57
FY2012 Financial Results Supporting Information 20 August 2012 Page 1 ASX Code: BSL
FY2012 Financial ResultsSupporting Information
20 August 2012
Page 1
ASX Code: BSL
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 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 INVESTORNEEDS OF ANY PARTICULAR INVESTOR.
THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD LOOKING TERMINOLOGY SUCH AS “MAY” “WILL” “SHOULD” “EXPECT” BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “MAY”, “WILL”, “SHOULD”, “EXPECT”, “INTEND”, “ANTICIPATE”, “ESTIMATE”, “CONTINUE”, “ASSUME” OR “FORECAST” OR THE NEGATIVE THEREOF OR COMPARABLE TERMINOLOGY. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE OUR ACTUAL RESULTS PERFORMANCE AND ACHIEVEMENTS OR INDUSTRY RESULTS TO BE MATERIALLY DIFFERENT RESULTS, PERFORMANCE AND ACHIEVEMENTS, OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCES OR ACHIEVEMENTS, OR INDUSTRY RESULTS, EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
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
Page 2
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.
Snapshots of Reporting Snapshots of Reporting Segments & DriversSegments & DriversSegments & DriversSegments & Drivers
Page 3
Reporting segments from FY2013
Corporate / Group
Coated & Industrial Products
New Zealand & Pacific Steel
HotRolled
Products
Building Products
ASEAN NA Global
Building
Building Components &
Distribution Products Australia Products Products
North AmericaASEAN, NA and IndiaSolutionsDistribution
Australia
Leading supplier of flat steel products in Australia Largest supplier of metal coated and painted steel in
Only fully integrated flat steel maker in New ZealandLeading domestic
Pre-eminent global designer / supplier Pre-engineered buildingsA leader in North
50:50 joint venture with Cargill Inc.Again voted no. 1 flat rolled steel supplier in North America (Jacobson
Leading supplier of flat steel solutions in Australia
Pre-eminent seller of branded steel in AsiaMetallic coating, painting and rollforming
Australia
Port Kembla Steelworks, NSWSpringhill NSW
market share of flat productsGrowing iron sands export business
America and China
Buildings North AmericaChina Building
North America (Jacobson Survey)
Delta, Ohio
BlueScope DistributionBlueScope Lysaght (rollforming)
JV (completion pending):ASEAN coating lines (Indonesia, Malaysia, Thailand, Vietnam)ASEAN Lysaght and Springhill, NSW
Western Port, VICWestern Sydney (NSW) and Acacia Ridge (Qld) Colorbond® facilities
Glenbrook, NZTaharoa, NZLysaght Pacific Islands (Fiji, New Caledonia &
China – Building Solutions, Lysaght and Building ProductsBuilding AsiaBuildings and Ranbuild
ASEAN Lysaght and Ranbuild (Indonesia, Malaysia, Thailand, Vietnam, Singapore & Brunei)
Page 4
Service CentresNorth America, Europe & Asia Export trading offices
(Fiji, New Caledonia & Vanuatu)
Buildings and Ranbuild AustraliaSaudi Building Systems
Steelscape (U.S.)ASC Profile (U.S.)India – Tata BlueScope JV
Segment business drivers
Corporate / Group
Coated & Industrial Products
New Zealand & Pacific Steel
Global Building
HotRolled
Products
Building Products
ASEAN NA
Building Components &
Distribution Products Australia Products Solutions Products
North AmericaASEAN, NA and India
Distribution Australia
D t h l• Selling prices• Material costs –
including iron ore, coal, fluxes, alloys,
• Despatch volumes• Product mix• Margins• Foreign exchange
• Selling prices of steel• Material costs – mainly
coal, fluxes, alloys, and coating materials
• Despatch volume• Margins• Political
developments
• Selling prices of steel
• Material costs –including scrap
• Despatch volumes• Margins• Foreign exchange
(esp USD, RMB)yand coating materials
• Conversion costs• Foreign exchange
• Foreign exchange (eg AUD/USD) • We own our iron sands
resource, so just an extraction cost applies
• Conversion costs
p• Foreign exchange
(USD, THB, IDR, MYR, VND)
steel, pig iron, fluxes and alloys
• Conversion costs• Foreign exchange Foreign exchange
(eg AUD/USD)• Despatch volumes• Domestic / export
and product mix
Conversion costs• Foreign exchange• Despatch volumes• Domestic / export and
d t i
g g(eg AUD/USD)
• Despatch volume• Energy costs
Page 5
and product mix product mix • Iron sands and
vanadium revenue
AustraliaAustraliaAustraliaAustraliaCoated Coated & Industrial Products& Industrial Products
Di t ib ti & S l ti Di t ib ti & S l ti Distribution & Solutions Distribution & Solutions
Page 6
Coated & Industrial Products Australia – underlying EBIT variance analysis (FY2012 vs. FY2011)y ( )
Net Spread Reduction ($124M)
Conversion & Other Costs:Escalation (47)
Raw Material Costs:Coal (63)Iron ore 2Scrap 1Alloys 2
Reduced volume of
l ki
EBIT
A$M
( )Higher unit costs on lower volumes (137)Other 36
Alloys 2Net realisable value provisions 45Opening stock adjustment (74)Coating Metals 7
loss making exports
E
-258
-31
-61+17
258
-327+43-192
+185
-80
61
FY2012OthE h
+50
C i MiV lR M t i l D ti E t P iFY2011
Page 7
FY2012OtherExchange Rates
Conversion Costs
MixVolumeRaw Material Costs
Domestic Prices
Export PricesFY2011
Coated & Industrial Products Australia – underlying EBIT variance analysis (2H FY2012 vs. 1H FY2012)y ( )
Net Spread Improvement $3M
-13Raw Material Costs:Coal 62Iron ore 57
EBIT
A$M
-58
13
+111
Iron ore 57Scrap & Alloys 3Net realisable value provisions 33Opening stock adjustment (70)Coating metals (2)
E
-145+1-7
-182
+83
-32 Conversion & Other Costs:Escalation (9)One off / Discretionary (42)Other (7)
Reduced volume of
2H FY2012OtherExchange Conversion & MixVolumeRaw Material Domestic
-48
Export Prices1H FY2011
Other (7)loss making exports
Page 8
RatesOther CostsCostsPrices
BlueScope Steel – Key drivers of CIPA result
1H FY10 2H FY10 1H FY11 2H FY11 1H FY12 2H FY12
East Asia HRC price1, US$/t 536 628 611 722 683 647- three month lag, A$/t 630 614 709 668 686 624
Influences pricing of some categories of domestic product
Iron ore fines index average2 92 145 147 178 159 142
Coking coal (low-vol)3, US$/wmt 129 165 217 278 266 218
domestic product
Indicative steelmaker spread4, US$/t 353 376 252 291 260 291
Indicative steelmaker spread4, A$/t 407 420 266 283 253 282
Average A$/US$ 0.872 0.894 0.945 1.033 1.031 1.033
End of period A$/US$ 0.895 0.850 1.017 1.069 1.013 1.003p
PKSW slab production, kt 2,187 2,537 2,643 2,530 1,864 1,286
CIPA total despatches5 kt 2 005 2 495 2 375 2 453 2 110 1 435
PKSW blast furnace #5 restarted and
ramped-up during this half
Notes: (1) Average of monthly Steel Business Briefing East Asia HRC US$/t CFR price
CIPA total despatches , kt 2,005 2,495 2,375 2,453 2,110 1,435
Australian normalised desp.6, kt 1,079 1,215 1,007 1,038 1,013 990
Page 9
Notes: (1) Average of monthly Steel Business Briefing East Asia HRC US$/t CFR price.(2) Average of Platts, The Steel Index and Metal Bulletin indexes, CFR China ports, US$/t 62% Fe.(3) Benchmark prices for 30 June fiscal year; does not reflect BSL’s coal price averaging arrangement for 15 months to 30 June 2010. Market quarterly ‘contract’ prices for FY2011, and market monthly Plats prices thereafter(4) See footnotes concerning indicative Asian steelmaker spread found in FY2012 investor presentation(5) Domestic & export total. Includes despatches to parties external to BSL, and despatches to other BSL divisions (eg C&BP Asia, C&BP North America and Aust. Distribution & Solutions).(6) Total Australian external despatches from C&IPA and Aust. Distribution & Solutions segments. Excludes despatches of externally sourced products (eg long products).
Coated & Industrial Products Australia – Despatch Mix
IMSA consolidated from Feb 2008. Internal despatches Both PKSW B h PKSW B h PKSW
pincrease and external
despatches decrease due to Steelscape coming ‘in house’
Chart shows despatch volume, kt
Both PKSW furnaces operable
during the half
Both PKSW furnaces operable
during the half
Both PKSW furnaces operable
during the half Closure of No. 6 BF, MCL5 &
771
2,6272,495
2,375 2,453
D th f GFC
Strong 1Q, weaker 2Q as markets
started to turn downBlast Furnace No. 5 restarted during this half
,WP HSM
Volumes decline 771
635 489
582 503 575
584
2,051 2,0052,110Depth of GFC;
Blast Furnace No. 5 offline for most of this half
materially as export market exit
progresses
635
229
489
271755
390
1,430 9101,074 1,061
741
1,435
649390
692
741379
649
1,101
509
1,026 867 1,003798 817 785 785
Page 10
Jun-2008 Dec-2008 Jun-2009 Dec-2009 Jun-2012 Dec-2010 Jun-2011 Dec-2011 Jun-2012
Coated & Industrial Products Australia – Annual CapacitiesPort Kembla Steelworks (Wollongong, New South Wales, Australia)
#5 Blast Furnace2,600
Slab Casters2,600
Plate Mill
Slab
Pl tPlate Mill450
Hot Strip Mill2,900
Plate
HRC
Coupled Pickled Cold Mill990
Metal Coating Lines
CRC
Metal Coated
Springhill Coated Works(Wollongong, NSW, Australia)
Metal Coating Lines 825
Paint Lines2001
Metal Coated Strip
Painted Strip
C ld Mill
Pickle Line1,100 Pickled HRC
W t P t C t d W kMetal Coating Lines
8302
Cold Mill1,000 CRC
Metal Coated Strip
Page 11
Western Port Coated Works(Hastings, Victoria, Australia)Note:
Numbers reflect mill capacity in kilotonnes(1) There is an additional 215ktpa of combined capacity at Western Sydney and Acacia Ridge (Qld) paint lines; (2) idling of MCL 5 has reduced available capacity by around 230Ktpa
830Paint Lines
330 Painted Strip
Strip
Port Kembla Steelworks – Production & Despatch Flow
Port Kembla SteelworksSlab Production Domestic
0 0Slab
446 1 821FY2012 FY20113,150 5,173
I t t
0 0
Interco
446 1,821
Export217 853
P t K bl St l k
Inventory movements& yield losses
Domestic467(3) 430
Interco229 968
HRC2 497 2 735
Western Port (2)
Hot Strip Mill Port Kembla Steelworks
Despatches (1)
FY2012 FY20113,298 4,915
467(3) 430
Domestic1,216 1,041
Export467(4) 698
2,497 2,735
Springhill(5) / Distribution
Mill
Pl t Mill
Interco1,563 1,607
Export347 566
DomesticPlate
Asia / Nth Am(6)
Plate Mill
Product / DestFY12 kt FY11 kt
Legend: Export23 41
196 191355 359
Domestic106 82
Distribution
Notes:(1) Slab, HRC and plate. Variance of total from sum of constituents is due to rounding.(2) See previous slide for Western Port Works capacities
Export30 45
Interco136 127
Nth Am(6)
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(3) Domestic HRC ex Port Kembla Steelworks only; ie excludes export HRC despatches from Western Port when reconciling from the ASX Earnings Release Attachment 1(4) Export HRC ex Port Kembla Steelworks only; ie excludes export HRC despatches from Western Port when reconciling from the ASX Earnings Release Attachment 1(5) See previous slide for Springhill Works capacities (6) See ASX Earnings Release Attachment 1 for detail
Port Kembla Steelworks – despatches by half year
2,6112,5992 4212,4942,5552,609
1 2952,0812,118
2,421
1 3611,938
BSL internal1,439
1,411
1,6061,295
1,2051,348
1,3481,3521,361
1 1501,361
BSL internal
778699
694
1,411
526838782
1,150
Export external 694267
479
526
466 338
538490
440
747846
422466
474 233
350Domestic external
p
100% exported, with geographic sales split being:
Dec-09Jun-08
479
Dec-07
466 338
Jun-09
159
Dec-08
440 326
Jun-11Dec-10
296
Jun-10
422
Jun-07
466
Dec-11 Jun-12
314 350Domestic external
External Product Sales Mix 64% sold
split being:North America 47%Asia 53%
External Product Sales Mix 64% sold domestically and 36% exported, with geographic split being:Asia / ME 56%
30% 36% 30% 23% 22% 43% 28% 31% 47% 18% 13%54% 51% 54% 57% 66% 47% 61% 59% 42% 67% 69%16% 13% 16% 20% 12% 10% 11% 12% 11% 15% 18%
SlabHRCPlate / Other
Page 13
Asia / ME 56%Americas 44%
Note: *Internal Customers include both domestic and export despatches
Port Kembla Steelworks – productivity
2 0005 000 Employees Productivity (Tonnes per person per year)4705
40491,750
2,000
4 000
4,500
5,000 p y y ( p p p y )
ear)
37833662 3610 3567
3406
3146 3171 3087 3,1231 250
1,5003,500
4,000
s/Em
ploy
ee/Y
e
*
2,263 1,000
1,250
2,500
3,000
Outp
ut, T
onne
s
**
500
750
1,500
2,000
(Cru
de S
teel
O
250
500
500
1,000
Prod
uctiv
ity
00FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
N tFY2012: Reduction
Page 14
Note:*2009 employees – includes 69 transfers in due to internal restructure**2012 employees - Based on average. The reduction of employees due to restructuring started in Oct 2011
of employees due to restructuring started
in Oct 2011
CIPA – steel business cost components
CIPA Steel Business Underlying Cost Base(A$M)(A$M)
DepreciationConversion, overhead & other
Raw materialsFreightDepreciation
FY2012FY2011Note:• Chart depicts total cost (including depreciation) incurred by steel business, which excludes approx $350M cost in FY2011 and approx
Page 15
p ( g p ) y pp pp$500M in FY2012 relating to other activities including export coke sales, cold ferrous feed to Arrium Ltd and by-products. In aggregate these activities make a small contribution to CIPA segment earnings
Consumption of primary raw materials at Port Kembla Steelworks
FY2008 FY2009 FY2010 FY2011 FY 2012 Indicative use rate per slab tonne
Volume consumed in production (dry Mt)
Iron Ore (Assuming 1 blast furnace running at capacity)
Fines 4.0 2.9 4.0 4.4 3.1 1.22tLump 1.6 1.0 1.5 1.8 1.1 0.22tPellets 2.3 1.6 1.5 1.3 0.5 0.07t Reflects mix shift
from restructure
Transition to single blast
furnace from OctTotal 7.9 5.5 7.0 7.5 4.7 1.51t
CoalCoking (1) 3.0 2.2 2.7 2.8 1.9 0.55tPCI 0 6 0 4 0 7 0 7 0 4 0 14t
from restructure to single blast
furnace (increase sinter, reduce
pellets)Includes (2)
furnace from Oct
660kt of coal PCI 0.6 0.4 0.7 0.7 0.4 0.14tAnthracite 0.1 0.0 0.0 0.1 0.0Total 3.7 2.6 3.4 3.6 2.3 0.69t
Scrap (3) 1 0 0 7 0 9 0 9 0 5 0 16t
around 300kt consumed for export coke despatches
( )660kt of coal consumed for export coke despatches
Scrap 1.0 0.7 0.9 0.9 0.5 0.16t
Raw Steel Production 5.3 3.5 4.7 5.2 3.2Export Coke Despatches 264kt 282kt 175kt 172kt 516kt
Note: (1) coking coal volumes shown are dry tonnes; market pricing is typically for wet tonnes, 8% moisture content difference to dry tonnes.(2) measure shows tonnage rate used in steel making, and excludes coal used for export coke making.(3) 40% of scrap feed is sourced externally; balance, internally sourced scrap.
Page 16
Supply and pricing of iron ore to the Port Kembla Steelworks(Updated for single blast furnace operations)( p g p )
Supplier Term Approximate Volume (p/a) Pricing Basis
BHP Billiton 10 years from1 July 2009 1.1Mt(1) Trailing monthly indexy
BHP Billiton 10 years from1 July 2009 3.1Mt(1) Pricing reviewed quarterly and tied to movements
in prices paid by customers of BHP Billiton in Asia1 July 2009 in prices paid by customers of BHP Billiton in Asia
Savage River(G R ) Until 31 Dec 2012 0.1Mt pellets(2) Trailing monthly index(Grange Resources) Until 31 Dec 2012 0.1Mt pellets Trailing monthly index
Page 17
Notes:1: reflects agreed reduced annual volumes post closure of No.6 Blast Furnace at Port Kembla2: remaining contract volume as at 30 June 2012
Supply and pricing of metallurgical coals to the Port Kembla Steelworks(Updated for single blast furnace operations)( p g p )
Supplier Term Product / Pricing BasisSupplier Term Approximate Volume (p/a) Pricing Basis
BHP Billiton 30 years from Hard coking coal;minimum volume linked to blast Quarterly market based pricing for long term
(Illawarra Coal) 1 July 2002 minimum volume linked to blast furnace requirements contract sales
Peabody Energy Until 31 March 2014 PCI Coal 300 400Kt(1) Agreed q arterl pricingy gy(principally Hunter Valley) Until 31 March 2014 PCI Coal; 300-400Kt(1) Agreed quarterly pricing
Page 18
Note:1: reflects agreed reduced annual volumes post closure of No.6 Blast Furnace at Port Kembla
HRC price benchmark
• Steel Business Briefing prices continue to be a reasonable public benchmark for BlueScope’s Asian HRC sales and an Steel Business Briefing prices continue to be a reasonable public benchmark for BlueScope s Asian HRC sales and an influence on domestic commoditised product pricing (noting this can change over time)
SBB East Asian Hot Rolled Coil Price, CFR (US$/t)US$/t$1,100
$1,000
US$/t
$900
$800$800
$700
$600
$500
$400
$0
Page 19
Jul-05$0
Jul-12Jan-12Jul-11Jan-11Jul-10Jan-10Jul-09Jul-08Jan-08Jul-07Jan-07Jul-06 Jan-09Jan-06Jan-05
Source: Steel Business Briefing
Australia Distribution & Solutions – underlying EBIT variance analysis (FY2012 vs. FY2011)( )
Net Spread Reduction ($6M)
MEB
IT A
$M
-34-6
00
-200-1
-9
Page 20
FY2012
-52
OtherExchange Rates
Conversion & Other Costs
MixVolumeRaw Material Costs
Domestic Prices
Export PricesFY2011
Australia Distribution & Solutions – underlying EBIT variance analysis (2H FY2012 vs. 1H FY2012)( )
Net Spread Improvement $14M
T A$M
EBIT
-4+5
-9+12
-23
+2
Page 21
-29
2H FY2012OtherConversion CostsVolume/MixRaw Material CostsDomestic Prices1H FY2012
Australia Distribution and Solutions – Overview
Darwin
Sheet Metal Supplies
Lysaght
KEY
BlueScope DistributionCairns
Mareeba
BlueScope Solutions incl. WaterCharters Towers
Mackay
Mount Isa
Rockhampton
Townsville
Acacia RidgeEagle Farm (2)NorthgateO l
ArcherfieldBiggera WatersCarole ParkChinderah
Bundaberg
Emerald Gladstone
Rockhampton
Roma
BalcattaKewdale (3)ForrestfieldBellevueMalagaMandurahWelshpool (2)Wannaroo
Eagle Farm
Oxley ChinderahCoolumRocklea
ArmidaleCoffs Harbour
Geraldton
Kalgoorlie
Port MacquarieTamworth
Toowoomba
Warwick
Wannaroo
Bomaderry
Arndell ParkEmu Plains
HamiltonSmithfield
AuburnCardiff
Albany
BathurstBunbury
Dubbo
EsperanceMildura
Port Macquarie
QueanbeyanWagga Wagga
CardiffChullora
Sites 103A ti C t 20 000
Bomaderry
Batemans BayOttoway
Albury
Ballarat
Bendigo
Campbellfield
Geelong
DandenongGeelong (2)
GillmanWingfield
MorwellPortland
Shepparton
Warrnambool
WodongaWingfield
Page 22
Active Customers >20,000 DandenongSunshine
Devonport
Geelong
Dandenong
Lyndhurst
g ( )Westall
Hobart
LauncestonSite count comprises: 61 Distribution & Sheet Metal Supplies, 33 Lysaght and 9 Solutions. Urban Water sites in Dandenong and Ormeau (not shown) to be divested in September 2012. Under new segment structure in FY2013, Solutions businesses become part of Global Building Solutions
Building Components & Distribution Australia segment
• The Building Component & Distribution segment effective from FY2013 brings together BlueScope • The Building Component & Distribution segment, effective from FY2013, brings together BlueScope Steel’s Distribution and Lysaght businesses
• The Australian solutions businesses (Buildings, Water, Ranbuild, Highline etc) are now part of the new Global Building Solutions segmentnew Global Building Solutions segment
• Sheet & Coil Processing is included in the Coated & Industrial Products Australia segment
PlateSheet Metal Supplies
Plate
Tube
Structural Steel
RoofingWallingGuttering
Hot Rolled coil
Cold Rolled stripMerchant Bar
Reinforcing Steels
Rural Products
gRainwater GoodsFencingMobile Roll forming
Cold Rolled strip
Plate
Stainless steel
Al i iPipes, Valves & Fittings
Specialty steels
formingSupply / install
Aluminium
Processing / Slitting/Shearing
Page 23
Processing Services
New Zealand & Pacific New Zealand & Pacific IslandsIslands
Page 24
New Zealand and Pacific Steel Products – underlying EBIT variance analysis (FY2012 vs. FY2011)y ( )
+6+82 2-30-1
Net Spread Reduction ($5M)
+82
+69-4-3
-6-2
EBIT
A$M
E
Page 25
FY2012OtherExchange Rates
Conversion Costs
MixVolumeRaw Material Costs
Domestic Prices
Export PricesFY2011
New Zealand and Pacific Steel Products – underlying EBIT variance analysis (2H FY2012 vs. 1H FY2012)y ( )
Net Spread Reduction ($1M)
+3+4+34 +35-1
-3-1
T A$M +12
-8
EBIT -5
Page 26
2H FY2012OtherExchange Rates
Conversion & Other Costs
MixVolumeRaw Material Costs
Domestic Prices
Export Prices1H FY2012
New Zealand – unique direct reduction process
Page 27
New Zealand – raw materials
Iron Sand Concentrate (Waikato North Head Mine)Iron sand mined and concentrated on site – 58.5% FeSufficient resource for long term steel making operationsConcentrate is slurry pumped 18km underground to GlenbrookExports to China commenced March 12. p
Thermal Coal Predominantly sourced from Solid Energy in NZ Predominantly sourced from Solid Energy in NZ Approximately 0.8Mt transported by rail to Glenbrook each year
Lime (McDonalds Lime - 28% NZS owned)34Ktpa lime (oxide and chip) quarried and processed at Ot h
Export Iron Sand Concentrate (Taharoa Mine)Iron sand mined and concentrated on site - 57% Fe
OtorohangaRailed and trucked to Glenbrook
Approximately 0.8-0.9Mt per annum of concentrate is slurry pumped to a buoy 2.5km offshore to a dedicated slurry vessel and shipped to China and J
Page 28
Japan
New Zealand Steel – FY2012 product flow
Export 1.10mtDomestic 7%HRC 33%
Mine SitesIron Sands
2.48mt Domestic 7%NZS Slab
0.61mt Export 23%
Interco (Export) 70%
HRC 33%
Interco (Export) 70%
Export 66%
Domestic 34%Plate 14%Export Vanadium
Slag 16ktExport 66%
Pipe 5% Domestic 94%
Export 6%Cold Mill 48% Domestic 10%
Export 2%
Interco (Export) 8%
Coating Lines 80% Domestic Metal Coated 50%
Export Metal Coated 14%Export Metal Coated 14%
Interco Metal Coated (Export) 14%
Domestic Painted 16%
Page 29
Domestic Painted 16%
Export Painted 4%
Interco Painted (Export) 2%
New Zealand – FY2012 product distribution (external and internal)
Indicative Product Mix (t) Indicative Sales by Region (t)Indicative Product Mix (t) Indicative Sales by Region (t)
Painted9% Australia
16%
Pacific Islands
8%
Metal Coated30%
Pipe5%
Cold Rolled10% Asia
9%
Other
Americas24%
Other1%
Indicative Sales by Sector (t)Hot Rolled
46%
New Zealand
42%Distribution20%
Indicative Sales by Sector (t)
(incl plate 15%)(incl. plate 15%)
Building & Construction
18%
Export58%
Page 30
Manufacturing4%
* External & Internal prime product sales
New Zealand – FY2012 non-steel product sales
Iron Sands Iron sands exports from Taharoa in FY2012 of 978kt were higher than FY2011 (818kt) due to an additional shipment and the arrival of the bigger ship (Taharoa Destiny) in May the bigger ship (Taharoa Destiny) in May. Iron sand exports from Waikato North Head commenced in FY2012. 163kt.
Ferrous Scrap Volumes: FY2012 37kt vs FY2011 33kt
Iron & Steelmaking SlagsVolumes: FY2012 140kt vs. FY2011 166kt.Challenging construction environment within New Zealand, plus delay of some projects.
Vanadium SlagVanadium production was up 6% on FY2011 due to increased steel production and process improvement initiatives.
Page 31
p p pFY2012 sales contained V2O5 at 4.49m lbs vs FY2011 4.62m lbs
Asia Asia Coated & Building Products AsiaCoated & Building Products AsiaCoated & Building Products AsiaCoated & Building Products Asia
Page 32
Coated & Building Products Asia – underlying EBIT variance analysis (FY2012 vs. FY2011)
+6
Net Spread Improvement $22M
+6
+31+11
+108 5
-35-15
EBIT
A$M
+608
+98-9-5
C i & Oth C tE Conversion & Other Costs:Cost Improvement Initiatives 7 Escalation (16) One-off / discretionary (23)Other (3)
Page 33
FY2012OtherExchange Rates
Conversion & Other Costs
MixVolumeRaw Material Costs
Domestic Prices
Export PricesFY2011
Coated & Building Products Asia – underlying EBIT variance analysis (2H FY2012 vs. 1H FY2012)
Net Spread Improvement $12M
+4+6
+29
+47+51
0-3
-15
5
EBIT
A$M
+29
-12
-5
E
Page 34
2H FY2012OtherExchange Rates
Conversion & Other Costs
MixVolumeRaw Material Costs
Domestic Prices
Export Prices1H FY2012
China – urbanisation continues to drive growth in the building and construction sector New Gov’t
Focus Old Gov’tFocusg
China Trends• Chinese Central Government continues directing a much higher proportion g g p p
of investment towards the interior versus coastal cities• The continued rise of inland cities is a fresh source of rapid growth
BlueScope China Highlights
• Best in class market coverage in buildings solutions
• Best in class products and quality• New facility in upcoming growth
areas• Supporting global building solutions
growth plans
Page 35
Xi’an Plant - under construction
Development of new combined Butler PEB and Lysaght rollforming facility in Xi’an due to strong growth outlook in central Chinay g g
• Construction of a new joint Butler and Lysaght plant in Xi’an. The plant will be similar to existing plant in Guangzhou
• Expected to be operational during 2H FY2013• Capital cost approximately A$60M
800 KM
800 KM
800 KM
Page 36
800 KM
North America North America Coated & Building Products Coated & Building Products gg
Page 37
Coated & Building Products North America – underlying EBIT variance analysis (FY2012 vs. FY2011)
Net Spread Improvement $1M
Net Margin Improvement $10M
$
EBIT
A$M
E
-72+73
-80+10
+7
-26
7
+9
Page 38
26
FY2012OtherExchange Rates
MixVolumeConversion Costs
Raw Material Costs
Domestic Prices
FY2011
Coated & Building Products North America – underlying EBIT variance analysis (2H FY2012 vs. 1H FY2012)
Net Margin Improvement $1M
Net Spread Improvement $4M
-3
EBIT
A$M
0
E
-9
+13
-9
-800
Page 39
9
2H FY2012OtherExchange Rates
Volume / MixConversion & Other Costs
Raw Material Costs
Domestic Prices
1H FY2012
BlueScope Buildings North America (pre-engineered buildings) –commercial, community and industrial are traditional markets, y
DistributionRetail
Manufacturing
ServiceHealthcare
Page 40
BlueScope Steel North American footprint
Canada
Key
HQ
ASC
Key
Steelscape
ASC Profiles
Mexico
BlueScope Buildings
BSL Steel Sales Offices
North Star BlueScope
Page 41
Buildings North America: 1.2 million square foot distribution facility erected in 28 days for major retailery j
Page 42
OtherOther
Page 43
Global steel markets remain under utilised due to soft demand, with the euro zone crisis affecting sentimentg
115%Monthly Crude Steel Capacity Utilisation* (%) • Demand in developed
105%
110%World (Excl China)ChinaWorld economies remains relatively
soft
• Industrial production has slowed
90%
95%
100% • Industrial production has slowed significantly in most emerging economies
80
86
80%
85% 85%• Some blast furnaces in Europe
remain idled, with expectations of further cuts or extended
i t i d75
65%
70%
75% maintenance periods
• Steel mill profitability in China has remained low
55%
60%
has remained low
• Chinese production growth is expected to return to more
t i bl l l50%Jan 13Jan 12Jan 11Jan 10Jan 09Jan 08Jan 07Jan 06Jan 05Jan 04Jan 03Jan 02Jan 01Jan 00
sustainable levels
Global steel capacity utilisation needs to return to sustained levels of around
Page 44* Notes – Crude steel capacity utilisation is calculated based on the WSA 62 reporting countries, representing approx 98% of global crude steel capacity; At 85% pricing power may shift towards steelmaker
-Source: WSA-Data to June 2012
Global steel capacity utilisation needs to return to sustained levels of around 85% for steel spread to improve and stabilise
A$ exacerbates the contraction of US$ spread and leads to increased import price pressure in Australia
Monthly Average Foreign Exchange Rate
p p p
1.10USD/AUD
y g g gJuly 1990 to July 2012
$1 03 (Jul avg)
1.00
$1.03 (Jul avg)
0.80
0.90 Avg: $0.90High: $1.08Low: $0.65
0.70 Avg: $0.69
0.60
High: $0.83Low: $0.49
0.50
Page 45
0.40Jan-90 Jan-12Jan-10Jan-08Jan-06Jan-04Jan-02Jan-00Jan-98Jan-96Jan-94Jan-92
Globally our focus is primarily on building products and solutions
1%China
10%25%
North Star USA
99%
Coated & Building NA
35%30%
25%99%
10%
ASEAN
100%
90%
15%35%25%
Australia New Zealand
10%10%
65%Building & constructionManufacturingAuto
40%
35%25%
Page 46
Ag & miningAuto
Note: indicative segment exposures
Calendar year earnings
A$ Milli CY03 CY04(3) CY05 CY06 CY07 CY08(4) CY09 CY10 CY11A$ Millions CY03 CY04(3) CY05 CY06 CY07 CY08(4) CY09 CY10 CY11
Revenue(1) 5,328 7,029 7,980 8,693 9,333 11,926 8,283 9,148 9,141
EBITDA(2) 857 1,501 1,411 1,052 1,130 1,775 (324) 563 (1,084)
EBIT(2)
- reported 581 1,212 1,111 742 792 1,399 (673) 215 (1,429)- underlying - - 1,308 966 924 1,532 (604) 236 (192)
Net profit- reported 436 859 792 413 414 887 (502) 100 (1,530)- underlying - - 943 586 563 989 (476) 120 (201)
EPS (¢) - reported 56 116 110 59 56 116 (34) 5 (80)
Notes:(1) Excludes revenue of equity accounted associates, e.g. North Star.
Page 47
(2) Includes share of North Star’s equity accounted net profit before tax and share of other associates’ NPAT. (3) Includes eight months of BlueScope Butler financial results.(4) Includes eleven months of Smorgon Distribution financial results and five months of IMSA Steel financial results.
Dividend history
42 / 20¢
20
44 / 0¢47 / 0¢
49 / 0¢
2710
30 / 10¢ 44 / 0¢
Special
27262424
10
7
22 / 7¢
20 21 22Final
18
13
9 1218 20 21 22
5Interim025 0 0
5 / 0¢ 5 / 0¢ 2 / 0¢ 0 / 0¢
Page 48
FY2012FY2011FY2010FY2009FY2008FY2007FY2006FY2005FY2004FY2003
Underlying Corporate and Group Costs – impacted each half by profit in stock elimination and foreign exchange movementsp g g
30
-39
6
30
A$M
-39-27
-51-35
-16
-49-41
-9
EBIT
-66
-90-105
-135
1H FY12FY112H FY111H FY11FY102H FY101H FY10FY092H FY091H FY09FY082H FY081H FY08 2H FY12 FY12
(58) (43) (101) (61) (35) (96) (31) (41) (72) (37) (33) (70) (33) (38) (70)
(28) (88) (116) (93) (33) 126 (10) (9) (19) 18 (2) 16 5 (1) 4
Comprised of:
Corporate Costs
Profit in stock adj (28) (88) (116) (93) (33) 126 (10) (9) (19) 18 (2) 16 5 (1) 4
5 15 20 (22) (4) (26) - 1 1 3 - 3 1 - 1
111 (19) 92 (4) (3) (7) - - - - - - - - -
Profit in stock adj
FX
Other (1) (2)
Page 49
30 (135) (105) 6 (9) (3) (41) (49) (90) (16) (35) (51) (27) (39) (66)Total
Notes: (1) Profit from realisation of Smorgon Steel shares ($128M), net of Distribution integration, restructuring and M&A costs.(2) IMSA integration costs.
Major approved capital projects and investment summary (in addition “Stay in Business” capital is approx. 60% of depreciation in current conditions)
Total Est. Actual to A$M
Total Est. Capex / Cost
Actual to 30 Jun 12 FY2013 FY2014 FY2015
Projects completed
Indonesia – Coating / Painting 166 166 - - -
Vietnam Coating / Painting 136 136Vietnam – Coating / Painting 136 136 - - -
China – Coating and Painting Facility– Guangzhou Butler / Lysaght
27433
27433
--
--
--
India - Butler / Lysaght facilities (50% interest) 44 44 - - -
A t li PKSW HSM i 102 102Australia: - PKSW - HSM expansion - Sinter Plant Emissions- No. 5 Blast Furnace Reline- Sinter Plant Upgrade- Steam Infrastructure Spend- Steel Injection Station
10210036214246
24 1
1021003621424624
------
------
------j
- WA Service Centre 21 21 - - -
Western Sydney Colorbond® Steel Facility 150 150 - - -
Projects to be completed
New Zealand – Taharoa Dry Mining 29 - 17 12 -New Zealand Taharoa Dry Mining 29 17 12
China – Xi’an Butler / Lysaght facility 58 17 37 4 -
Australia: – Next Generation ZINCALUME® and COLORBOND® steel 98 2 47 44 7 -
InvestmentsIMSA North American businesses 807 807 - - -IMSA North American businesses Smorgon Steel’s Distribution business(2)
Butler Manufacturing(3)
Lysaght and water acquisitions
807700277129
807572 (1)
277129
---
---
---
Total Major Project Capital Spending 3,698 3,449 98 23 -
Page 50
Notes: (1) Gross cost of $700m less pre-tax profit on SSX shares of $128M leaves $572M.(2) Excludes working capital adjustment and pre-acquisition costs of $50M.(3) US$190M (A$226M) recovered following the sale of Vistawall in June 2007.
Committed debt facilities as at 30 June 2012, pro-forma adjusted for 7 August 2012 repurchase of US$88M of U.S. Private Placement Notes
Committed Drawn
g p
Maturity Local currency A$M A$MSyndicated Loan Note FacilityTranche 1 December 2013 A$675M A$675M A$199M Tranche 2 December 2015 A$675M A$675M -
2004 U.S. Private Placement NotesSeries B July 2014 US$74M A$74M A$74M y
2008 U.S. Private Placement NotesSeries A June 2015 US$11M A$11M A$11M Series B June 2018 US$46M A$46M A$46M Series B June 2018 US$46M A$46M A$46M
Other facilitiesThailand subsidiary loan Various THB 2,500M A$78M -Malaysia subsidiary loan Various MYR 65M A$20M Malaysia subsidiary loan Various MYR 65M A$20M -Finance leases August 2013 Various A$134M A$134M Total $1,713M A$482M
Note: assumes AUD/USD at 1.0032
In addition to debt facilities, BSL has a receivables securitisation program of $150M maturing August 2013In resizing our finance facilities and to reduce costs agreement has been reached with the Syndicated Loan Note
Page 51
In resizing our finance facilities and to reduce costs, agreement has been reached with the Syndicated Loan Note Facility banks that, upon completion of the Coated Products Joint Venture (expected in March 2013 quarter), the December 2013 A$675M LNF tranche commitment will be reduced by A$450M to A$225M
Shares on issue
Milli ( d d) Million (rounded)
Shares on issue at listing, July 2002 793Sh b b k (116)Share buy-backs (116)Dividend reinvestment scheme issues +67Employee share plan issues +34Employee share plan issues 34Institutional share placement, Dec 2008 +97Share purchase plan issue, Feb 2009 +36Entitlement offer 2009 – institutional tranche (May 09) +515Entitlement offer 2009 – retail tranche (June 09) +397Dividend reinvestment scheme (18 8m); employee share issues (0 05m) +19Dividend reinvestment scheme (18.8m); employee share issues (0.05m) +19Shares on issue at 30 June 2011 1,842Employee Share Plan Issues +7p yEntitlement offer 2011 – institutional tranche (Nov 11) +851Entitlement offer 2011 – retail tranche (Nov 11) +649
Page 52
Shares on issue at 30 June 2012 3,349
Environment
• As a result of the operational restructure announced in August 2011, by FY 2013 BlueScope’s Australian Scope 1 & 2 greenhouse gas (GHG) emissions will fall by of the order of 5.5Mtpa as a direct result of the reduction in production.
• The closures have also led to reductions in water and energy usage, and reductions of emissions of other environmental pollutants. • The production restructure was completed without any environmental incidentsThe production restructure was completed without any environmental incidents.
ENVIRONMENTAL HIGHLIGHTS
Awards• New Zealand Steel – Finalist in the Ministry of the Environment's Green Ribbon Awards. • Lysaght Kuching – Won two Prime Minister's Hibiscus Malaysia Awards 2010/2011.• BSI Cilegon – Received Green Rating Company Award 2010/2011 by Indonesian Ministry of the Environment, and winner of the inaugural Krakatau
Industrial Estate Cilegon (KIEC) award for plant with cleanest environmentIndustrial Estate Cilegon (KIEC) award for plant with cleanest environment.
Environmental Engagement Activities• Biodiversity – Second Peregrine nesting box (produced by local high school) installed and 400 individual tube stocks (indigenous species) planted
th W t P t it 44 if t l t d b th St lS E i t l C ittacross the Western Port site; 44 conifer trees planted by the SteelScape Environmental Committee.• World Environment Day / Earth Hour – Tree planting activities and environmental activities at various ASEAN facilities were conducted in
conjunction with local communities; SteelScape Rancho Cucamonga participated in a local Earth Day event, where almost 3,000 people had an opportunity to learn how SteelScape’s ‘Cool Metal Roofing’ helps the environment.
• Clean Up Events various facilities participated in business and community area clean up activities• Clean-Up Events – various facilities participated in business and community area clean-up activities.• School Events – Western Port was a major sponsor and participant in the local “Schools Enviro Week” (involving approximately 2500 children), which
aimed to encourage primary aged school children to learn about the environment; Port Kembla Steelworks ran interactive environmental workshops with approximately 150 school children as part of the Wollongong City Council “Rise and Shine” activities.
Page 53
Update on BlueScope’s Australian Emissions Profile
Mt COGFC &
BF relineReduced
Production
1.6 1 41.612
14
Mt CO2-e BF reline
1.0
Production
Scope 1Scope 2*
1.3
1.4
8
10
11
7.9
10.8 11.4
8.67.5
2
4
6
0
2
2008 2009 2010 2011 2012 2013
• The overwhelming majority of BSL’s direct emissions are chemical process emissions derived from the reduction of iron ore to metallic
++
• The overwhelming majority of BSL s direct emissions are chemical process emissions derived from the reduction of iron ore to metallic iron via the Blast Furnace route. e.g.
Fe2O3 + 3CO 2Fe + 3CO2
Fe2O3 + 3C 2Fe + 3CO2 3
• As a result of the operational restructure announced in August 2011, by FY 2013 BlueScope’s Australian Scope 1 & 2 emissions will fall by of the order of 5.5 Mtpa as a direct result of the reduction in production.
• Overall, including increased export coke sales, the Company expects annual Scope 1 and 2 Australian emissions to be in the order of
Page 54
* BSL is not liable directly for Scope 2 emissions but will experience carbon cost pass through from electricity generators. In this calculation 2008 Scope 2 emissions have been calculated based on a weighted average of Australian electricity carbon intensity factors. 2009 , 2010 and 2011 Scope 2 emissions are taken from BSL’s NGERS report. + FY2012 and FY2013 emissions are estimates.
7.5Mtpa by FY2013.
BlueScope Steel under the Australian Carbon Pricing Mechanism
• BlueScope Steel is a liable entity under the scheme, which commenced 1 July 2012.
• A Jobs and Competitiveness Program allows for allocation of permits to emissions-intensive trade-exposed (EITE) activities including integrated iron and steelmaking Permit allocation will include:activities, including integrated iron and steelmaking. Permit allocation will include:
Allocation of permits at the maximum rate (94.5% in Year 1) to iron and steelmaking activities up to and including hot rolling.
Permit allocation decreases by 1.3% per annum thereafter .
Productivity Commission review of EITE arrangements in 2014/15 with minimum three years’ notice of any changes. Review will take into account a range of factors, including whether 70% of international sectoral competitors face comparable carbon constraints.
• BlueScope estimates it will receive in the order of 6.5Mt EITE permits in the first year of the scheme; this compares to a p p y ptotal estimated Scope 1 & 2 emissions of the order of 7.5Mtpa.
• During the first three “fixed price” years of the scheme the carbon price is set by the Government. Prices are $23/t CO2 e in FY2013; $24 15/t in FY2014; $25 40/t in FY2015Prices are $23/t CO2-e in FY2013; $24.15/t in FY2014; $25.40/t in FY2015.
During the fixed price phase, liable parties will not be entitled to use international emissions units for compliance.
• At the end of the fixed price period, the scheme will convert to a flexible price cap-and-trade emissions trading scheme. In the flexible phase 50% of liability can be met with international emissions units. Certified Emission Reduction (CER) units are currently trading at €3.20 (Dec-13 instrument, as at 31 July 2012, source: http://www.carbonpositive.net/)
A price cap and floor will be in place for at least the first 3 years of the flexible price period. The price ceiling will be $20 above the expected f $
Page 55
international price and will rise by 5 per cent in real terms each year, the price floor will be $15, rising annually by 4 per cent in real terms. The Treasury forecast price in year 4 is $29/t.
Steel Transformation Plan (STP)
• The Steel Transformation Plan was established in 2011 to encourage investment, innovation and competitiveness in the Australian steel manufacturing industry.
It ill id $300M f f di t th t l i d t th f f 2012 • It will provide $300M of funding to the steel industry over the four years from 2012.
• The STP will largely neutralise BlueScope’s total expected net exposure to Scope 1 & 2 liabilities under the CPM for this period.p
• In December the Government confirmed it would advance payment of $100M of the $183M of STP funds available to BlueScope. Payment was received on 13 January 2012.
• It is expected that the balance of $83M will be received in the latter years of the STP period.Thereafter, the Government will provide BlueScope with a 10% increase in permit allocation relating to slab production commencing in FY2017 for a minimum of two years.p g y
• An independent review mechanism to monitor the impact of the carbon pricing mechanism and other factors on the economic circumstances of the steel industry, will also be provided.
• The STP is a pragmatic outcome for BlueScope after four years of negotiation, and also signals the Government’s intention to limit the potential pass-through of carbon emission costs from coal miners onto steelmakers .
Page 56
• BlueScope has submitted its application for registration under the Steel Transformation Plan.
FY2012 Financial ResultsSupporting Information
20 August 2012
Page 57
ASX Code: BSL
