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FY2007 Results Presentation Period Ended 30 June 2007Kirby Adams, Managing Director and Chief Executive OfficerPaul O’Malley, Chief Financial Officer 30 June 2007
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
July 2002 to August 2007….
Dynamic Global Steel
Market
Dynamic Global Steel
Market
Geographic and Product
Diversity
Geographic and Product
Diversity
Strong Board & Management
Team
Strong Board & Management
Team
Growth Opportunities in
Asia
Growth Opportunities in
Asia
Low Cost Producer
Low Cost Producer
Strong and Flexible Capital
Structure
Strong and Flexible Capital
Structure
Profitable Through the
Cycle
Profitable Through the
Cycle
Consistently Strong Cash
Flows
Consistently Strong Cash
Flows
Strong Operating
Track Record
Strong Operating
Track Record
Value Added Branded Products
Value Added Branded Products
A VERY DIFFERENT KIND OF STEEL
COMPANY
Page 4
3.54.1
3.52.8
1.8 1.50.9 0.8 0.4
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
Lost
time i
njurie
s per
milli
on m
an-h
ours
worke
d
Includes Contractor performance from 1996Includes Butler performance from May 2004
Medically Treated Injury Frequency RateLost Time Injury Frequency Rate
8.0 9.36.4
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
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
Reported performance for IISI member companies (employees & contractors)
NSW Manufacturing 27.9 in 2005
Zero harm is our goal for our team and communities
18,046 Employees, 91 manufacturing sites, 17 countries
Page 5
Group financial headlines FY2007 vs. FY2006
Twelve months ended 30 June Variance2007 2006 %
Revenue A$8,913M A$8,031M Up 11% External despatches 7.621M tonnes 7.559M tonnes Up 1%EBITDA A$1,423M A$850M Up 67%
EBIT A$1,099M A$556M Up 98%
NPAT -
Reported A$686M A$338M Up 103%EPS- Reported- Underlying Operational
95¢89 ¢
48¢79¢
Up 99%Up 12%
After Tax Return on Invested Capital 14.9% 8.5% Up 75%
After Tax Return on Equity 20.3% 10.4% Up 94%
Net Operating Cashflow
-
From operating activities A$1,343M A$803M Up 67%-
After capex
/ investments A$802M A$(130)M Up 717%
Dividend-Final ordinary (fully franked)-Total ordinary (fully franked)
26cps47cps
24cps44cps
Up 8%Up 7%
Gearing (net debt) 28% 38% Below 30-35% target range
Across the board improvements
Page 6
Cashflow
–
very strong leading to lower debt/gearing
A$M FY2003 FY2006 FY2007
Source
Cashflow
from operations 795 903 1,364
Working capital movement (31) (100) (21)
Net cash from operations 764 803 1,343
Proceeds from Asset Sales 44 23 265
Proceeds from Share Issues - 1 221808 827 1,829
Application
Capital Expenditure (165) (816) (493)Smorgon
Steel shareholding (19.9%) - - (319)
Statutory (tax) (29) (356) (229)
Returned to shareholders (101) (552) (321)Net Funding (512) 872 (498)
(807) (852) (1, 860)
Closing cash increase / (decrease) 1 (25) (31)
First full year of operations after listing
Very strong operations performance (72% up on FY
2003)
Working capital improvement initiatives continue to pay off
Greenfield capex
program slowing
Principally proceeds from the sale of Vistawall
Debt reduction reduces gearing 38% to 28%
Page 7
Continuing to reward our shareholders as we grow
Share Buybacks – Public listing to 30 June 2007Purchased and cancelled 116m shares−
on market –
90m shares−
off market –
26m sharesAverage price paid $6.10 per share
Shares on issueAs at 30 June 2007 733.8 million
Dividend reinvestment schemeEffective from and including final FY2006 ordinary dividend
Dividends – All fully franked (ordinary / special)
Total return to shareholders since BSL’s public listing (July 2002):
Share buybacks $ 707mDividends paid $ 1,430mFinal dividend (to be paid 23 Oct 07) $ 191m
$ 2,328m
$3.15 per share or 77% payout ratio (NPAT)
18
24
7 1020 2120
9 1218
2624
13
05
101520253035404550
Interim Final Special
FY2003 FY2004 FY2005 FY2006 FY2007
22 / 7¢
30 / 10¢
42 / 20¢ 44 / 0¢47 / 0¢
Page 8
15%
35%
4%
11%
9%
10%
16%
15%
43%4%
10%
17%
4%7%
Exports -
Americas
Exports -
Asia
Exports –
Europe/Med/Middle East/India Australia
NA (HRPNA + C&BPNA) New Zealand/Pacific
Asia
ExternalDespatches
Key
Record sales volumes, driven by strong demand for BlueScope’s products
Domestic sales (produced and sold within country)
Record
Exports28%
15%
32%
4%
14%
6%
21%
8%
FY2007
Exports36%
Australia
NZ
Asia
Exports - Americas
Exports Europe/Med/ME/India
Exports -
Asia
Exports41%
7.159MT 7.559MT 7.621MT
FY2005 FY2006
NorthAmerica
Page 9
+10%
Sales Tonnes
Construction59%
57%
FY2006 FY2007
Non-dwelling 25%(0.657)
Dwelling 22%(0.578)
Engineering 12%
Manufacturing 14%
Agriculture & Mining 13%
Auto & Transport 8%Packaging 6%(1)
Non-dwelling 23%(0.547)
Dwelling 22%(0.523)
Engineering 12%
Manufacturing 15%
Agriculture & Mining 11%
Packaging 6%Auto & Transport 11%
Desp
atch
es ‘0
00 to
nnes
500
1,000
1,500
2,000
2,500
3,000
Sales into Australian market increase 10% and 250,000 tonnes
Despatches 2.380mt 2.629mt
Note: (1) Closed the tinplate business in April 2007
Construction demand for BlueScope’s products remains strong.
Stronger A$ a concern in terns of increased imports
Automative and manufacturing sectors continue to have issues.
Smorgon, distribution will further enhance our position from FY2008.
Page 10
400
500
600
700
800
900
1000
1100
1200
1300
Full year June2006
Export Prices DomesticPrices
Volume / Mix NSBSL Conversion &Other Costs
Raw MaterialCosts
ExchangeRates
Other Full year June2007
EBIT variance FY2006 to FY2007 by itemEB
IT A
$ Milli
ons
Raw material costs PKSW (143) Coating metal costs (140)External Steel Feed
-
Asia (73) -
USA(2) ANZ (7)
(9)
Higher export slab and HRC prices
Recovery from Western Port fire and
increased Asian despatches
Asset Sales -
Vistawall
59-
Other (2)Tinplate closure 142Redundancy provision 41Smorgon dividends 29Other 8
$556
m
$439m
$1,099m
($365m)
$76m
$277m
($44m)
($13m)$207m
($34m)
• Productivity initiatives 109• Cost escalation (127)• Freight (28)• Other 12
Page 11
400
500
600
700
800
900
1000
1100
1200
Full year June2006
Hot RolledProductsAustralia
Coated & BldgProducts Aust
NZ & PacificSteel Products
Coated & BldgProducts Asia
Hot RolledProducts Nth
America
Coated & BldgProducts Nth
Am
Corporate &Group
DiscontinuedBusinesses
Full year June2007
-
Reporting SegmentReporting SegmentPerformancePerformance
Page 12
Upstream BusinessesUpstream BusinessesHot Rolled Products AustraliaHot Rolled Products Australia
Hot Rolled Products North AmericaHot Rolled Products North America
Page 13
1149
438321
759
456
0100200300400500600700800900
10001100
FY05 FY06 FY07 1H FY07 2H FY07
Hot Rolled Products Australia (PKSW) –
outstanding operational strength continues to meet strong demand
Performance - FY2007 vs. FY2006
Higher export slab and domestic sales pricesStronger domestic demand and market shareRicher product mix (higher HRC sales)
Partly offset by higher US$ raw material feed costs and higher freight and discretionary repairs & maintenance costs
Record annual iron make, slab, HRC and plate productionBFNo.5 reline rescheduled to March 2009$134M sinter plant upgrade approved (reduce pellet/increase fines)Cogeneration feasibility study commenced.
FY2007 return on net assets (pre-tax) 41%
EBIT
A$ M
illion
s
PKSW sales revenue up 13% to A$3,919m
MarketsDomestic demand improves, with despatches up 22%
Hot rolled coil (HRC) sales to pipe and tube― Strong engineering and non-residential construction
Plate― Increased project activity
Exports down 25% on FY 06High in 06 due to Western Port fire (+300kt slab)Mix change –HRC exports up / slab down due to increased HRC capacity
Page 14
Port Kembla
Steelworks despatches –
richer product sales mix and stronger domestic demand
External Product Sales Mix
Slab 44% 48% 30%HRC 41% 39% 54%Plate/Other 15% 13% 16%
0500
10001500200025003000350040004500500055006000
2005 2006 2007 2007 PFInternal Customers Domestic Customers Exports Customers *
(kto
nnes
)
5,2105,2684,922
51% 44% 51%
21% 16%19%
30%40%28%
* Including BlueScope Steel Asia feed
** Proforma
profile includes sales to Smorgon
Steel Distribution
100% exported, with geographic sales split
Asia 48%
USA 48%
Other 4%
45% sold domestically and 55% exported, with geographic split being:
Asia 44%USA 40%Other 16%
5,210
54%
16%
30%
**
Page 15
Hot Rolled Products North America –
another outstanding operational performance
MarketsContinued strong demand for BlueScope’s products in North America and Europe.
Performance- FY2007vs. FY2006
North Star BlueScope−
8% EBIT reduction largely due to lower HRC to scrap spread in A$ terms (higher in US$) and higher electricity costs
−
Steel production largely unchanged−
Voted No.1 Jacobson Survey (fifth year in a row)−
Paid US$115M dividends to BlueScope−
Improved operational performance will result in capacity creep in FY 2008
Trading offices−
Product sold to−
Americas (1.1m tonnes)−
Europe (0.4m tonnes)−
USA removed dumping duties on corrosion resistant sheet from Australia
Castrip−
Nucor continues to make very good progress−
Nucor started the construction of a second plant at Blythesville, Arkansas.
199 188
112
68
180
0
20
40
60
80
100
120
140
160
180
200
FY05 FY06 FY07-1H FY07-2H FY07
EBIT
A$ M
illion
s
This segment includes:North Star BlueScope Steel (50% interest)Castrip LLC and North American and European sales offices
FY2007Sales revenue of A$566M (sales offices), up 13%, and A$722M (North Star), up 1%Return on net assets (pre-tax) 67%
Page 16
New Zealand SteelNew Zealand Steel
Page 17
New Zealand and Pacific Islands Products –
higher zinc costs and unfavourable NZ$/US$ exchange rate flatten earnings
FY2007 return on net assets (pre-tax) 24%
Performance –FY2007vs. FY2006
EBIT down due to―Higher zinc costs―Unfavourable NZ$/US$ exchange rate
Making good advances on resolving steelmakereliability issues.Slab production flat but annualised 4Q was over 600ktStudies into additional vanadium extraction and iron sands sales continue.New annual metal coating and paint line production records.
189
105
43 47
90
0
25
50
75
100
125
150
175
200
FY05 FY06 FY07-1H FY07-2H FY07
EBIT
A$ M
illion
s
Sales revenue up 3% to A$728M MarketsDomestic despatches up 9% largely due to stronger construction marketConsequently, exports sales lower.
Page 18
Midstream & Downstream BusinessMidstream & Downstream BusinessCoated & Building Products AustraliaCoated & Building Products Australia
Coated & Building Products North AmericaCoated & Building Products North AmericaCoated & Building Products AsiaCoated & Building Products Asia
Page 19
Coated and Building Products Australia –
improved operational performance but stronger A$ and higher metal coating costs effect earnings
Performance –FY2007vs. FY2006
Improved performance was largely due to Increased despatches (record despatches to building market)Higher pricesFY 2006 Western Port fire variance (higher sales and lower costs in FY 2007)
Partly offset byHigher metal coating costs ($95m)Adverse destination mix change principally in the second half, with increased exports (next slide)Higher steel feed costs
Record annual metal coated and painted production West Sydney Colorbond® facility commissioned in August 2007.Water – after 3 years our water business is profitable with FY2007 turnover of approx $50M. Research and development spend up $12M on FY 2006.
2
-3
4941
-8-15
0
15
30
45
60
FY05 FY06 FY07-1H FY07-2H FY07
EBIT
A$ M
illion
s
Sales revenue up 15% to A$3,186M
FY 2007 return on net assets (pre-tax) 3% Tin plate operations ceased April 2007. Not reflected in this analysis. Now treated as a “Discontinued Business”.
Page 20
-50
-25
0
25
50
75
100
Half yearended Dec
2006 Export PricesDomestic
Prices VolumeRaw Material
Costs MixExchange
RatesConversion &
Oth Costs Other One-offs
Half yearended June
2007
-
Coated and Building Products Australia –
Second half vs
First half FY 2007
Performance – (2nd vs 1st half)Increased production, but stronger A$ and increased import competition led to
significantly higher export sales (+265kt) of products at lower end of value range.
EBIT
A$ M
illion
s
$49m$12m
($8m)($7m)
$17m
($72m)
$5m
($4m)
$3m
($11m)
Steel feel costs 12Coating Metals (7)
Higher Exports (72)
Page 21
Coated and Building Products North America (Butler Buildings) – downstream success in North America continues
Markets (100% sales to non-residential)Non-residential construction was flat against a declining residential market
Performance –FY2007vs. FY2006
Improved result largely due to higher margins, through−
improved plant efficiencies−
lower conversion costs−
resolution of Jackson plant start up issues Total despatches up 1% on FY 2006
BUCON (Butler Construction) revenue was down due to drop off in WalMart distribution actively.
-33
9
2314
37
-40
-30
-20
-10
0
10
20
30
40
FY05 FY06 FY07-1H FY07-2H FY07
EBIT
A$ M
illion
s
Sales revenue down 6% to A$788MFY2007 return on net assets (pre-tax) 50%
Note:
The Vistawall
business was sold on 29 June 2007 for US$190M. Its financials are not included in this analysis but included under “Discontinued Business” in FY 2007 Accounts. Butler Manufacturing was acquired April 2004 for US$206M (after allowance for cash).
Page 22
Coated and Building Products Asia –
improved earnings but mixed result
FY2007 return on net assets (pre-tax) 3%
MarketsThailand – coup led to depressed local market conditions, leading to more exports. China – very competitive market with tight spreadsVietnam – intense competition and unfavourable tariff Indonesia – strong demand continuesMalaysia – record domestic despatches.
Performance –FY2007vs. FY2006
Improved segment earnings due to:―higher prices―higher volumes― lower business development and pre-operating
costs―partly offset by higher unit costs as the new facilities
ramp-up, higher zinc and steel feed costs and higher depreciation on the new facilities
Total despatches up 32%Country review (next slide)−
Established −
Start-up.
79
1911
4231
0
20
40
60
80
100
FY05 FY06 FY07-1H FY07-2H FY07
EBIT
A$ M
illion
s
Sales revenue up 32% to A$1,387M as greenfield plants start to produce and despatch
Page 23
Coated and Building Products Asia –
Established Asian business performance continues to improve –
absence of Chinese coating margins is an issue
-50-40-30-20-10
0102030405060708090
100
Full year June2006
EstablishedAsia
Businesses
Vietnam China India Full year June2007
ASIAN EBIT Contribution by country in FY 2007
$19m
$77m
$42m
($5m)($3m)
($27m)
Established Asia Businesses include:-
Thailand-
Malaysia-
Indonesia-
Trading offices- Asia HO
EBIT
A$ M
illion
s
Start-up Businesses
Page 24
Coated and Building Products Asia –
excellent growth and outstanding operations performance but mixed EBIT outcomes
Established BusinessesThailand - “coup stalls strong recovery”
―
Political uncertainty continues with elections now expected Dec 07
―
Increased exports, including to India and Europe
―
Very strong operations performance –
MCL No. 2 at nameplate capacity after 18 months.
Indonesia – “fully loaded domestically”―
Strong domestic market―
Operating at capacity. Sourcing product from other BSL operations.
―
Work on MCL No.2 recommenced
Malaysia – “strong turnaround continues”―
Good domestic demand―
Resumption of exports―
Improved coating yields
Start-up BusinessesVietnam – “overcoming challenges”
―
Big improvement in operations performance in 2H―
Intense competition and unfavourable tariffs―
Initiatives being implemented –
to improve yields, reduce costs and grow markets
―
Coating business breakeven in first operating year
China – “coating market in China is low margin”―
Coating market –
reduced spread (cold rolled to selling price) is the issue
―
Implementing sales initiatives (based on major market study)
―
Operations –
running ahead of schedule
India – “strong buildings demand at Tata BlueScope”―
3 downstream PEB / rollforming
facilities operating ahead of schedule
―
Strong PEB sales―
Coating development progressing with equipment being ordered and construction commenced.
FY06 FY07 Variance FY06 FY07 Variance
Revenue: $685M
$860M + $175M
$393M
$529M +
$136M
EBIT: $52M
$81M
+ $29M
$(29M)
$(35M) ($6M)Note: At the Coated and Building Products Asia segment level, sales revenue and EBIT eliminates sales revenue and profit in stock (EBIT) for transactions within “established”
and “start-up”
businesses
Page 25
0
20
40
60
80
100
120
Arcelor +
Mittal
Nipp
on Stee
l
JFE
POSC
O
Corus +
Tata
Baos
teel
US Stee
l
Nuco
r
Severstal
Thyssen Kr
upp
Evraz
Gerdau
Wuh
an
ChinaS
teel
Maan
shan
Blue
Scop
e
SSAB
+ Ip
sco
CSN
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Crude Steel Production (MT)
Revenue (US$m)
0
200
400
600
800
1,000
1,200
1,400
1950 1970 1990 2010
6.0%
3.1%
0.9%
6.8%
Japan: 6.9% World Ex-Japan: 1.8% (1965-1980)
USSR: -2.0% World Ex -
USSR: 1.4% (1980-2000)
1960 1980 2000
China: 20.9% World Ex-
China: 2.5% (2000-2007)
Compound Annual Growth Rates
IndustryConsolidation
Global Steel IndustryGlobal Steel Industry
Page 26
Global steel industry –
our long term view has not changed
CHINARaw material, energy and internal transport costs reducing relative competitiveness of ChinaSteel reform initiatives evident with more promisedUnderlying demand in China is strongLonger term - steel to progressively displace other building materialsSteel export growth occurringHyper-competitive internal market
Global steel industry consolidation accelerating
REST OF WORLD Global economic growth remains strong
Japan – record steel production likely in 2007 stoked by domestic demandRussia – strong economy limits exportsUSA – strong North American economy―World Trade case against China
Middle East and Europe – strong demandContinued production disciplineIndia – growing steel requirementsIncreased alliance activityIncrease in steel industry mining activity
Page 27
0
20
40
60
80
100
120Ar
celo
r + M
ittal
Nipp
on S
teel
JFE
POSC
O
Coru
s + T
ata
Baos
teel
US S
teel
Nuco
r
Seve
rstal
Thys
sen
Krup
p
Evra
z
Gerd
au
Wuh
an
Chin
aStee
l
Maan
shan
Blue
Scop
e
SSAB
+ Ip
sco
CSN
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Crude Steel Production (MT)
Revenue (US$m)
Most companies shown announced intention to acquire or formed alliancesWhat will happen next?
Global steel industry consolidation increases pace
Europe / Americas
Europe / Asia
Asia
Australia, Asia, Americas
Europe
Americas
Note: Above analysis completed for calendar year 2006
Sources: IISI, company reports
Page 28
0
200
400
600
800
1,000
1,200
1,400
1950 1970 1990 2010
Millio
n To
nnes
6.0%
3.1%
0.9%
6.8%
Crude steel production, 1950 - 2007 (Compound Annual Growth Rates, %)
Source: IISI, BSL
Japan: 6.9% World Ex-
Japan: 1.8% (1965-1980)
USSR: -2.0% World Ex -
USSR: 1.4% (1980-2000)
China has driven production growth since 2000
1960 1980 2000
China: 20.9% World Ex-
China: 2.5% (2000-2007)
Page 29
Smorgon Steel Smorgon Steel Distribution Acquisition Distribution Acquisition
Page 30
Transaction details:1.
BlueScope has formally acquired Smorgon’s
metal distribution business (SSD) for
A$700million with effect from 3 August 2007. Net Cost $610M
2.
OneSteel
has acquired all Smorgon
Steel shares on issue (excluding the 179,124,278 shares currently owned by BlueScope)
3.
OneSteel
acquired all of BlueScope’s holding of Smorgon
Steel shares for a cash price approximately equivalent to the value payable to Smorgon
Steel’s other
shareholders under the Scheme, namely for $447M vs
$319m paid in August 06
4.
BlueScope will be responsible for the acquisition and re-supply of scrap metal for OneSteel’s
Sydney steel mill, itself and others
Acquisition of Smorgon
Steel’s distribution business
Page 31
Overview of Smorgon Steel’s distribution business
Australia’s second largest distributor of steel and metal products (flat and long)
Smorgon Steel Distribution has:LTIFR performance of 3.8 (injuries per million hours worked)In FY 06 sold approximately 850,000 of steelAround 12,000 active customers 1,800 employees in 92 distribution outlets nationally Developed international export markets for some products Market share of approximately 35%.
Page 32
Acquisition of Smorgon Steel’s distribution business
Strategic rationaleBrings BlueScope closer to its end customers, consistent with our downstream strategyIncreases ability to serve customers through a broader combined distribution network and product range including flat products, pipe and tube and other long productsImproved efficiencies through linking with the BlueScope flat products supply chain
Financial Effect on BlueScope The financials are per the OneSteel/Smorgon Steel announcements of June 26 and December 18 2006, and reflect a stand-alone listed distribution company. These numbers will not be the same under BlueScope Steel ownership but provide an order of magnitude indication:
Revenue ~A$1,400m (need to reduce by BSL intersegment sales) EBITDA ~A$80m Also expect value add benefit to the Group of $15-20M of EBITDA through synergies and improved efficiencies mostly captured in years 2 and 3. First year’s benefit to be largely offset by integration costs.
We are intending to report as part of Coated and Building Products Australia.
Page 33
BlueScope SteelBlueScope Steel’’ssFinancial ResultsFinancial Results
Page 34
Earnings performance leveraged to better mix and steel price spreads.
(1)
Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue, which was A$156M (FY 2007) vs. A$169M (FY 2006)
(2)
Includes two months of BlueScope Butler financial results.(3)
Operating numbers represent Reported numbers adjusted for unusual or non-recurring events to reflect underlying financial performance from ongoing operations
A$ Millions FY2003 FY2004 (2)
FY2005 FY2006 FY2007 2007-1H 2007-2H
Revenue 5,302 5,770 7,964 8,031 8,913 4,520 4,393
EBITDA (1) 881 1,104 1,655 850 1,423 794 629
EBIT (1) –
Reported 611 818 1,358 556 1,099 635 464
EBIT (1)
–
Operating (3) 1,559 840 1,057 627 430
NPAT -
Reported 452 584 982 338 686 388 298
NPAT –
Operating (3) 1,129 555 643 385 258
EPS (cps) -
Reported 57.1 77.8 134.0 47.9 95.3 54.7 40.6
EPS (cps) –
Operating (3) 154.0 78.8 89.3 54.3 35.0
Page 35
900
950
1000
1050
1100
1150
1200
1250
ReportedResult
DiscontinuedBusiness -Packaging
PackagingStandalone
Losses
Op Lossesfrom
businesses tobe closed
DiscontinuedBusiness -
Taiwan
DiscontinuedBusiness -Vistawall
RestructureCosts
Grow thActivity
Asset Sales UnderlyingResults
Underlying FY2007 BlueScope financial performance
EBIT$M
NPAT$M
EPScps
Reported Result 1,099 686 95.3
One-off adjustments (42) (43) (6.0)
Underlying Result 1,057 643 89.3
($AM)
EBIT NPAT
Discontinued BusinessesPackaging Taiwan Vistawall
(9)17
(86)
(7)17
(40)
Packaging Standalone losses 62 43
Operating results from businesses to be discontinued
Packaging Products (34) (23)
Growth Activity Business development & pre-
operating activities 20 18
Other Staff downsizing Asset Sales Tax Adjustment
(5)(7)0
(3)(5)
(43)
(42) (43)
EBIT
$M
Other unusual and one-off items include:
$1,099m
$62m
$1,057m
($86m) ($7m)($5m)
$17m
($9m) $20m($34m)
PKSW (exp v domestic) (27) Other (7)
PackagingFY07 result (53)Closure costs (9)
Erksine
Park, NSW
India 5China 5West Sydney 7Other
3
Page 36
400
500
600
700
800
900
1000
1100
1200
Full year June2006
Hot RolledProductsAustralia
Coated & BldgProducts Aust
NZ & PacificSteel Products
Coated & BldgProducts Asia
Hot RolledProducts Nth
America
Coated & BldgProducts Nth
Am
Corporate &Group
DiscontinuedBusinesses
Full year June2007
-
EBIT
A$ M
illion
s
EBIT MovementsFrom FY2006 $456M ($3M) $105M $19M $188M $9M $(21)M $(197)M
To FY2007 $759M $41M $90M $42M $180M $37M $(66)M $16M
Due to: •
Higher export steel prices
•
Higher domestic volumes
•
Higher sales vols
•
Higher zinc costs
•
Improved operations
•
Increased export sales
•
Higher prices
•
Higher zinc costs
•
Exchange rate (NZ$ vs
US$)
•
Higher sales vols
•
Higher domestic prices
•
Higher steel feed & coated costs
•
Improved spread (North Star) in US$ (but lower in A$)
•
Higher vols
for trading office sales
•
Sales prices more than recover feed costs
•
Improved productivity
•
Unfavour
able PISE
•
SSX dividend
•
Taiwan closure •
Tinplate closure•
Vistawall
sale
FY2007 Sales Revenue
•
$3,919M+13%
•
$3,186M+15%
•
$728M+3%
•
$1,387M+32%
•
$566M(inc. NSBSS)
+13%
•
$788M(6%)
EBIT variance FY2006 to FY2007 by reporting business segment
$556m
$302m
$1099m$213m
$44m
($7m) ($45m)
$23m
($15m)
$28m
All BlueScope business segments profitable
Page 37
As at A$ Millions 31 December 2006 30 June 2007
Assets Cash 58 36 Receivables 1,207 1,269 Inventory 1,409 1,271 Other Assets 1,143(1) 1,259(1) Net Fixed Assets 3,736 3,671
Total Assets 7,553 7,506
Liabilities Creditors 833 881 Interest Bearing Liabilities 1,983 1,538 Provisions & other Liabilities 1,249 1,222 Total Liabilities 4,065 3,641
Net Assets 3,488 3,865
Balance sheet –
working capital reductions and lower gearing improve financial flexibility
Net Debt / (Net Debt + Equity) 35.6% 28.0%(1) Includes BlueScope’s 19.9% shareholding in Smorgon
Steel
Sales up 11% with total
receivables & inventory flat
Debt down even with
Smorgon
19.9% ($319M)
Now below target gearing
30-35%
Page 38
Cash –
return of strong cash flows
(1)
Purchased 19.9% shareholding in Smorgon
Steel (2)
Reflects shares issued under the shareholder dividend reinvestment plan ($97M) the full underwriting of the FY2006 final ordinary dividend ($119M) and employee share plan ($5M).(3)
Reflects capital injection by minority interests in subsidiaries.(4)
All periods normalised to reflect sale of receivables program cash flow movements as debt.
A$ millions 2003 2004 2005 2006 2007 2007-1H 2007-2HCash from operations 795 1,012 1,671 903 1,364 752 612
Working Capital Movement (31) (94) (432) (100) (21) (55) 34Net operating cash flow 764 918 1,239 803 1,343 697 646Net investing cash flows- Capital & investment
expenditure(209) (585) (663) (816) (493) (283) (210)
-
Smorgon
shareholding(1) - - - - (319) (319) _
-
Other 44 7 41 23 271 38 233Net cash flow before
financing & tax599 340 617 10 802 133 669
Net financing cash flow (468) 309 348 870 (506) (23) (483)Payment of income tax (29) (119) (312) (356) (229) (126) (103)Share buy-back (26) (259) (327) (96) -Share issues (2) - - - - 221 168 53Dividends- Ordinary (75) (191) (273) (314) (321) (169) (152)
- Special - (53) (75) (142) - - -Other (3) - - - 2 2 2 -Net increase in cash held 1 27 (22) (25) (31) (15) (16)
Page 39
Major project capital and investment spending profile
PROJECTSAll in A$million
Total Est. Capex / Cost
Actual to 30/6/06
Actual FY2007 FY2008 FY2009 FY2010
Projects completedThailand –
Coating expansion 80 80 - - - -
Vietnam –
Coating / Painting 136 136 - - - -
China
-
Coating and Painting Facility-
Guangzhou Butler / Lysaght 27433
26431
102
--
--
--
India -
Butler / Lysaght facilities (50% interest) 44 32 9 3 - -AustraliaPort Kembla (PKSW) - HSM expansion
- Sinter Plant EmissionsWA Service Centre
10210021
999521
35-
---
---
---
Western Sydney Colorbond® 150 95 52 3 - -
Projects to be completed
India -
Coating / Painting (50% interest) 135 - 5 82 39 9
Indonesia –
Coating / Painting 134 14 - 71 43 6
PKSW –
Blast Furnace No. 5 Reline –
Sinter plant upgrade 330134
562
509
5150
16871
52
INVESTMENTSSmorgon Steel’s Distribution businessButler ManufacturingLysaght and water acquisitions
700277110
-277110
319(1)
-19
253(2)
--
---
---
Total capital spending(4) 2,760 1,312 483 513 321 22
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. (4) Cogeneration feasibility study being undertaken over next 15 months and the capital cost of the project, will likely be in the range of A$700 –
1,000M.
Page 40
EBIT remains sensitive to realised
hot rolled coil prices and raw material costs
(1)
The change in export HRC price assumes proportional effect on export slab, and flow on to domestic pipe and tube market and to other export products. This does not include the potential impact on Australian domestic coated product prices, as the flow on effect in the short term is less certain.
(2)
The movement in the Australian dollar/US dollar exchange rate includes the restatement of US dollar denominated receivables and payables and the impact of translating the earnings of offshore operations to A$.
(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)
+/ 1¢
movement in Australian dollar / US dollar exchange rate(2)
+/– US$10 / tonne movement in NSBSL HRC price to scrap spread+/– 2% movement in slab production in Australia, New Zealand & USA+/– US$10 / tonne movement in coal costs+/– US$10 / tonne movement in iron ore costs
85
10 12 17 50
100
Full Year (current)
Full Year (previous)
– 141128
4590
86
(3)
(3)
Page 41
Transitioning to MD & CEO of BlueScope
Announced as Kirby’s successor August 6, 2007To take effect 1 November 2007My intention is to provide investors with a detailed review of my
new management structureapproach to doing business, and any strategy revisions
on or around the time of the AGM in November. This will be followed by an investor roadshow.
My review process will include a rigorous “test and refresh” activity ofmarket opportunitycapability, and execution plans
for each of our businessesI look forward to working with you and briefing you in detail in November.
Page 42
In summary In summary -- a year of a year of great achievements great achievements
Page 43
July 2002 –
August 2007 –
“Oh what a journey”
Dynamic Global Steel
Market
Dynamic Global Steel
Market
Geographic and Product
Diversity
Geographic and Product
Diversity
Strong Board & Management
Team
Strong Board & Management
Team
Growth Opportunities in
Asia
Growth Opportunities in
Asia
Low Cost Producer
Low Cost Producer
Strong and Flexible Capital
Structure
Strong and Flexible Capital
Structure
Profitable Through the
Cycle
Profitable Through the
Cycle
Consistently Strong Cash
Flows
Consistently Strong Cash
Flows
Strong Operating
Track Record
Strong Operating
Track Record
Value Added Branded Products
Value Added Branded Products
A VERY DIFFERENT KIND OF STEEL
COMPANY
Page 44
Includes Contractor performance from 2000Includes Butler performance from May 2004
Includes Contractor performance from 2004Includes Butler performance from May 2004
1.5
0.9 0.80.4
4.1
3.5
2.8
1.8
0
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004 2005 2006 2007
Lost
time i
njurie
s per
milli
on m
an-h
ours
worke
d
Medically Treated Injury Frequency RateLost Time Injury Frequency Rate
21.9
17.0
12.4
9.48.0
9.3
6.5 6.4
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007
Medic
ally t
reate
d inju
ries p
er m
illion
man
-hou
rs wo
rked
Reported performance for IISI member companies (employees & contractors)
NSW Manufacturing 27.9
in 2005
Taking care of our employees
One of my most pleasing outcomes since becoming President of BHP
Steel in March 2000, has been our focus and improvements in our safety performance:
And
over the same period we increased our number of employees from approximately 13,500 to 18,000 or over 30%
Page 45
0
100
200
300
400
500
600
15/07/02 15/12/02 15/05/03 15/10/03 15/03/04 15/08/04 15/01/05 15/06/05 15/11/05 15/04/06 15/09/06 15/02/07 15/07/07
BLUESCOPE STEEL - TOTAL RETURN INDEX S&P/ASX 100 - TSR Index (Rebased)
15/7/2002 – 16/7/2007
Source: ABN AMRO
Taking care of our shareholders
BlueScope’s total return to shareholders vs
ASX 100 over 5 years since listing.
INDE
X
BlueScope’s TSR 15/7/2002 – 16/7/2007 +500%
Page 46
A$557M
A$2,649
A$3,291
Less internal / otherTotal revenue
Downstream
Midstream
Upstream
(A$1,225M)
A$5,272M
A$2,064M
A$3,751M
A$4,805M
FY2007
From the “Triangle”
to the “Trapezoid”
+270%
+42%
+46%
+68%(A$1,760M)
A$8, 860M
FY2003
Page 47
Global group sales revenue mix –
mid and downstream sales revenue growth powering ahead
Downstream
Midstream
Upstream
229.4%
16.2%
37.9%
12.5%
21.9%
5.9%
A$1,835M
A$3,078M
A$4,539M
A$2,064M
A$3,751M
A$4,805M
A$557M
A$2,649M
A$3,291M
FY2003 FY2005 FY2007
Less internal / other (A$1,225M) (A$1,511M) (A$1,760M)Total Sales Revenue A$5,272M A$7,941M A$8,860M
+68.0%
Page 48
Historical revenue and EBITDA growth by stream since listing
A$ Millions FY03 FY05 FY07 Growth2003 - 2007
Sales Revenue
Upstream 3,291 4,539 4,805 + 46%Midstream 2,649 3,078 3,751 + 42%Downstream 557 1,835 2,064 + 270%Other / Eliminations (1,225) (1,511) (1,760)Total 5,272 7,941 8,860 + 68%
EBITDAUpstream 672 1,694 1,195 + 78%Midstream 297 123 184 -
38%
Downstream 40 42 108 + 170%Other / profit in stock elimination
(128) (204) (64)
TOTAL 881 1,655 1,423 + 62%
Page 49
Strategy of focus on construction has offset the contraction in manufacturing in Australia over the last 5 years
Sales Tonnes
Construction
59%46%
FY2003 FY2007
Non-dwelling 25%
Dwelling 22%
Engineering 12%
Manufacturing 14%
Agriculture & Mining 13%
Auto & Transport 8%Packaging 6%
Non-dwelling 22%
Dwelling 18%
Engineering 6%
Manufacturing 22%
Agriculture & Mining 11%
Packaging 8%
Auto & Transport 13%
Desp
atch
es ‘0
00 to
nnes
500
1000
2,000
2,500
3,000
1,500
- 3%Despatches 2.710mt 2.629mt
500
1000
2,000
2,500
3,000
1,500
Page 50
From a promising start in 2002 to a dynamic future in 2007
• SHAREHOLDERS • CUSTOMERS
• COMMUNITIES • EMPLOYEES
Page 51
Questions & Answers Questions & Answers
FY2007 Results Presentation Period Ended 30 June 2007Kirby Adams, Managing Director and Chief Executive OfficerPaul O’Malley, Chief Financial Officer 30 June 2007
ASX Code: BSL
Page 53
Supporting InformationSupporting Information
Page 54
Reporting business segments
Corporate / Group
Hot Rolled Products
Australia
Lowest quartile producerLeading supplier of flat steel in AustraliaGlobal scale
o
Port Kembla Steelworks
New Zealand & Pacific Islands
Products
Only fully integrated flat steel maker in New ZealandLeading domestic market share of flat products
o
Glenbrook, NZo
Pacific Islands
Pre-eminent global designer / supplier Pre-engineered buildingsNo 2 position in North America and no. 1 in China
o
Butler buildings
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)
o
Delta, Ohio
Coated & Building
Products Asia
Pre-eminent seller of branded steel in AsiaLower cost “backward integration” growth strategy
o
Indonesian, Malaysian, Thailand and Vietnamese operations
o
China, including Butlero
Lysaght Asiao
India – Tata BlueScope JV
Largest supplier of metallic coated and painted steel in AustraliaLeading market shares in most key products
o
Western Porto
Springhillo
Lysaght Australiao
Service Centreso
Smorgon Distribution
Coated & Building Products Australia
Page 55
IndonesiaMetal Coating 100kt (+165kt)
Painting 40kt
(+120kt)
Western PortHot Rollling
1.43mtCold Rolling 1.0mt
MC (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
+Australia
7 Service Centres41 Lysaght Sites
7 BlueScope Water
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
Annualised Production Capacities and Approved Growth as at June 2007
Asia24 Lysaght and
PEB Sites
IndiaMetal Coating 250kt
Painting 150kt
(1)
CRC from packaging cold mill
Page 56
BlueScope Steel China footprint
BlueScope Steel in China1 Metal Coating/Painting Line Facility4 Lysaght Manufacturing Facilities2 Butler PEB Manufacturing Facilities60 Butler/CSC Sales Offices24 Butler District Offices/Sales Office
Page 57
BlueScope Steel in North America1 Regional Office4 BlueScope Steel Sales Office2 Joint Ventures7 Butler Manufacturing Plants
12 Butler Sales/Engineering Offices
BlueScope Steel North American sites
Page 58
BlueScope Steel’s communities are our homes
Supporting our Communities
Actions:Corporate Donations & Sponsorship PolicySite based community relations plansCollaborative community partnershipsButler Foundation in USWorkplace giving in Australia
Actions:HSEC PoliciesEnvironmental Management standardsPerformance targetsCompliance systemsFormal audit processesIncident Management Systems
Positioning for the FutureEnvironmental Governance and Compliance
Key Components:
“Our success relies on communities supporting our business and products. In turn, we care for the environment, create wealth, respect local values, and encourage involvement. Our strength is in choosing to do what is right.” *
Actions:Greenhouse Gas abatement optionsCogeneration feasibility studyEmissions managementWater reduction initiativesIISI CO2 Breakthrough ProjectAsia-Pacific Partnership on Clean Development and Climate
* BlueScope Steel Bond
Page 59
Water conservation –
clear focus on further reducing fresh water consumption
BlueScope Steel’s total Australian daily fresh water consumption - 40 megalitres per day (ml/day) (FY2006)Port Kembla Steelworks (PKSW)
Consumption of fresh water – 37 ml/dayInnovative waste water recycling project (with Sydney Water) will reduce consumption by more than 50% to 17 ml/day Salt water consumption (approx 815 ml/day) in lieu of fresh water consumption
Springhill (Port Kembla) has reduced its fresh water consumption by approximately 50% in last 5 years.Western Port to cut its freshwater use by over 60%.
Port Kembla Steel Works Total Water Use (ml/day) for process and cooling Western Port
$21.5 million water recycling project approved (including funding from Victorian Government).
Between BlueScope and South East Water.
The Western Port project will also reduce treated wastewater discharged to Western Port Bay by 75%.
Project expected to be competed in 2009.
Salt Water Waste Water Fresh Water
96%
2%2%
Page 60
55
5048 47
41
34 34
3129 29
27 26
23 22 22 21 20 19 18 17 16 16 15 14 13
10 10 10 9 8 7 7 6 6 5 4 3
Blue
Scop
e
AK S
teel
Kobe
Ste
el
TKS
Salz
gitte
r
Sum
itom
o
Tech
int
Voes
talp
ine
Arce
lor M
ittal
Hyun
dai S
teel
US S
teel
Riva
Gro
up
Nipp
on S
teel
JFE
Baos
teel
Hand
an
Panz
hihu
a
Kunm
ing
Stee
l
Maa
nsha
n
Seve
rsta
l
Tata
Cor
us
POSC
O
Essa
r
USIM
INAS
Baot
ou
Mag
nito
gors
k
Nuco
r
NISC
O
Ind
Unio
n
Erde
mir
Ansh
an
SAIL
Benx
i
Chin
a St
eel
Ilyic
h
Wuh
an
Gerd
au
VALUE-ADDING CAPABILITY (Metal Coating Capacity as % of HRC Capacity)
NOTE: Compiled from the largest 60 steelmakers. Excludes those who do not have flat steel metal coating capacity
Source: IISI ‘World Steel in Figures’, CRU ‘Steel Sheet Quarterly Oct 2006
In addition, leading global positions in:RollformingPaintingPre Engineered Buildings
BlueScope Steel –
a global leader in adding value to hot rolled coil
Will increase to 55% with recently announced CAPEX (India & Indonesia)
Page 61
Global steel industry consolidation –
announcements over last 12 months
July 07
June 07
–
Gerdau
Ameristeel
announced its intention to acquire US Steel produce Chaparral Steel for US$4.22 billion.
–
Ternium
announced the acquisition of Grupo
Imsa, for US$3.2M, had been completed.
–
Steel Dynamics, Inc. announced that it will acquire The Techs, for US$360 million on a cash free basis (subject to adjustments).
May 07 ―
Mitsui & Co. (U.S.A.) Inc acquired Steel Technologies Inc. for US$532 million.―
U.S. Steel Corp to acquire Lone Star Technologies Inc for US$2.1
billion. The merger created the country’s largest tubular products producer.
―
Baosteel
proposed merger with Baotou Steel Union
Apr 07 ―
Essar
Global acquires Algoma for C$1.8 billion (US$1.6 billion)
Mar 07 ―
BlueScope Steel agrees to purchase Smorgon
Distribution for AUD$700 million
Feb 07 ―
Rautaruukki
announces plans to acquire Norwegian steel bridge supplier Scanbridge
AS for EUR $6.4 million (Downstream)
Jan 07 ―
Nucor announces acquisition of Harris Steel Group (US$858 million) ―
Tata Steel acquires Corus Group for £6.2 billion ($12 billion), creating the world’s fifth-biggest steelmaker.
―
Baosteel
acquires Bayi
Iron & SteelDec 06 ―
Arcelor
Mittal
acquires Sicartsa, a Mexican integrated long products mill, for an enterprise value of US$1.44bn
Page 62
Consolidation continued…
Nov 06 ―
Evraz
acquires Oregon Steel for US$2.3bn
―
CSN and Esmark
in bidding war to acquire Wheeling-Pittsburgh
Oct 06 ―
Tenaris
acquires Maverick (pipe and tube) for US$3.2bn―
Posco
and Nippon announce that they will spend more than a total of $900 million to increase their stakes in each other to ward off hostile takeover bids. Nippon Steel will buy about 2% of Posco’s
shares to bring its stake to 5.32% and Posco
will raise its stake in Nippon to 3.81% by March 31st
Jun 06 ―
Proposed merger of Smorgon
and OneSteel
announced―
Mittal
acquires Arcelor
for €38bn Apr 06 ―
NCI Building System acquires Robertson Ceco
for US$370M
Page 63
BlueScope Steel Group EBIT variance FY 2007 vs
FY 2006 –
Continuing or underlying business
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
Full year June2006
Export Prices DomesticPrices
Volume NSBSL Conversion &Oth Costs
Raw MaterialCosts
ExchangeRates
Other One-offs Full year June2007
-
$753m
$439m
$1083m
($365m)
($13m)
$76m
($44m)
($34m)$207m
$64m
Ore, Coal, Scrap (143)Coating Metals (141)Steel Feed (81)
EBIT
A$ M
illion
s
Higher Freight (28)Higher labour costs (23)R&M (12)Higher costs in Asia (10)Research costs (12)Impact Western Port fire 36Favourable production volumes 22Other (7)
Asset Sales (4)
Redundancy provisions 41
Smorgon dividends 29
Depreciation (mainly Asia) (20)
Other 18
Page 64
400
500
600
700
800
900
1000
Full year June2006
Export Prices DomesticPrices
Volume Mix Conversion &Oth Costs
Raw MaterialCosts
ExchangeRates
Other Full year June2007
-
Hot Rolled Products Australia (PKSW) –
variance analysisEB
IT A
$ Milli
ons
Freight (30)R&M (18)Labour (16)Volume 22Other
(12)
Note
* BlueScope purchased 300-400kt of iron ore at the end of FY2005 before the 71.5% price increase became effective and so used lower priced ore in the first half of FY 2006. A similar transaction was not undertaken in FY 2007.
$456m
$349m
$759m
($7m)
($8m)($54m)
$34m
$83m
$46m
($140m)
Higher slab & HRC prices
Improved domestic sales
Redundancy provision 34
Iron Ore (24)Coal (14)Opening Inventory (69)Scrap
(33)
Page 65
Hot Rolled Products Australia –
net annual movements in total PKSW raw material costs
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008
S&A Conversion Costs Despatch & Freight Raw Materials
-3%
+36%+34%
+2% -2%
Page 66
Hot Rolled Products Australia -
product flow (Indicative) FY2007
Port Kembla Steelworks5.31mt slab FY2007
(5.28mt slab FY2006)
Hot Strip Mill (1)
54%(49%)
Plate Mill9%
(8%)
C&BP Australia (2)
(Western Port)22%
(16%)
C & BP Australia (2)
(Springhill)49%
(54%)
Domestic HRC23%
(21%)
Notes:(1)
+400kt HSM expansion was completed July 2006. This did progressively see slab sales reduced by an equivalent amount over FY2007.
(2)
“C&BP Australia”
is Coated and Building Products Australia.
Export Slab (1)
15% (0.8mt)
(27%) (1.4mt)
Export HRC
28% (0.8mt)
(25%) (0.6mt)
Page 67
Slab and HRC price benchmarks
Previously recommended the Japan to Korea HRC price as being a reasonable public benchmark for BlueScope’s domestic and Asian HRC sales; andContinue to recommend the following both benchmarks
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
$700
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
US$
/mt
SBB HRC East Asia Import CFR
Source: Steel Business Briefing
Page 68
100
120
140
160
180
200
220
240
260
280
Full year June2006
Trading Offices NS BSL Castrip / Other Full year June2007
-
Hot Rolled Products North America –
FY 2007 vs
FY 2006 EBIT variance analysis
(North Star BlueScope 50% only)Sales revenue up 1% to A$722MEBIT down 8% to A$156MFY2007 return on net assets (pre-tax) 59%
This segment comprises:North Star BlueScope Steel (50% interest)Castrip LLC and North American and European sales offices
EBIT
A$ M
illion
s $188m$180m
$5m ($13m)-
Page 69
Hot Rolled Products North America –
new baghouse
installation
Looking after our employees and environment –
the new baghouse
has significantly improved working conditions. The capital cost is approximately US$40M (100% project) and was completed mid CY 2007.
Pre-installation Post-installation
Page 70
50
60
70
80
90
100
110
120
130
140
150
Full year June2006
Export Prices DomesticPrices
Volume Mix Conversion &Oth Costs
Raw MaterialCosts
ExchangeRates
Other One-offs Full year June2007
New Zealand and Pacific Islands Products performance variance analysis
FY2007 vs. FY2006Sales revenue up 3% to A$728MEBIT down 14% to A$90MFY2007 return on net assets (pre-tax) 24%
EBIT
A$ M
illion
s
$105m$5m
$90m
($21m)
$6m $2m
-
$22m
($30m)
$1m
Higher coating metals (22)
Coal (1)
Steel Feed (7)
Page 71
Export Hot Rolled 34% (6%+28%)
Domestic Pipe4%
Domestic Hot Rolled8%
Export Cold Rolled14% (1%+ 13%)
Domestic Cold Rolled12%
Coating lines74%
New Zealand Steel (FY2007) product flow*
Export Metal Coated13% (8% + 5%)
Domestic Painted20%
Domestic Metal Coated61%
ExportIron Sand
Concentrate0.8mt
Export Vanadium Slag
15 kt
Mine SitesIron Sand Concentrate
2.0mt
New Zealand Steel0.6mt Slab
0.6mt Hot Rolled
Cold Strip Mill54%
* Indicative annual prime production and sales (t)
Export Painted6% (4%+2%)
(External % + Internal %)
Page 72
-50
0
50
100
150
200
250
Full yearJune 2006
ExportPrices
DomesticPrices
Volume Mix Conversion& OthCosts
ResearchCosts
RawMaterialCosts
ExchangeRates
Other Full yearJune 2007
Coated and Building Products Australia –
variance analysis
FY2007 vs FY2006 EBIT variance analysis (excluding the packaging business, which is reported as a Discontinued Business).
Steel Feed costs (35)Coating Material costs (95)
EBIT
A$ M
illion
s
Net increase in export sales
Sales revenue up 15 % to A$3,186m EBIT from ($3m) up to A$41mFY 2007 return on net assets (pre-tax) 3%
($3m)
$110m
$41m
($32m)
$23m
($40m)
$29m
$22m$74m
($130m)
($12m)
Page 73
Coated and Building Products Australia –
domestic building market remains strong
Building MarketsRecord building market full-year volumes for BlueScope.Record volumes achieved in COLORBOND® Steel’s 40th Anniversary year. TRUECORE® (steel framing) sales growing rapidly.Successful launch and market take-up of COLORBOND PERMAGARD®. Full year sales positively impacted by strong commercial/industrial activity, supported by solid residential building activity in WA & Qld.
Manufacturing and distribution marketsMajor share recovery achieved in distribution channel in first half of the year.Distribution, automotive and manufacturing markets remain under pressure from imports and stronger A$.
Page 74
Water –
BlueScope is part of the solution
Tank a day is a $1 million BlueScope initiative to help school children help our environmentBlueScope Water continues to grow rapidly with a focus on water storage and management solutions for households through to industrial consumersUrban Water Storage experienced continued rapid growth with a focus on:
Retro fit WATERPOINT SLIMLINE® and WATERPOINT CLASSIC® rainwater harvesting solutions to existing homesInstallation of THINKTANK® rainwater harvesting systems in new homes
Pioneer Water Tanks range of rural & industrial water storage products continue to perform solidly and to grow export:
The range of Pioneer GALAXY® tanks are a key component in drought proofing and Industrial rainwater harvesting and water management
Production capacity is currently being expanded in Queensland, Victoria and Perth.
Another downstream business to deliver growth
Page 75
New building solution –
Lysaght
Quickform
product
Quickform Building Homebush, Sydney
Benefits:Full load bearing fire and sound rated walls for multi-tenancy applicationsLight weight (minimum labour requirements)Fast and easy to install
Page 76
Our customers are our partners
Our Market OfferHigh quality productsAdvertising / promotional supportServiceDeliverySatisfaction WarrantyTechnical Support
Creating New productsNew markets
TUBEFORM®
XLERPLATE®
Page 77
Another building solution –
Lysaght
Bondek®
Page 78
Value-added solutions
Graffiti Remover
NEETASCREEN Plus Fence AQUAPLATE®
Page 79
Smorgon distribution business –
product flows
In FY 2006, Smorgon Steel Distribution supplied over 850,000 tonnes of product, as follows:
Source: Smorgon Steel
380kt 260kt 150kt 70kt
Roll forming Roll forming
Page 80
Smorgon
distribution business –
national outlets (FY2006)
Source: Smorgon Steel Total: 92
BlueScope Steel has now strengthened its channels to the Australian market, in addition to it’s:
Lysaght
Service Centre
Water
businesses.
Page 81
Total Purchase Price $700m
Current Value of 19.9% stake in SSX1 ($447m)
Additional cash to be paid to Smorgon Steel $253m
Original investment (19.9% of Smorgon Steel) $319m
Pre -
tax cash outlay $572m
Estimated tax on gain from original investment $38m
Total cash outlay $610m
Note: The above does not include the ~$29m in fully franked dividends received from Smorgon Steel, or any interest paid on borrowings
1)
Final value of SSX shares is still subject to confirmation.
BlueScope Steel reaches agreement with OneSteel and Smorgon Steel
Page 82
0
10
20
30
40
50
60
70
80
90
100
110
120
130
Full year June2006
Export Prices DomesticPrices
Volume Mix Conversion &Oth Costs
Raw MaterialCosts
ExchangeRates
Other One-offs Full year June2007
Steel Feed (21)Coating Materials (24)
$19m
$39m
$42m
$11m
$12m
($10m)($7m)
$44m
($45m)
($21m)
Coated and Building Products Asia –
variance analysisEB
IT A
$ Milli
ons
FY2007 vs. FY2006Sales revenue up 32% to A$1,387mEBIT up 121% to $42mFY2007 annualised return on net assets (pre-tax) 3%
EBIT variance analysis
Depreciation (15)
Other (6)
Page 83
Indonesian coated expansion
May 2007 – announced intention to recommence its brownfield coating expansion in Indonesia.Cost US$113m (inc US$12m already spent)Expansion:
construction of a second metallic coating line, with in-line painting at its Cilegon operation (100km west of Jakarta)
New line will be dedicated to producing thin gauge (0.2 - 0.4 mm) coil Operational by end CY2009.Summary of increased output:
Metal Coating Line Painting Line
Current capacity (MCL1) 100,000 tonnes 40,000 tonnes*
Incremental improvement through optimising line loadings at no cost
35,000 tonnes 20,000 tonnes
Plus new line (MCL2)** 130,000 tonnes(Max 170,000 bare tonnes)
100,000 tonnes
Total 265,000 tonnes 160,000 tonnes
* Actual output from 50,000 previously announced due to a higher proportion of thin gauge processing.
** Approximately 80% of the MCL2 output will be in line painted.
Page 84
Indonesia –
metal roofing sheets
Our largest customer in Indonesia, PT Tatalogam Lestari, produces metal roofing sheets from our 0.2mm product.
Source: PT Tatalogam Lestari
Page 85
(k to
nnes
)
Our Asian Coating / Painting / Roll-forming / PEB capacity to improve twofold by FY2009
490
990
175
420
0100200300400500600700800900
10001100
FY2006 FY2007 FY2008 FY2009Metal coating Painting
BY REGION
X 2
X 2.4
Page 86
Indicative FY2007 Zinc and Aluminium
usage (vs. FY2006)
Tonnes Zinc Aluminium
FY2007 FY2006 FY2007 FY2006
AUSTRALIA
Springhill 22,787 21,250 10,632 10,000
Western Port 21,800 17,500 10,900 9,500
Sub-total 44,587 38,750 21,532 19,500
NEW ZEALAND 6,700 6,500 3,400 3,500
NORTH AMERICAVistawall(1) - - 33,000 30,000
ASIA(2) 15,800 12,250 13,800 11,250
TOTAL 67,087 57,500 71,732 64,250
Note:(1
)
Vistawall
business was sold on 29 June 2007.(2
)
In future years BSL Asia’s usage will increase as new mid-stream projects ramp-up to full capacity
Page 87
0
10
20
30
40
50
60
Full year June2006
Export Prices DomesticPrices
Volume Mix Conversion &Oth Costs
Raw MaterialCosts
ExchangeRates
Other One-offs Full year June2007
-
Coated and Building Products North America –
variance analysis
Comprises:Butler buildingsVistawall business was sold on 29 June 2007 and therefore not included in this analysis.
FY2007 vs. FY2006 EBIT variance
Sales revenue down 6% to A$788MEBIT up from A$9m to A$37mFY2007 return on net assets (pre-tax) 50%
EBIT
A$ M
illion
s
$9m
$37m
($2m)
$1m
$19m
$14m
($2m)($2m)
Improved conversion costs following Jackson startup 6 Lower freight 2Improved material usage 3Other 8
Page 88
Calendar year earnings
A$ Millions CY2003 CY2004(2) CY2005 CY2006
Revenue 5,328 7,029 7,980 8,693
EBITDA(1) 857 1,501 1,411 1,052
EBIT(1)
-
reported 581 1,212 1,111 742-
operational - - 1,308 966
Net profit-
reported 436 859 792 413
-
operational - - 943 586EPS (¢) 56 116 110 59
(1)
Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue(2)
Includes eight months of BlueScope Butler financial results
Page 89
From the Triangle to the Trapezoid
Downstream
Midstream
GROWTH PROJECTS
Major projects completed to 30 June 2007 To be completed FY2008 – FY2009
AsiaIndia - PEB and Lysaghtfacilities at PuneIndia – Lysaght facility at Chennai & New Delhi
USA Successful turnaround of Tennessee facility.
Thailand – PEB facilityChina – Guangzhou (PEB and Lysaght)
− Lang Fang (Panels)Australia
A$319M Smorgon Steel shareholding (19.98%)
AustraliaAcquired Smorgon’sDistribution Business (Aug 07)
AsiaThailand – second metal coating line (MCL2)
Vietnam – metal coating (MCL) and paint line (PL) and ramp up in progress
China – MCL and PL and ramp up in progress
AsiaIndia – new MCL & PL construction (mid CY2009)
Indonesia – MCL2 & PL2 (end CY2009)
AustraliaSydney Colorbond® plant start-up (July 2007)
Australia400kt HSM expansion at PKSW
New ZealandFront end study
USANorth Star BlueScope – new bag house installed
AustraliaBF No 5 reline (expected March 2009)Upstream
+270%
+42%
+46%
Revenue increased FY 2003 vs. FY 2007
FY2007 Results Presentation Period Ended 30 June 2007Kirby Adams, Managing Director and Chief Executive OfficerPaul O’Malley, Chief Financial Officer Business Presidents20 August 2007
ASX Code: BSL