JP Morgan Conference Singapore

Transcription

1 JP Morgan Conference Singapore John Knowles, VP Investor Relations Robert Elliott, VP Finance Asian Building & Manufacturing Markets 5 October, 2004 ASX Code: BSL

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, BSL DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR INVESTOR. TO THE FULLEST EXTENT PERMITTED BY LAW, BSL AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS. Page 2

3 Rewarding Shareholders As We Grow Page 3

4 Safety Our goal remains zero harm Lost Time Injury Frequency Rate Medically Treated Injury Frequency Rate Injuries resulting in lost time per million man-hours worked IISI Member Companies (2002) Medically treated injuries per million man-hours worked * Includes contractors from 1996 * Includes contractors from 2003 But, we experienced a fatality on 29 June 2004 Page 4

5 Creating shareholder value as we grow Strong Strong Board Board & Management Team Team Profitable Profitable Through Through the the Cycle Cycle Dynamic Dynamic Global Global Steel Steel Industry Industry Value Value Added Added Branded Branded Products Products Growth Growth Opportunities in in Asia Asia A VERY DIFFERENT KIND OF STEEL COMPANY Strong Strong Operating Operating Track Track Record Record Strong Strong and and Flexible Flexible Capital Capital Structure Structure Consistently Geographic Geographic Strong Strong Cash Cash and and Product Product Flows Flows Diversity Diversity Low Low Cost Cost Producer Producer Page 5

6 BlueScope Steel A global leader in adding value to Hot Rolled Coil 54 Increasing to 54% with recently announced CAPEX VALUE-ADDING CAPABILITY (Metal Coating Capacity as % of HRC Capacity) A similarly strong downstream position in Painting #2 worldwide Rollforming #1 worldwide Pre Engineered Buildings #1 worldwide NOTE: Compiled from the largest 60 steelmakers (excluding those who do not have flat steel metal coating capacity) Source: IISI World Steel in Figures 2004, CRU Steel Sheet Quarterly April 2004 Page 6

7 Metallic coated and painted value added products - Australia Don t risk your reputation Continued process and product innovation from launch in Enhanced technology in ZINCALUME steel is planned for launch in late Most trusted and proven brand in roofing for the Commercial & Industrial Building market. Most versatile product offering outstanding performance in a variety of uses. Eg: residential house framing 11 millionth tonne in Olympic Equestrian Centre Page 7

8 Metallic coated and painted value added products - Australia Making the Right Choice The premier painted steel solution since Most recognised residential roofing material brand in Australia (Source: Consumer Contact Co). Consumer preference is fuelling increased demand for COLORBOND steel fencing and roofing. New colour range launched in 2003 to offer increased design flexibility to match home building trends. COLORBOND steel technology enhanced to provide new for longer performance (2003). A family of products for a variety of applications and environments(eg: Garage Doors, Metallic Finishes, Coolroom Panels). 6 millionth tonne in Page 8

9 Customer value proposition - elements Product Quality Product Brand Strength Market Position Supply Chain Performance Service Excellence In-Market Experience Corporate Strength Performance proven over time Wide range available Warranty protection Constantly revitalised to meet customer needs Market recognition and demand Ingredient branding Trademark protection Market development Innovation Customer relationships Secure and stable supply Tailored for customers Short lead times Superior delivery performance Technical support Problem resolution Training and literature Industry knowledge Local expertise Skilled Account Management Financial strength Reputation for integrity Page 9

10 BlueScope Steel Business Segments Corporate / Group Hot Rolled Products New Zealand Steel Coated & Building Products Asia Coated & Building Products Australia Coated & Building Products North America Lowest quartile producer Leading supplier of flat steel in Australia Global scale o Port Kembla Steelworks o North Star BlueScope o Castrip Only fully integrated flat steel maker in New Zealand Leading domestic market share of flat products Pre-eminent seller of branded steel in Asia Lower cost backward integration growth strategy o Indonesian, Malaysian and Thailand operations o Vietnam o Lysaght Asia o China, including BlueScope Butler Largest supplier of metallic coated and painted steel in Australia Leading market shares in most key markets o Western Port o Springhill o Packaging Products o Lysaght Australia o Service Centres Pre-eminent global designer / supplier Pre-engineered buildings No 1 position in North America and China Page 10

11 Annualised Production Capacities and Approved Growth as at 31 August 2004 Asia / Pacific 23 Roll Forming Sites 2 Butler PEB Manufacturing Plants (China) Thailand Cold Rolling 300kt Metal Coating 175kt +200kt Painting 90kt Malaysia Metal Coating 160kt Painting 70kt China footprint attached Indonesia Metal Coating 100kt Painting 50kt China MC 250kt Painting 150kt Vietnam MC 125kt Painting 50kt Brisbane Painting 88kt Coated and Building Products North America (Refer attached) North Star JV Hot Rolling 1.62mt (100%) Castrip JV Port Kembla / Springhill Raw Steel 5.1mt Hot Rolling 2.4mt +400kt Plate 320kt Cold Rolling 930kt Tinplate/Blackplate 450kt MC (3 lines) 750kt + PL (2 lines) 207kt + Australia 7 Service Centres 27 Lysaght Sites Western Port Hot Rolling 1.43mt Cold Rolling 1.0mt MC (3 lines) 830kt + Painting (2 lines) 330kt + New Zealand Iron sand Mining Raw Steel 625kt Hot Rolling 750kt Cold Rolling360kt Metal Coating 230kt + Painting 60kt Hollow Sections 45kt Page 11

12 BlueScope Steel Lysaght and Butler China Footprint BlueScope Steel in China 1 Metal Coating/Paint Line facility (under construction) 5 Lysaght manufacturing facilities (incl. Taiwan) 60 Lysaght / CSC sales offices 2 Butler PEB manufacturing facilities 24 Butler district offices / sales offices Page 12

13 BlueScope Steel North American Sites BlueScope Steel in North America 1 Regional Office 4 BlueScope Steel Sales Offices 2 Joint Ventures 7 Butler Manufacturing Plants 12 Butler Sales / Engineering Offices 7 Vistawall Manufacturing / Fabrication Plants 12 Vistawall Sales Offices Page 13

14 Consistently strong cash flows A$ millions 2000 (1) 2001 (1) 2002 (1) H H Net operating cash flow before borrowing costs and income tax Net investing cash flows - Capital expenditure - Other Net cash flow before financing & tax (90) 10 (105) (6) (162) 8 (183) 18 (290) (288) (99) (3) (191) (285) Net financing cash flow (493) 75 (8) 83 Payment of income tax (29) (119) (84) (35) Net dividends (75) (244) (155) (89) Net increase in cash held (1) 2000 to and including 2002 normalised. Page 14

15 Capital management rewarding shareholders as we grow 30 Share Buyback - Purchased/cancelled 60.7m shares - Further program 18.0m shares Dividends - All Fully Franked +38% 40 Total return to shareholders since public listing since July 2002: Initial buyback $286m Dividends Paid $313m Final/Special (to be paid) $208m $807m Cents Per Share Special Ordinary 0 FY2003-1H FY2003-2H FY2004-1H FY2004-2H Page 15

16 Growing for the future benefit of shareholders Growth initiatives underway Vietnam (A$160m / early CY2006) new metal coating and paint line facility Thailand (A$80m / mid CY2005) second metal coating facility China (A$280m / mid CY2006) new metal coating and paint line facility BlueScope / Butler integration North America Butler acquisition, integration and business transformation More recent growth initiatives Hot Strip Mill upgrade Port Kembla Steelworks Progressing West Sydney - Colorbond steel centre Page 16

17 Port Kembla Hot Strip Mill expansion (+0.4mtpa) Second Walking Beam Reheat Furnace 7 8 Page 17

18 Major growth initiatives capital spending profile All in A$m Total Est. Capex/Cost FY2004 Actual FY2005 FY2006 FY2007 Vietnam (1) Thailand (1) China (1) Port Kembla HSM expansion (1) Butler acquisition Total (3) (1) Estimated capital costs based on forecast exchange rate assumptions. (2) Butler acquisition cost less cash acquired and not including the benefit of Louisiana Pacific Corporation settlement proceeds received of US$21m. (3) Addition of smaller capital spending programmes bringing total approved CAPEX to over A$1 billion. Page 18

19 Group financial headlines FY2004 Continued to seize market opportunities and drive business improvements Revenue $5.77 billion Record even with A$ strength Despatches 6.94 million metric tonnes Record NPAT $584 million Up 29% to record EBITDA $1,105 million First time over $1.0 billion EBIT $818 million Up 34% EPS 77.8 Up 36% Return on Invested Capital 18.5% Improvement continues Net Cash Flow $315 million Even after Butler & growth expenditure Debt Increased Up $425 million Reflects Butler acquisition and share buyback Gearing (net debt) 12.9% But for buyback and acquisition would be zero Page 19

20 EBIT A$ Millions Strong and improved financial performance across all segments FY03 FY04 Group EBIT $818m North Star BlueScope Steel Hot Rolled Products New Zealand Steel Coated & Building Products Australia Coated & Building Products Asia New business segment as at 1 May months results, including integration costs -9 Coated & Building Products North America Page 20

21 EBIT A$ Millions Hot Rolled Products hard work is paying off FY03 FY04 FY04-1H FY04-2H FY2004 return on net assets (pre-tax) 30.7% Revenue = A$2,732m Markets - Strong global demand - Tight markets for raw materials and product - Record prices in second half - Core long term customer relationships Performance - Annual production records at PKSW and North Star BlueScope Steel - Offset by: stronger AUD/USD iron ore and scrap costs repair and maintenance spending higher employment costs - Enterprise Bargaining Agreement renewed Page 21

22 Product initiatives / branding Establishing brand recognition. For example, the introduction of: Page 22

23 EBIT A$ Millions New Zealand Steel its best ever performance FY03 FY04 FY04-1H FY04-2H Markets - Strong NZ construction demand - Record domestic sales mix - Higher prices - particularly export - Core long term customer relationships FY 2004 return on net assets (pre-tax) 14.1% Revenue = A$560m 20 Performance - Record EBIT - Annual paint line production record - Metal coating expansion completed with full benefit to be achieved in Best ever safety outcomes Page 23

24 EBIT A$ Millions Coated & Building Products Australia Oh What A Feeling! FY03 FY04 FY04-1H FY04-2H 197 FY2004 return on net assets (pre-tax) 16.0% Revenue = A$2,884m Markets - Demand never been stronger construction, automotive, manufacturing - Signs of dwelling market slowing - Industrial/commercial remains buoyant - Price increases implemented - Strengthened channels to market Performance - Annual production records - Feed costs higher in second half = margin squeeze - Low cost capacity improvements continue - Western Port maintenance alliance operational best ever delivery performance - Springhill production and efficiency improvements - Customer survey affirms improved service Toyota President s Award - Packaging business margin pressure Page 24

25 Value-added branded innovations in Australia Page 25

26 EBIT A$ Millions Coated and Building Products Asia the growth continues FY03 FY04 FY04-1H FY04-2H Markets - World s fastest growing steel market - BlueScope Steel uniquely positioned - Prices higher in local currencies - Pre-engineered building demand growing in Asia immediate scale achieved in China through Butler acquisition - BlueScope Steel s branded products increasing presence and growing reputation 20 0 FY2004 return on net assets (pre-tax) 21.5% Revenue = A$689m Performance - All plants operating near full capacity - Strong volume growth of 35% - Achieved A$100m EBIT - Leading safety performance - Major capital projects developed, approved and underway - Excellent EBIT performance in local currencies Page 26

27 Index of EBIT performance of Asian businesses in local currencies Thailand Malaysia Indonesia China Page 27

28 Asia BlueScope Steel s core growth region Growing revenue and profits continue Unique Asian footprint with multiple growth opportunities Innovative - new products and solutions Capacity growth 110 Asian Financial Performance (EBIT) 90 A$ Millions 70 [Insert Picture] Page 28

29 Asian Business Overview Market leader offering : Metallic coated Pre-painted steel Solutions to the building & construction markets No. 1 PEB position in China Through : A network of world class facilities Leading brands & products : Tailored to the local markets and their segments Portfolio of markets : Multi-domestic & export Well developed channels to market tailored to specific market needs Focus on customer service and manufacturing excellence, safety and the environment Core growth region for BlueScope Steel Page 29

30 Asian growth our starting point is the market Lysaght Asia Page 30

31 Apparent steel consumption South East Asia M Tonnes Thailand CY e Indonesia 12 M Tonnes South East Asian Countries- Total Regional Consumption Malaysia CY e M Tonnes Vietnam 12 M Tonnes CY e M Tonnes CY e CY e Page 31

32 China coating development Located at Suzhou, 80kms west of Shanghai. Excellent transport links. Metallic Coating Line - 250,000tpa Paint Line - 150,000tpa Slitter / Recoil Facility - 20,000tpa Capital cost A$280m. Construction started April Start production mid-cy2006. Import replacement. Artist s Impression Risk management. Page 32

33 China Page 33

34 Vietnam coating development Hanoi Airport with Clean Colorbond Roof LYSAGHT HA TAY FACTORY SALES OFFICES Lysaght Pre-Engineered Building LYSAGHT BIEN HOA FACTORY METALLIC COATING & PAINTING SITE Page 34

35 Vietnam Page 35

36 Thailand Page 36

37 Building solutions Roof Trusses Pre-Engineered Buildings Page 37

38 Pre-engineered buildings BlueScope Butler No. 1 in China Many large span buildings sold in China, Vietnam, Thailand, Laos, Cambodia, Malaysia, Sri Lanka, India, Sabah, Indonesia, the Philippines and Fiji Page 38

39 Lysaght PEBs Marketing Literature Page 39

40 BlueScope Lysaght PEB s in Thailand 300 chicken sheds sold in Thailand. The shed design increased bird weight by 10%, reduced energy consumption by 20%, mortality rates reduced by 75% and no birds in these sheds suffered from bird flu. Page 40

41 Components All components are galvanised to prevent corrosion. All parts simply bolt together eliminating on-site welding and speeding up assembly. Page 41

42 Quality roofing & walling profiles Klip-Lok Hi- Ten Spandek Hi- Ten Trimdek Hi- Ten Available in quality, long-life Zincalume and Colorbond finishes with a 20 year warranty Page 42

43 Coated and Building Products North America foundations in place Butler Manufacturing Co. acquisition completed 27 April No negative surprises - Integration team making good progress - New management structure in place - Galesburg facility to close mid-cy Timber business (Lester) sold in July 2004 Continued improvement in non-residential buildings construction in U.S. - Butler Buildings order backlog up - Vistawall despatches stronger Challenges - Rapid steel price increases, higher aluminium costs - Limited steel availability.. On target to achieve consolidated financial goals stated at acquisition - FY05 EPS neutral - FY06 EPS positive Page 43

44 What is a Pre-Engineered Building (PEB)? Fully designed and engineered building Comprising steel structural frame and roofing systems, typically with steel walling Butler is THE PEB company Design, Engineering, Manufacturing, Sales & Marketing Page 44

45 Why PEBs? Speed, cost effectiveness, broad application Example: 110,000m 2 facility, erected in 28 working days Wal*Mart Stores Distribution Centre (Arkansas) 1 July 9 2 July 23 3 July 30 4 August 6 Page 45

46 Butler Buildings North America No. 1 in PEBs Manufacturing Warehouse Retail Recreation Showroom Community Page 46

47 Vistawall Page 47

48 Looking forward to 2005 Global steel industry Higher costs BlueScope Steel strategy Outlook for BlueScope Steel Page 48

49 Global steel industry - consolidation in OECD Production Share of Top 3 Steelmakers in each Region (%, 1998 vs 2003) US 55% EU 50% Japan 64% 33% 31% 49% USS, ISG, Nucor Arcelor, LNM, Corus JFE, NSC, Sumitomo Source : POSCO, POSCO Growth & Innovation, Jan 04 Page 49

50 Global steel industry - dynamic North America Record HRC prices Scrap surcharges and volatility Steel availability Consolidation continues Economic recovery South America Plans for new capacity Raw material rich Low cost India Increasing steel capacity Growing GDP demand Europe Weak demand continues Consolidation benefits CIS Restricted scrap exports Stronger economies Australia / New Zealand Strong economic growth Interest rates? Japan Production at capacity Significant exports Korea Shipyards full BlueScope Steel customer China World s largest steel consumer and producer Less than 5% of BlueScope Steel sales Indirect impact significant Net importer of flat steel Slowdown welcome Raw material / shipping effect SE Asia SE Asia Improved economic growth Volatile tariff structures Page 50

51 Steel making raw material costs are increasing Iron Ore Coal Shipping 6,000 5,000 4,000 3,000 2,000 BDI Index 1,000 0 Nov-99 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03 May-04 unprecedented demand and extremely tight supply position China reducing exports 2-3 Year backlog for shipbuilders SOURCE: ANZ Bank Resources Market Outlook, Mar 04 BDI Baltic Dry Index Iron Ore and Coal Aus-Japan Reference Prices Source: IISI, Baltic Dry Index, SSY Page 51

52 Other metallic coating material costs also increasing Aluminium Zinc Tin 2,000 1,800 1,500 1,300 9,000 US $ /TONNE 1,600 1,400 1,200 1,000 Jun-98 Apr-99 Feb-00 Dec-00 Oct-01 Aug-02 Jun-03 Apr-04 US $ /TONNE Chinese demand has driven 25-30% price rise since Recent Chinese Government actions caused minor price fall... which may be only temporary. 1, Jun-98 Apr-99 Feb-00 Dec-00 Oct-01 Aug-02 Jun-03 Apr-04 Chinese demand is still growing. Potential for further price rises. US $ /TONNE 7,000 5,000 3,000 Jun-98 Apr-99 Feb-00 Dec-00 ` Oct-01 Aug-02 Jun-03 Apr-04 Chinese and world demand outpacing supply. Concentrate inventories depleted. Source: London Metal Exchange (LME) Page 52

53 Marine freight well managed to minimise costs Global marine freight market continues to be tight BlueScope Steel s approach - stagger renewals - long term relationships - limited spot contracts BlueScope Steel largely insulated in FY2004 In FY2005: - Approximately half of our marine freight cost is exposed to higher costs... totalling a net A$70m or approximately 10% of our total transportation spend Page 53

54 Our strategy is unchanged Vietnam China Vietnam China Thailand HSM Expansion Butler PEB/Solutions Rollforming Painted Metallic Coated Cold Rolled Hot Rolled Coil, Plate Slab Australia & NZ Brownfields Australia & NZ Brownfields Water Asia and Regional Growth Value-added branded products Asset productivity Disciplined capital management World-class low-cost operations Manufacturing excellence Supply chain velocity Cost reductions Vigorously defend existing value Page 54

55 Financials Page 55

56 Continued strong earnings performance A$ Millions 2000 (1) 2001 (1) 2002 (1) (3) H H (3) Revenue 4,898 4,941 4,593 5,302 5,770 2,619 3,151 EBITDA (2) , EBIT (2) Net Profit EPS ( ) (4) (1) 2000 to and including 2002 normalised. (2) Includes profit/loss for North Star BlueScope Steel. (3) Includes two months of BlueScope Butler financial results. (4) Weighted average shares on issue 791.5m FY03 and 750.5m FY04. Page 56

57 EBIT variance FY2004 vs. FY2003 EBIT A$m 1100 $82m $79m $2m Higher R&M (42) Employment costs (42) Freight (18) Cost improvements 68 FY03 Superannuation Contribution 32 FY03 Name Change Provision 20 Lower Restructuring Costs $300m ($111m) ($85m) $70m $818m 700 $611m ($130m) June 03 YTD Actual Export Prices Domestic Prices Volume / Mix NSBSL Exchange Rates Conversion & Other Costs Raw Material Costs Other June 04 YTD Actual Page 57

58 EBIT variance June 04 half year vs. December 03 half year EBIT A$m $68m 600 $31m $10m $223m ($10m) $21m $516m 500 ($74m) ($55m) $302m Dec 03 Half Export Prices Domestic Prices Volume / Mix NSBSL Exchange Rates Conversion & Other Costs Raw Material Costs Other June 04 Half Page 58

59 Balance Sheet strength and flexibility A $ M illions A s A t E xcluding FY 04 acquisitions 30 June June June 2004 Assets Cash Receivables Inventory Other Assets Net Fixed Assets 3,086 3,289 3,090 Total Assets 4,753 5,782 5,053 Liabilities Creditors Interest Bearing Liabilities Provisions 1,001 1,267 1,094 Total Liabilities 1,662 2,588 1,859 Net Assets 3,091 3,194 3,194 Net Debt / (Net Debt + Equity) 2.4% 12.9% (excluding off balance sheet items) Page 59

60 Results remain sensitive to BlueScope Steel s realised hot rolled coil prices Assumption Estimated impact on forecast EBIT (A$mil) for year ending 30/06/05 +/ US$25 / tonne movement in BSL s average realised HRC price (1) 75 +/ 1 movement in Australian dollar / US dollar exchange rate (2) 13 +/ US$10 / tonne movement in NSBHP scrap to HRC price spread 12 +/ 2% movement in slab production in Australia and New Zealand 24 +/ US$1 / tonne movement in coking coal costs 5 +/ US$1 / tonne movement in iron ore costs 10 (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. (2) The movement in the Australian dollar/us dollar exchange rate includes the restatement of US dollar denominated receivables and payables. Page 60

61 2004 was another good year... and the momentum continues Anticipate another good year in 2005 Challenges ahead - much higher slab / HRC prices in first half leading to further margin pressure downstream - adjusting to higher raw material and freight cost environment - achieving productivity to offset higher wage / employment costs Opportunities ahead - Butler turnaround and PEB growth - safe and successful project construction - new products and markets - choosing amongst myriad of growth opportunities - further execution of our strategy Seize benefits of our diversified product and geographic portfolio Continue to reward our shareholders as we grow Page 61

62 JP Morgan Conference Singapore John Knowles, VP Investor Relations Robert Elliott, VP Finance Asian Building & Manufacturing Markets 5 October, 2004 ASX Code: BSL