2003 2004 2005 2006 2007 2007-1H 2008-1HCash from operations 795 1,012 1,671 901 1,364 752 617Working Capital Movement (31) (94) (432) (98) (21) (55) (17)Net operating cash flow 764 918 1,239 803 1,343 697 600Net investing cash flows- Capital & investment
expenditure(209) (585) (663) (816) (493) (283) (934)
-
Smorgon shareholding(1) - - - - (319) (319) 447
-
Other 44 7 41 23 271 38 3Net cash flow before
financing & tax599 340 617 10 802 133 116
Net financing cash flow (468) 309 348 870 (506) (23) 142Payment of income tax (29) (119) (312) (356) (229) (126) (139)Share buy-back (26) (259) (327) (96) - - -Share issues - - - - 221 168 65Dividends- Ordinary (75) (191) (273) (314) (321) (169) (191)- Special - (53) (75) (142) - - -Other (4) - - - 2 2 2 -Net increase in cash held 1 27 (22) (25) (31) (15) (7)
Page 42
As at A$ Millions 30 June 2007 31 December 2007
Assets Distribution Acquisition Total
Cash 36 41 Receivables 1,269 262 1,274 Inventory 1,271 255 1,519 Other Assets 1,259 (40)(1) 1,136 Net Fixed Assets 3,671 73 3,448
Total Assets 7,506 550 7,418
Liabilities Creditors 881 219 901 Interest Bearing Liabilities 1,538 303 1,745 Provisions & other Liabilities 1,222 28 1,118 Total Liabilities 3,641 550 3,764
Net Assets 3,865 - 3,654
Balance sheet –
lower gearing even with acquisition of Smorgon Steel distribution
Net Debt / (Net Debt + Equity) 35.6% 31.8%
SSX Distribution offset by reduction
in other receivables
Impairment write-downs
Will increase to 40% following IMSA funding
(1)
Other assets mainly comprise goodwill on acquisition ($388m) less divestment in Smorgon Steel shares ($447m)
SSX Distribution largely offset by
reduction in other creditors
Payment of employee and
restructure provisions
Page 43
EBIT remains sensitive to realised hot rolled coil prices, raw material costs and US$ movements
(1)
The change in export HRC price assumes proportional effect on export slab, and flow on to domestic pipe and tube market and to other export products. This does not include the potential impact on other Australian domestic prices, as the flow on effect in the short term is less certain.
(2)
The movement in the Australian dollar/US dollar exchange rate includes the restatement of US dollar denominated receivables and payables, the impact of translating the earnings of offshore operations to A$, and exchange rate movements embedded in domestic pipe and tube prices denominated in A$.
(3)
Coal and iron ore US dollar prices are predominantly locked in for FY2008.
Estimated impact on forecast EBIT
(A$mil)
Assumption
+/– US$25 / tonne movement in BlueScope’s average realised export HRC price (1)
+/– US$10 / tonne movement in NSBSL HRC price to scrap spread
+/– 2% movement in steel production in Australia, New Zealand & USA+/– US$10 / tonne movement in coal costs+/– US$10 / tonne movement in iron ore costs
85
11
284590
Full Year (current)
Full Year (previous)
11
284590
85
(3)
(3)
+/ 1¢
movement in Australian dollar / US dollar exchange rate(2) 14– 12
FY08 FY08
Page 44
SummarySummary
Page 45
Summary / Outlook
Reasonable start to the yearunderlying first half profit in line with market expectations
Asia – detailed performance review in progress with management changes to bolster capability.Very pleased with the 3 acquisitions
Smorgon DistributionHCI IndustriesIMSA
“Blueprint”Establishing infrastructure and deliverables.
Second half FY 2008 outlookExpecting increased earnings vs 1st half largely due to―
stronger global steel prices, principally from Q4 2008.•
North Star’s performance dependant upon relative movements between steel and scrap prices
―
improved contribution from Smorgon Distribution and Coated Australia, and a contribution from the IMSA assets (Feb –
June 2008)Butler North America’s order book remains strong but key market indicators are softening.Potential issues―
Stronger A$―
Higher feed and zinc and aluminium costs for coated businesses
Page 46
Questions & Answers Questions & Answers
First Half FY2008 Results Presentation Period Ended 31 December 2007Paul O’Malley, Managing Director and Chief Executive OfficerWayne Armour, Acting Chief Financial Officer 25 February 2008
ASX Code: BSL
Page 48
Supporting InformationSupporting Information
Page 49
Reporting SegmentsReporting SegmentsAdditional InformationAdditional Information
Page 50
0
100
200
300
400
500
600
700
800
Half year ended Dec 2006 Domestic Prices Volume / Mix Conversion & Other Costs Other Half year ended Dec 2007
$635m
$128m
$328m
($76m) ($11m)
($24m)($40m)
($64m)
$10m
($55m)
($175m)
Reported EBIT variance 1H FY2007 to 1H FY2008 by itemEB
IT A
$ Milli
ons
Net Spread improvement $62m
Page 51
Hot Rolled Products Australia (PKSW) –
underlying EBIT variance analysis
1H FY2008 vs. 1H FY2007
Underlying EBIT down 14% to A$354M
EBIT
A$ M
illion
s
0
100
200
300
400
500
600
Half year endedDec 2006
Export Prices DomesticPrices
Raw MaterialCosts
Volume Mix Conversion &Oth Costs
ExchangeRates
Other Half year endedDec 2007
-
$414m$41m
$354m
($10m)
($2m)
($52m)
$6m($10m)
$16m
($49m)
Spread improvement +$8mIron Ore (44)Coal 26Inventory movement/revaluation
(10)Scrap
(16)Alloys (5)
Discretionary R&M, consumables & Other
(31)No. 5 BF support
(10)Freight (11)
Shift to export after closure Tinplate 2H07
Page 52
0
20
40
60
80
100
120
140
Half year endedDec 2006
Export Prices DomesticPrices
Raw MaterialCosts
Volume Mix Conversion &Oth Costs
ExchangeRates
Other Half year endedDec 2007
$38m
$30m
$50m
($10m)
$19m
($9m)$14m
($12m)
($1m)($19m)
EBIT
A$ M
illion
s
1H FY2008 vs. 1H FY2007
Underlying EBIT up 32% to A$50m
Coated and Building Products Australia -
underlying EBIT variance analysis
Higher units costs ―
Packaging cold mill & West Sydney ramp up (27)
Cost reductions 11Other 4
Spread Improvement +$43m
Lower feed 3Lower coating costs 11
Increased imports from 2H FY07 (9)
Profit in stock elimination (11)Other 1
Page 53
0
20
40
60
Half year endedDec 2006
Export Prices DomesticPrices
Raw MaterialCosts
Volume Mix Conversion &Oth Costs
ExchangeRates
Half year endedDec 2007
$43m
$36m
($5m)($1m)
$3m
$3m
($10m)
$3m
New Zealand and Pacific Islands Products –
underlying EBIT variance analysis
1H FY2008 vs. 1H FY2007
Underlying EBIT down 16% to A$36m
EBIT
A$ M
illion
s
Spread contraction ($7m)
Coal (10)
Page 54
Coated and Building Products Asia –
underlying EBIT variance analysis
1H FY2008 vs. 1H FY2007
underlying EBIT down 23% to A$30m
EBIT
A$ M
illion
s
0
10
20
30
40
50
60
70
Half year endedDec 2006
Export Prices DomesticPrices
Raw MaterialCosts
Volume Mix Conversion &Oth Costs
ExchangeRates
Other Half year endedDec 2007
$39m$4m
$30m
($18m)
$13m
($2m)($10m)
$2m
$4m
($2m)
Spread Contraction ($12m)
Steel feed costs
(18)
Page 55
0
20
40
60
80
100
120
140
Half yearended Dec
2006
Export Prices North StarSpread
Conversion &Oth Costs
Raw MaterialCosts
ExchangeRates
Other Half yearended Dec
2007
-
Hot Rolled Products North America –
underlying EBIT variance analysis
(North Star BlueScope 50% only)Sales revenue down 17% to A$310MUnderlying EBIT down 63% to A$38M1H FY2008 annualised return on net assets (pre-tax) 32%
This segment comprises:North Star BlueScope Steel (50% interest)Castrip LLC and North American and European sales offices
1H FY2008 vs 1H FY2007 EBIT variance analysis
EBIT
A$ M
illion
s
$112m $2m
($64m)
$1m
($2m) ($1m)
$47m
($1m)
Page 56
0
10
20
30
40
50
60
Half year endedDec 2006
Export Prices DomesticPrices
Raw MaterialCosts
Volume Mix Conversion &Oth Costs
ExchangeRates
Other Half year endedDec 2007
$23m
$38m
($3m)
$5m
$2m$20m
($5m)
($4m)
Coated and Building Products North America –
underlying EBIT variance analysis
Comprises:Butler buildings
1H FY2008 vs. 1H FY2007 underlying EBIT variance
EBIT
A$ M
illion
s
Spread improvement +$17m
Page 57
Other Supporting Other Supporting InformationInformation
Page 58
External reporting business segments were not changed for 1H FY2008 results
Corporate / Group
Hot Rolled Products
Australia
Leading supplier of flat steel in AustraliaGlobal scale
Port Kembla Steelworks
New Zealand & Pacific Islands
Products
Only fully integrated flat steel maker in New ZealandLeading domestic market share of flat products
Glenbrook, NZPacific Islands
Pre-eminent global designer / supplier Pre-engineered buildingsNo 2 position in North America and no. 1 in ChinaIMSA assets (from Feb 2008)
Butler buildingsVarco Pruden BuildingsMetlSpanASC ProfilesSteelscapeHCI
Coated & Building Products
North America
Australia New Zealand Asia North America
Hot Rolled Products
North America
50:50 joint venture with Cargill Inc.Again voted no. 1 flat rolled steel supplier in North America (Jacobson Survey)
Delta, Ohio
North American and European Export Trading Offices
Coated & Building
Products Asia
Pre-eminent seller of branded steel in AsiaLower cost “backward integration” growth strategy
Indonesian, Malaysian, Thailand and Vietnamese operationsChina, including ButlerLysaght AsiaIndia – Tata BlueScope JV
Largest supplier of metallic coated and painted steel in AustraliaLeading market shares in most key products
Western PortSpringhillLysaght AustraliaService CentresSmorgon Distribution
Coated & Building Products Australia
Page 59
Port Kembla Steelworks -
despatches by half year
External Product Sales Mix
Slab 54% 42% 31% 29% 32%HRC 35% 45% 53% 55% 56%Plate/Other 11% 13% 16% 16% 12%
0200400600800
10001200140016001800200022002400260028003000
FY06-1H FY06-2H FY07-1H FY07-2H FY08-1HInternal Customers Domestic Customers Exports Customers *
(kto
nnes
)
2,6892,579
43% 45%
16% 15%
40%41%
* Including BlueScope Steel Asia feed
2,600
47%
21%
32%
50% 45%
18%18%
32% 37%
2,609 2,608
40% sold domestically and 60% exported, with geographic split being:
Asia 42%USA 36%Other 22%
100% exported, with geographic sales split
Asia 68%
USA 32%
Other 0%
Page 60
Australia Hot Rolled Products Australia –
net annual movements in PKSW raw material costs
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008E
S&A Conversion Costs Despatch & Freight Raw Materials *
-3%
+36%
+34%
+2%-2%
(1)
Includes iron ore, coal, scrap and alloys but not scrap purchased on behalf of OneSteel.(2)
The favourable movement in raw material cost reflects the favourable movement in exchange rate more than offsetting the increase
in raw material costs.
(1)
(2)
Page 61
Australia -
Hot Rolled Products Australia -
product flow (Indicative) 1H FY2008
Port Kembla Steelworks2.6mt slab 1H FY2008
(2.7mt slab 1H FY2007)
Hot Strip Mill 53%
(53%)
Plate Mill9%
(9%)
C & BP Australia (1)
(Springhill & Distribution)
41% (48%)
Domestic HRC23%
(26%)
Export HRC36%
(26%)Notes:(1)
“C&BP Australia”
is Coated and Building Products Australia(2)
Included 134kt internal sales to BlueScope’s Thailand operations
Export Slab 17%
(16%)
C&BP Australia (1)
(Western Port)21%
(22%)
C & BP Australia (Distribution)
19% (0%)
Domestic Plate 70%
(85%)
Export Plate11%
(15%)
(2)
Page 62
Port Kembla Steelworks –
Blast Furnace No. 5 reline and cogeneration plant
1. Blast Furnace No. 5 Reline remains on target for March 2009 (CURRENT EXPECTATION)Total capital cost A$370m ($106m spent by end of FY 2007). The increase from $330m to $370m reflects expected increase in labour costs largely due to the resources boom in Australia. Depreciated over 20 years.The project will take approx. 100 days, commencing in March 2009 and finishing June 2009.Expected lost slab production (shutdown and ramp up) is approx 680kt, reflecting part offset from increasedBF No. 6 production and higher scrap use in basic oxygen steelmaking.At this stage a number of export customers will be affected during this exercise. Have contacted our customers who will make alternative arrangements during the reline project. Domestic external sales are not expected to be materially affected.Major raw materials impact:
expect to purchase approx 700kt less iron ore (principally fines and pellets) than the 7,700kt purchased in 2007 and expected in 2008;approx 65kt of additional scrap purchased; andpresent intention is not to change coal consumption and to export excess coke (approx 240kt). However, if coke margins don’t meet our requirements at the time then we would reduce our coking coal purchases by up to 300kt.
2. Co-generation plantFeasibility study continues
Page 63
Port Kembla Steelworks -
Blast Furnace No. 5 reline
Page 64
Port Kembla Steelworks –
Sinter Plant Upgrade
3. Sinter Plant Upgrade (CURRENT EXPECTATIONS)Main shutdown planned for April – May 2009 (approx. 35 days)Coincide with BF No. 5 reline, when demand for sinter is reduced.Total capital cost A$134m.What is planned? Principally:
lengthen & deepen the strand, refurbish cooler install new strand feed device, ignition furnace install 2 new raw material conveyor sequences
Where? On No. 3 sinter machine at PKSWis single source of 5.3mtpa of sinter for BF’s No. 5 & No. 6currently the typical blast furnace burden mix is: −
57% sinter (fines based); 25% pellets; 18% lump Outcome post upgrade:
increased sinter production by 1.1 mtpa to 6.6mtpa (capacity is expected to be 5.5mtpa by end CY 2008)this will require + 1.1 mpta of fines BUT would displace 1.0 mtpa of pellets (in FY07 the fines to pellet price differential was approx US$30/t).Increased Pulverized Coal injection rates (cost saving as use more thermal and less coking coal) due to blast furnace permeability being improved by higher quality sinter.
Sinter
Sinter is an agglomeration of fine ores, fluxes (limestone and sand) and fuels fused together by heat.
Page 65
Exit End
•
Rebuild cooler
•
Increase Width
•
Increase Fan Power
•
Relocate Lowering wheel and extend
building
•
New cooler feed chute
Entry End
•
New Ignition Furnace
•
New Strand Feeding Device
Precipitators
•
Refurbish zones 2, 3 & 4 -
R&M
•
New Zone 1
•
Modern ElectricsStrand
•
Increase Height
•
Increase Length
Port Kembla Steelworks –
Sinter Plant upgrade
SINTER : AGGLOMERATION OF FINE ORES, FLUXES (LIMESTONE AND SAND) AND FUELS FUSED TOGETHER BY HEAT.
Page 66
Australia –
Hot Rolled Products Australia -
Slab and HRC price benchmarks
The following Steel Business Briefing prices continue to be a reasonable public benchmark for BlueScope’s domestic and Asian HRC prices (noting this can change over time).
HRCSteel Business BriefingHRC East Asia Import CFR
SLAB Steel Business Briefing Slab East Asia Import CFR
Asian HRC Benchmark Price
$0
$100
$200
$300
$400
$500
$600
$700
$800
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08
US$
/mt
SBB HRC East Asia Import CFR
Source: Steel Business Briefing
Page 67
Coated Australia –
Project update
West Sydney Colorbond Facility Plant handed over to manufacturing team and paint on strip August 2007Capital cost $150m (including land, buildings and processing equipment)Nameplate capacity up to 120,000 tpa− technical ramp up is expected to take 2 years but will also be subject to the market.
Capability to meet 24hr delivering orders vs typically longer lead times at Springhill.
Service Centre Paint Line (Port Kembla) closure To be clear, this is not the Springhill paint line but a second line in Port KemblaOldest and most cost inefficient paint line in BSL networkAdopted a staged approach to closure, ie. over 12-24 months.Initially change from 7 to 5 days continuous production.Approx 90 employees will be affected.
Page 68
Our customers are our partners
Our Market OfferHigh quality productsAdvertising / promotional supportServiceDeliverySatisfaction WarrantyTechnical Support
Creating New productsNew markets
TUBEFORM®
XLERPLATE®
Page 69
Export Hot Rolled 34% (6%+28%)
Domestic Pipe4%
Domestic Hot Rolled8%
Export Cold Rolled14% (1%+ 13%)
Domestic Cold Rolled12%
Coating lines74%
New Zealand Steel (FY2007) product flow*
Export Metal Coated13% (8% + 5%)
Domestic Painted20%
Domestic Metal Coated61%
ExportIron Sand
Concentrate0.8mt
Export Vanadium Slag
15 kt
Mine SitesIron Sand Concentrate
2.0mt
New Zealand Steel0.6mt Slab
0.6mt Hot Rolled
Cold Strip Mill54%
* Indicative annual prime production and sales (t)
Export Painted6% (4%+2%)
(External % + Internal %)
Page 70
NZ Iron Sands feasibility studies underway, project teams are revitalised
The abundant iron sand resource at New Zealand Steel is an increasingly valuable asset in the BlueScope Steel portfolioThere are a number of “brownfield” opportunities to better exploit this strategic resource to increase the production of:
slab and / or pig iron;vanadium bearing slag / vanadium pentoxide;ironsand exports;and new products such as titania slag and zircon
2 projects currently in feasibility stage of the approval process (Vanadium converter and Taharoa iron sands expansion)4 projects in concept or pre-feasibility phases (Vanadium pentoxide, Titania, Iron Make, Pig Iron)
Glenbrook Taharoa
Page 71
Natural Gas Consumption (MMBTU per ton, FY)
2002 2003 2004 2005 2006 2007 2008
Electricity Consumption (KWH per ton, FY)
2002 2003 2004 2005 2006 2007 2008
Tap to Tap Time (minutes)
2001 2002 2003 2004 2005 2006 2007 2008
EAF Power on Time per Heat (Minutes of Power Used per heat))
2001 2002 2003 2004 2005 2006 2007 2008
North America -
North Star BlueScope Steel –
EAF operational excellence
Focus on energy management given recent spike in electricity and natural gas prices
Page 72
North America –
acquisition of HCI Steel Building Systems, Inc
On 1 November 2007 BlueScope acquired privately owned HCI Steel Building Systems Inc. (a pre-engineered steel buildings business)
HCI designs & manufactures steel PEB’s for heavy industry, commercial and community segmentsGenerated sales revenue approx US$40m in FY 2007.Regional focus – northwest USA and western Canada, which strengthens Butler’s position in the region
An excellent fit for our PEB business in North America.
Truck Service Centre Dawson Building – Skeleton Steel Dawson Office Building
Page 73
Water conservation –
clear focus on further reducing fresh water consumption
Port Kembla Steelworks
Total Water Use (ml/day) for process and cooling
Western Port Operation
$21.5 million water recycling project with South East Water, including funding from Victorian Government.
Project expected to be competed in 2009.
50% REDUCTION IN FRESHWATER CONSUMPTION
Salt Water96%
Waste Water 2%
Fresh Water2%
PLANNED 60% REDUCTION IN FRESHWATER USAGE
Page 74
Donates 200 rainwater tanks a year to Australian primary schoolsA kick start to schools’water conservation and education programs1920 schools registered –30% of all primary schools540,000 students involved120 tanks allocated to date
www.tankaday.com.au
Our Communities -
BlueScope Tank a Day challenge helping young Australians conserve water.
Page 75
$200 million already spent to reduce energy demand. For example:70% of our New Zealand operations electricity needs produced on-site by co-generation from captured process gasses.
Other sustainability initiatives include:100% of metallic scrap and slag material is recycled. Funding research in lower carbon steel technology.
NZ STEEL – EXTERNALLY PURCHASED AND INTERNALLY COGENERATED ELECTRICITY
Apr-Mar Year
0
200
400
600
800
1000
1200
1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07
GWhInternal
Cogeneration
Purchased Energy
New Zealand Steel and sustainability –
benefits of cogeneration
Page 76
Port Kembla Steelworks
Co-Generation Plant
ProcessSteam
Electricity Up to 220MW
Surplus process gasfrom iron & steel making
Proposed Port Kembla Steelworks Co-Generation Plant
12 months feasibility study underwayReduce approximately 800,000 tpa CO2 equivalent One of the largest GHG reduction projects in Australia - equivalent to taking 185,000 cars off the road Total investment in the range of $700m -$1,000mA workable Government policy for trade exposed industries is a critical part of assessing this major investmentWe will continue to look for projects that will reduce CO2 emissions
PKSW Cogeneration plant –
technology led solution that will displace greenhouse gas emissions…
Page 77
IndonesiaMetal Coating 100kt (+165kt)
Painting 40kt
(+120kt)
Western PortHot Rollling 1.43mtCold Rolling 1.0mtMC (3 lines) 830kt
Painting (2 lines) 330kt
SydneyPaint Line (1 Line) 120kt
New Zealand/PacificIron Sand MiningRaw Steel 625ktHot Rolling 750ktCold Rolling 360kt
Metal Coating 230kt Painting 60kt
Hollow Sections 45ktPacific Roll forming sites 3
Port Kembla/IllawaraRaw Steel 5.2mt
Hot Rolling 2.8mt Plate 360kt
Cold Rolling 960kt (240kt)(1)
MC (3 lines) 750kt PL (2 lines) 207kt
Australia7 Service Centres41 Lysaght Sites
7 BlueScope Water90 Distribution Sites
VietnamMC 125ktPainting 50kt
ChinaMC 250ktPainting 150kt
ThailandCold Rolling 350kt
Metal Coating 375ktPainting 90kt
MalaysiaMetal Coating 150kt
Painting 60kt
BrisbanePainting 90kt
• Coated and Building Products North America
• North Star BlueScope JVHot Rolling 1.80mt (100%)
• Castrip JV w Nucor
Unique production footprint in the world’s fastest growing regions
Asia24 Lysaght and
PEB Sites
IndiaMetal Coating 250kt
Painting 150kt
(1)
Includes CRC from packaging cold mill
Page 78
BlueScope Steel China footprint
BlueScope Steel in China1 Metal Coating/Painting Line Facility4 Lysaght Manufacturing Facilities3 Butler PEB Manufacturing Facilities60 Butler/CSC Sales Offices24 Butler District Offices/Sales Office
1H FY 2008
REVENUE:
A$234M
EBITDA:
(A$174M)
EBITDA –
Underlying:
A$9M
EMPLOYEES:
1,940
INVESTED CAPITAL:
A$207M
GUANGZHOU
SUZHOU
Page 79
BlueScope Steel North American footprint
MI
FL
DEMD
KY
ME
NY
PA
VT
RI
VAWV
OHINIL
NCTN
SC
ALMS
WI
NJ
GA
NM
TX
OK
NE
SD
NDMT
WY
COUT
ID
AZ
NV
WA
CA
OR
AR
LA
MO
IA
MNMACT
NH
KS
MI
FL
DEMD
KY
ME
NY
PA
VT
RI
VAWV
OHINIL
NCTN
SC
ALMS
WI
NJ
GA
NM
TX
OK
NE
SD
NDMT
WY
COUT
ID
AZ
NV
WA
CA
OR
AR
LA
MO
IA
MNMACT
NH
KS
Mexico
Key
Varco Pruden Plant
Butler Plant
BSL Steel Sales OfficesKoreteck
SteelscapeMetlSpanASCNorthStar BlueScope
HCI Steel
1H FY 2008
REVENUE:
A$661M
EBITDA:
A$98M
EMPLOYEES:
2,421 incl. North Star
INVESTED CAPITAL:
A$359M
NB: Revenue excludes BSL’s 50% interest in North Star BlueScope Steel.
Page 80
Indicative FY2008 Zinc and Aluminium
usage vs
FY2007
Note:(1
)
In future years BSL Asia’s usage will increase as new mid-stream projects ramp-up to full capacity(2
)
Av FY 2007 Zinc price was US$3,728 per tonne vs
av
1H FY 2008 price of US$2,889 per tonne, with current spot price of US$2,416 per tonne (12 Feb 2008).
Tonnes Zinc Aluminium
FY2008(E) FY2007 FY2008(E) FY2007
AUSTRALIA
Springhill 21,423 22,787 11,281 10,632
Western Port 22,261 21,800 11,284 10,900
Sub-total 43,684 44,587 22,565 21,532
NEW ZEALAND 7,300 6,800 3,700 3,500
ASIA 19,814 14,888 18,094 13,092
TOTAL 70,798 66,275 44,359 38,124
Page 81
0
20
40
60
80
100
120
Arce
lorM
ittal
Nipp
on S
teel
JFE
POSC
O
Tata
Cor
us
Baos
teel
US S
teel
Nuco
r
Thys
sen
Krup
p
Evra
z
Seve
rsta
l
Gerd
au
Wuh
an
Chin
a Ste
el
Maan
shan
Blue
Scop
e
CSN
SSAB
$0
$20
$40
$60
$80
$100
$120
Crude Steel Production (M tonnes) Revenue (US$bn)
Global steel industry consolidation continues
EU / Americas
EU / Asia
Asia
Australia, Asia, Americas
EU
Americas
US$ Billions
Millio
ns o
f ton
nes c
apac
ity
Note: CY07 estimates of revenue. Production based on CY06 IISI data. CSN’s production is shown at steady state as 2006 production was disrupted by outages (3.5mt)
Page 82(4) In addition, a Cogeneration feasibility study being undertaken over next 12 months and the capital cost of the project, will likely be in the range of A$700 – 1,000M.
Major approved capital projects and investments summary
PROJECTSAll in A$million
Total Est. Capex / Cost
Actual to 30/6/07
FY20081H Actual
FY20082H
FY2009 FY2010
Projects completed
Thailand –
Coating expansion 80 80 - - -
Vietnam –
Coating / Painting 136 136 - - -China
-
Coating and Painting Facility-
Guangzhou Butler / Lysaght27433
27433
--
--
--
India -
Butler / Lysaght
facilities (50% interest) 44 41 3 - - -AustraliaPort Kembla (PKSW) - HSM expansion
- Sinter Plant EmissionsWA Service Centre
10210021
10210021
---
---
---
Western Sydney Colorbond® 150 147 3 - - -
Projects to be completed
India -
Coating / Painting (50% interest) 135 5 2 33 60 35
Indonesia –
Coating / Painting 134 14 2 28 77 13
PKSW –
Blast Furnace No. 5 Reline –
Sinter plant upgrade 370134
10612
1215
2334
22666
37
INVESTMENTSSmorgon
Steel’s Distribution businessButler Manufacturing(3)
Lysaght
and water acquisitions
700277129
319(1)
277129
253(2)
--
---
---
---
Total capital spending(4) 2,819 1,796 290 118 429 58
Notes: (1) Cost of 19.98% holding in Smorgon
Steel (SSX). (2) Net cost to BlueScope on sale of SSX shares excluding tax payable on sale of SSX shares. Gross cost of $700M less pre-tax profit on SSX shares of $128M leaves $572M. (3) US$190M (A$226M) recovered following the sale of Vistawall
in June 2007.
Page 83
Calendar year earnings
A$ Millions CY2003 CY2004(2) CY2005 CY2006 CY2007(3)
Revenue 5,328 7,029 7,980 8,693 9,333
EBITDA(1) 857 1,501 1,411 1,052 1,130
EBIT(1)
-
reported 581 1,212 1,111 742 792-
operational - - 1,308 966 924
Net profit-
reported 436 859 792 413 414
-
operational - - 943 586 563EPS (¢) -
reported 56 116 110 59 56
(1)
Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue(2)
Includes eight months of BlueScope Butler financial results(3)
Includes five months of Smorgon
Distribution financial results
Page 84
Internal business structure has been reorganised
to focus on our strategic priorities and execution
Noel Cornish Paul O’Keefe Mark Vassella Kathryn Fagg Bob MooreBrian Kruger
Aus/NZ Steel Manufacturing
Businesses
Australian Coated and Industrial
Markets
Australian Distribution and
Solutions
CFO (Charlie Elias)
Asia
Legal (Michael Barron)
ChinaCorporate Strategy
and Innovation;North America,
People and Organisational Performance (Ian Cummin)
Paul O’Malley
Managing Director and CEO
Oversees all manufacturing facilities
in Aus/NZ; NZS; responsible for driving
safety, process excellence and
meeting production schedule at lowest cost
Customer oriented business responsible for
all Australia sales, exports (other than
downstream), key account
management, supply chain, strategic pricing
and setting the production mix for
manufacturing
Oversees North American businesses
with particular emphasis on growth,
as well as leading corporate strategy and
innovation
Direct CEO report for China to provide top
management focus on turnaround effort
Combines responsibility for
Australian downstream businesses (Lysaght, Distribution, Service centres, Water and
Butler Buildings)
Responsible for leading ASEAN businesses
and Indian joint venture
Page 85
Marine freight continues to be one of the most volatile commodities in the world – expect further rate hikes this CY BUT BlueScope largely insulated
Marine freight market volatilityall time high in Dec 2007to some of the biggest one-day falls ever seen (in Jan)
o
The extent of the fall being due to –
An iron ore port closure in Brazil–
Flooding in Queensland halting coal exports–
Power crisis in China and South Africa restricting coal exportsthese are relatively short term and would expect a rebound
BUT BlueScope’s strategy is to manage this volatility through the negotiation of medium to long term contracts where possibleBaltic Dry Index showing marine freight market over the last 3 years
Bulk Dry Index
0
2,000
4,000
6,000
8,000
10,000
12,000
Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08
First Half FY2008 Results Presentation Period Ended 31 December 2007Paul O’Malley, Managing Director and Chief Executive OfficerWayne Armour, Acting Chief Financial Officer 25 February 2008
ASX Code: BSL