1H FY2018 Financial Results Presentation

Transcription

1 1H FY2018 Financial Results Presentation Mark Vassella, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 26 February 2018 BlueScope Steel Limited. ASX Code: BSL ABN:

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. THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, WHICH CAN BE IDENTIFIED 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 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 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. 2

3 1H FY2018 HEADLINES

4 Safety: improving global performance so far in FY2018 Lost time injury frequency rate Medically treated injury frequency rate Lost time injuries per million man-hours worked Medically treated injuries per million man-hours worked Years ended 30 June YTD YTD Years ended 30 June 4 Charts include contractors from 1996, Butler from May 2004, 2007/08 acquisitions, Australian operational restructure in 2012 and Pacific Steel, Fielders and Orrcon from July 2015 Note: (1) The MTIFR baseline was reset from 4.4 to 6.3 due to changes in calculation method

5 A strong finish to the half year; delivered $517M underlying EBIT Underlying EBIT $516.8M Similar to 2H FY2017 Includes $32.1M one-off benefit 1 from settlement of historical coal supply dispute Underlying EBIT return on invested capital 16.8% Third successive half year above 15% Reported NPAT $441.2M 23% improvement on 1H FY2017 One-off benefits contributed $84.2M 2 5 Notes: (1) cash settlement and reversal of prior year provisions (2) one-off tax benefit relating to the recently announced U.S. tax reform ($52.1M) and one-off benefit from settlement of historical coal supply dispute ($32.1M) Figures shown are for the six months ended 31 Dec Underlying results are provided to assist readers better understand the underlying financial performance; refer to page 58 for information on the adjustments from reported financial information.

6 Solid balance sheet position and ongoing capital management Free cash flow (Operating cash flow less capex) $146.2M Lower due to seasonality of working capital $609.3M for CY2017 Capital management Announced framework in February cps interim dividend 14% franked $148M buy-back during 1H FY18; $150M extension announced Net debt $262.1M Down 51% on 31 Dec 2016 Up $30M on 30 June 2017 Leverage 0.2x Interest cover 13.9x Post $171M of buybacks & dividends 1 Note: (1) underlying EBIT divided by net finance costs 6

7 Underlying EBIT by segment BlueScope benefits from a diversified portfolio Australian Steel Products $261.7M 8% Better market demand and volumes Benefit of one-off coal supply dispute settlement $32M Headwinds from higher energy costs North Star $145.2M 31% Spreads moderated from historical highs Strong operating and volume performance Building Products ASEAN, Nth Am & India $93.3M 16% India and Indonesia improved Soft demand in projects segment in South East Asia leading to selling prices lagging feed cost rises BlueScope Buildings $33.9M 32% Nth Am: early softness in premium segment, now improved China Buildings returned to profitability Loss in Buildings ASEAN; proceeding with exit options New Zealand & Pacific Steel $41.0M 201% 1 Better steel prices Improved productivity Corporate & eliminations ($58.3)M 15% Higher mainly due to inter-segment eliminations and equity-based remuneration expense 7 Comparisons are 1H FY2018 vs 1H FY2017. Underlying results are provided to assist readers better understand the underlying financial performance; refer to page 58 for information on the adjustments from reported financial information. Note: (1) The Taharoa export iron sands business generated underlying EBIT of $25.9M in 1H FY2017 and $0.3M in 2H FY2017. The business was divested on 1 May 2017 and has been reclassified to discontinued operations. Accordingly, underlying results have been adjusted to exclude Taharoa s contribution. Table 13 of BlueScope s FY2017 Operating and Financial Review contains further detail on the restatements.

8 MANAGEMENT AND STRATEGY UPDATE

9 New Executive Leadership Team Mark Vassella Managing Director & Chief Executive Officer (as of 1 Jan 2018) 30 years in steel industry Most recently Chief Executive, BlueScope Aust & NZ Led Australian and New Zealand restructures Ran all BlueScope s buildings businesses in North America, leading the integration of our acquisitions Former member of the North Star and TBSL boards Charlie Elias Tania Archibald John Nowlan Pat Finan Sanjay Dayal Debra Counsell Alec Highnam 9 Chief Exec NS BlueScope (as of 1 Mar 2018), and Exec Responsibility for BlueScope China (from 1 Jul 2018) Currently BSL CFO (10 years) Experience working in Asia through NS BlueScope JV and TBSL boards; Linfox BlueScope Chief Financial Officer (from 1 Mar 2018) Currently CFO Aust & NZ Instrumental in Aust & NZ restructures Also worked in Asia and in lead corporate roles in BSL 21 years with BSL Chief Exec of ASP, and acting Chief Exec of NZ & Pac Steel (as of 1 Jan 2018) 42 year career with BSL; worked in many of our major facilities incl establishing North Star Has led significant turnaround and efficiency programs Chief Executive BlueScope Buildings 20 years with BlueScope, Butler, and BHP Coated Steel combined From 1 July 2018, executive responsibility to focus on BlueScope Buildings North America and North Star Chief Executive Strategy and Optimisation (from 1 Mar 2018) Currently Chief Exec NS BlueScope Previously Chief Executive for Asia Chief Legal Officer and Company Secretary Joined BlueScope in 2014, following an international career extending over 25 years in partner and equivalent roles at leading global law firms Executive General Manager People Appointed Executive General Manager People on 1 April 2016 Prior to current role Alec managed HR functions in both North America and Australia/New Zealand

10 What we aim to achieve, and how we do it, are guided by Our Bond, our strategy and our financial principles Our Bond Strategy Financial principles 10

11 11 OUR BOND

12 OUR BOND Enhancing our sustainability reporting FY2016 Report FY2017 Report FY2018 Report Initial step towards sustainability reporting, combining content of BlueScope s annual Community Safety and Environment Report, our People Report, and the Annual Report Substantive update of our sustainability reporting using stakeholder consultation and GRI framework Further update using GRI framework FY2017 BLUESCOPE SUSTAINABILITY REPORT Focus on five key topics: Safety, health & wellness Climate change & energy Supply chain sustainability Business conduct Diversity and inclusion Intend to provide more detailed disclosure on climate-related governance, strategy, risk management and metrics To be released shortly FY2018 BLUESCOPE SUSTAINABILITY REPORT Intend to further enhance disclosure on material sustainability topics Intend to provide further disclosure on the organisation s resilience under different climate-related scenarios To be released late in

13 OUR BOND Strong performance on sustainability Safety, health and wellness Relentless pursuit of Zero Harm and further improvement in performance against LTI and MTI measures World leading safety performance kept LTIFR rate below 1.0 for over 13 years Climate change and energy Reduced surplus steelmaking capacity by 50% leading to a reduction of Australian CO2 emissions by an estimated 43% since 2011 Focused on reducing energy consumption and carbon emissions Supply chain sustainability Committed to respecting human rights Actively working on sustainability throughout the supply chain Business conduct Systems are in place to report and investigate any cases of misconduct Across our 15,000 employees in 17 countries, the company s independently-run 24/7 Whistleblower Hotline has led to 10 investigations so far this financial year, some of which are ongoing Diversity and inclusion Greater gender diversity across all levels: ~40% new hires in operator/trade roles in 1H FY2018 Rate of hiring up 75% across the company since FY2015 Exceeded 30% gender diversity on the Board 13

14 The strategy is focussed on shareholder returns STRATEGY Grow premium branded steel businesses with strong channels to market Deliver competitive commodity steel supply in our local markets Ensure ongoing financial strength Coated & Painted Products BlueScope Buildings North Star BlueScope Australia & NZ Steelmaking Balance Sheet Drive growth in premium branded coated and painted steel markets in Asia-Pacific Drive growth in North America and turn around China Maximise value Deliver value from Australian/NZ steelmaking by game-changing cost reduction or alternative model Maintain strong balance sheet Invest & grow Optimise & grow Optimise / invest Optimise Maintain 14 Note: included in the Coated & Painted Products grouping are our Australia, New Zealand, ASEAN, U.S., India and China metal coating, painting and rollforming operations. Australia & NZ Steelmaking includes all operations in both countries up to and including HRC and plate production.

15 and is delivering financially STRATEGY Underlying EBIT (group) Underlying return on invested capital 1, % $M % (215) -4.2% FY2012 FY2015 CY2017 FY2012 FY2015 CY2017 Underlying EPS Free cash flow (operating cash flow less capex) cents per share 29 $M (8) FY2012 FY2015 CY FY2012 FY2015 CY2017

16 A lot has been achieved and we have plenty more to do to drive growth STRATEGY Grow premium branded steel businesses with strong channels to market Deliver competitive commodity steel supply in our local markets Ensure ongoing financial strength Coated & Painted Products BlueScope Buildings North Star BlueScope Australia & NZ Steelmaking Balance Sheet Significant North America earnings growth Growing home appliance steels sales in Thailand Commissioning MCL3 in Thailand later this year Growth in Aust. coated product sales North America: delivering productivity savings / continuous improvement China Buildings restructured back to profitability Moved to full ownership 25kt production increase in 1H18 Targeting further incremental expansion $300M pa productivity / cost improvements in Australia NZ$80M productivity / cost improvements in NZ Divested Taharoa iron sands Net debt reduced to $262M Leverage reduced to 0.2x Clear capital management framework incorporating ongoing buy-backs 16 Potential India investments painting & coating Key: Current / future growth area

17 Clearly stated financial principles to support decision making and investment FINANCIAL PRINCIPLES Return hurdles Every BlueScope business needs to deliver ROIC Management and employees are incentivised within each business to deliver ROIC targets Investment timing Balance sheet capacity Steelmaking BlueScope intends to have the financial capacity at troughs in the cycle, to make opportunistic investments BlueScope will avoid M&A at peaks in the cycle BlueScope is a net purchaser of steel substrate and will continue to ensure options exist for competitive substrate sourcing BlueScope will target zero net debt or positive cash BlueScope will reward shareholders from free cash flow as an active strategy Leverage may be used for appropriate acquisitions but only if accompanied by an active debt reduction program Commodity steelmaking in Australia & NZ is a valuable option provided it can deliver target returns and is cash flow breakeven 1 at the bottom of the cycle BlueScope intends to maintain balance sheet capacity to fund a shutdown of steelmaking if not cash positive. Conversely it will maintain flexibility to reinvest in capacity where target returns are met 17 Note (1): EBITDA less stay in business capital expenditure

18 Capital management framework FINANCIAL PRINCIPLES Framework Dividend and buyback Board s present intention is to pay consistent dividends, given limited franking availability, in conjunction with ongoing on-market buy-backs 1, funded on the following basis: To retain strong credit metrics To ensure a balance between returning capital to shareholders and investing in growth, particularly in Asia To be 30% to 50% of free cash flow. To be updated if/when net cash position achieved Over $340M returned to shareholders in dividends and buy-backs during CY2017, while at the same time investing capital in growth and reducing net debt The Board today announced a 6.0 cents per share partially franked interim dividend and a $150M extension of the on-market buy-back 18 Note: (1) On-market buy-backs are seen as the most effective method of returning capital to shareholders after considering various alternatives and given BSL s lack of franking capacity after payment of the interim dividend. The Board reserves the right to suspend or terminate buy-back at any time.

19 SEGMENT FINANCIAL RESULTS

20 ASP underlying EBIT up over 2H FY2017 through better volumes/mix, spread and coke margins Underlying EBIT ($M) H FY2017 Domestic despatches (kt) $32.1M one-off benefit 1 from settlement of historical coal supply dispute H FY H FY2018 Comments on 1H FY2018 (compared to 2H FY2017) Volume / mix improved Domestic volume increased on strong demand HRC and COLORBOND steel volumes in particular Solid mill production performance of 3.0mtpa run-rate in the half Realised spread improved: Prices largely similar (but better than outlook expectations) Improvement in benchmark coal and iron ore prices offset by high priced inventory from 2H FY2017 and non-repeat of one-off price benefits in 2H FY2017 Settlement of historical coal supply dispute $32.1M 1 Higher scrap and coating metal prices Higher contribution from export coke of $24M Energy cost escalation of ~$17M 1,007 1,002 1,034 1,076 1,096 Targeted growth drivers Increasing competitiveness and offer compared to imports Product development to target inter-material growth opportunities 1H FY2016 2H FY2016 1H FY2017 2H FY2017 1H FY2018 Deliver further productivity and cost improvements to at least offset inflation. However, energy costs remain a headwind 20 Note: further despatch volume data, including exports, is found on page 66 Note: (1) cash settlement and reversal of prior year provisions

21 Continued focus on customer engagement is underpinning Australian demand 0 Gross Despatches less 1 Normalised Despatches 21 1,200 1,000 Total Australian external domestic despatch volumes (Kt) H FY15 2H FY15 1H FY16 2H FY16 1H FY17 2H F17 1H FY18 Total construction % shown in red 71% 69% 69% 71% 69% 70% 68% 31% (336kt) 31% (331kt) 7% (70kt) 11% (120kt) 13% (136kt) 7% (80kt) 33% (332kt) 29% (297kt) 6% (65kt) 11% (113kt) 13% (132kt) 8% (80kt) 1,073kt 1,019kt 1,098kt 1,094kt 1,107kt 1,146kt 1,179kt (141)kt (118)kt (91)kt (92)kt (73)kt (70)kt (83)kt 932kt 901kt 1,007kt 1,002kt 1,034kt 1,076kt 1,096kt FY2015 1,833kt 34% (372kt) 30% (326kt) 7% (73kt) 10% (114kt) 12% (130kt) 7% (82kt) FY2016 2,009kt 32% (355kt) 30% (325kt) 7% (75kt) 12% (132kt) 12% (126kt) 7% (81kt) 33% (362kt) 30% (331kt) 7% (79kt) 12% (133kt) 11% (123kt) 7% (79kt) FY2017 2,110kt 32% (370kt) 29% (327kt) 8% (94kt) 12% (140kt) 12% (138kt) 7% (77kt) 33% (387kt) 29% (337kt) 9% (110kt) 12% (137kt) 12% (143kt) 5% (65kt) Dwelling Non-dwelling Engineering 2 Manufacturing Agri & mining Transport A significant proportion of product goes to alterations and additions. Sub-segment performing well Balance mainly driven by detached residential commencements; limited exposure to multiresidential. Detached approvals remain positive with flow-on activity effect and some constraints on trade availability extending the pipeline of workflow Consumes a third of our COLORBOND steel Strong east coast economy and booming services sector driving positive investment in new office, retail, hotels and warehouses Strong public infrastructure and utilities investment to offset LNG pullback. Focus of public investment in NSW and Vic; in roads, rail and telecoms Stabilised and improved marginally since A$ fall from parity; strong dwelling market providing key support Growth momentum in agri on Asian demand and weaker AUD currency; mining spend visible in pockets Truck bodies, trains, ships, trailers etc this area is growing Automotive volumes in decline following closure of car manufacturing in 1H FY2018 (1) Normalised despatches exclude third party sourced products, in particular, long products (2) Engineering includes infrastructure such as roads, power, rail, water, pipes, communications and some mining-linked use

22 ASP s profitability improved considerably through productivity initiatives, even at bottom of the cycle spreads ASP EBITDA per tonne vs spread Underlying EBITDA per tonne A$/t (50) (100) Bottom of cycle spreads 1 FY16 FY15 FY14 FY Note: (1) USD170/t, AUD/USD0.73 FY17 FY12 FY13 FY11 1H18 FY04 FY06 FY03 FY07 FY09 FY05 FY08 East Asia Lagged Spread A$/t 22 ASP remains positioned with considerable leverage to spread improvements with steelmaking cash positive at ~ bottom of the cycle spreads. Moving forward, we must not be complacent in our pursuit of continued productivity improvements. We need to deliver returns necessary to support a decision in 10 to 15 years to reline the blast furnace at Port Kembla

23 North Star underlying EBIT down 31% on 1H FY2017 with spreads moderated from historical highs Underlying EBIT ($M) 1 Comments on 1H FY Continued to operate at 100% capacity utilisation Spread in the US$ /t range moderated from the historical highs of 1H FY2017 Volume increased over 1H FY2017 through capacity expansion initiatives. Volume lower than 2H FY2017 due to seasonality. Pursuing further incremental capacity growth 1H FY2017 2H FY2017 Note: (1) Includes Castrip equity accounted until 8 Jul 2016 Total despatch volumes (metric Kt) 1H FY2018 Upward pressure on electrode, refractory and alloy costs in 2H FY2018 of ~A$5M and further similar amount expected in FY2019 FX translation unfavourable with stronger AUD:USD 1,017 1,077 1,038 Targeted growth drivers Boosting capacity through low cost de-bottle-necking projects track record of incrementally growing capacity Continue to target costs 1H FY2017 2H FY2017 1H FY

24 North Star: further low-capital incremental expansion North Star despatches since commencement (100% basis) 2, % Further incremental capacity expansion in progress Metric kt 1,500 GFC 1, FY98 FY00 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 24 Delivered majority of goal of adding ~120kt of incremental production by FY2018 (over FY2014). Pursuing further growth through improving caster speeds, hot strip mill edger enhancements and other yield improvements

25 North Star earnings relatively consistent through the cycle, noting annual variability. Averaged 90% conversion of EBITDA to cash over last six years US$M EBITDA and spread 1 U.S. mini-mill spread (US$/t metric) U.S. mini-mill spread EBITDA (100% basis) Cash flow (EBITDA less capex) Move to full ownership of North Star during 1H FY EBITDA (US$M) 0 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 0 Note: (1) U.S. Midwest mini-mill HRC spread (metric) based on CRU Midwest HRC price (assuming one month lag), SBB #1 busheling scrap price (assuming one month lag) and Metal Bulletin NOLA pig iron price (assuming two month lag); assumes raw material usage of 1.1t per output tonne 25

26 Building Products segment underlying EBIT down 16% on 1H FY2017 Underlying EBIT ($M) (2.6) (3.6) (3.1) 1H FY2017 2H FY2017 1H FY2018 Total despatch volumes (Kt) Nth America Thailand Malaysia Vietnam Indonesia India 1 Other Comments on 1H FY2018 Benefit of diversified geographical exposure with North America, India and Indonesia stronger; other businesses softer North America: better volume and cost performance. Noting roll-off of $20M one-off inventory benefit in 1H FY2017 India: business conditions remain positive; core earnings similar to last half; $10.7M one-off benefit of recognising previously unrecognised deferred tax asset (included due to equity accounting) Soft demand in projects segment in South East Asia leading to selling prices lagging feed cost rises Thailand: softer volume and mix with lower industrial & commercial and retail volumes, offset in part by higher manufacturing and home appliance steel volumes Malaysia: spread compression in a weaker construction market; export volumes down Vietnam: combination of prolonged wet season and adverse mix shift in the SME and retail segments led to a weaker result Indonesia: higher margins through pricing discipline Targeted growth drivers 26 1H FY2017 Note: (1) Equity accounted share of net profit after tax 2H FY2017 1H FY2018 Continue to target broader GDP+ growth with increasing wealth of middle classes driving demand increases

27 Coated & painted projects in process and under evaluation in Asia; to be funded from free cash flow Retail/SME products Continued investment in products, brands and channels to grow sales to the retail/sme markets in each country Home appliance steels Progressing towards our business case sales volume target but at a slower rate than expected (around 50% of expected rate) Next generation ZINCALUME steel products Third metal coating line in Thailand Myanmar market entry Evaluating roll-out of next-generation ZINCALUME steel with Activate technology (magnesium-additive coating) Construction commenced. Commercial production expected in early FY2019 Sales office established in Lysaght roll-forming facility commenced operation in 1H FY2018 India painting capacity Demand for additional painting capacity being evaluated India metal coating capacity Conducting pre-feasibility on second metal coating line in India 27 Cold rolling capacity in Asia Evaluating demand for additional cold rolling capacity in ASEAN

28 BlueScope Buildings underlying EBIT down 32% on 1H FY2017; but momentum building in North America and China Buildings profitable 28 Underlying EBIT ($M) Buildings Nth Am 19.5 Coated China Buildings China (9.9) (7.3) (7.4) Buildings ASEAN (1.4) (2.2) (3.2) (5.0) Interco elims 1H FY2017 2H FY2017 1H FY2018 Total despatch volumes (Kt) Buildings Nth Am Coated China Buildings China Buildings ASEAN (22.7) (21.0) (27.1) Interco elims 1H FY2017 2H FY2017 1H FY2018 Comments on 1H FY2018 Engineered Buildings North America: Early softness in premium manufacturing and industrial segments impacted volumes/margins. Order intake recovering from Q2 FY2018 Continued benefits of productivity program Coating & Painting China: Lower volumes and margins driven by weaker demand in premium segments Engineered Buildings China: Returned a profit following implementation of sales effectiveness, plant restructuring and productivity improvement initiatives $15M improvement compared to 1H FY2017 Engineered Buildings ASEAN: Softer order intake and lower margins Progressing exit options Targeted growth & improvement drivers North America: (i) new business segment initiatives to improve customer share of wallet; (ii) delivering further continuous improvement measures China Buildings: positioning business as a profitable channel for our Coating & Painting operations

29 New Zealand & Pacific Steel underlying EBIT tripled 1H FY2017 on productivity initiatives and improved steel prices Underlying EBIT 1 ($M) H FY2017 2H FY2017 Domestic steel despatches (Kt) H FY2018 Comments on 1H FY2018 Domestic demand continues to be very strong Continued strong building activity Robust infrastructure demand esp in roads Modest increase in selling prices on higher regional steel prices, compared to 2H FY2017 Raw material costs rose on higher coal and coating metals prices Further productivity improvements and cost savings, mainly volume benefit from plant throughput improvements Taharoa divested 1 May Pacific Steel (long) New Zealand Steel (flat) Targeted growth drivers Continued focus on further productivity / restructuring benefits 1H FY17 2H FY17 1H FY18 29 Note: further despatch volume data, including exports, is found on page 81 Note (1): The Taharoa export iron sands business generated underlying EBIT of $25.9M in 1H FY2017 and $0.3M in 2H FY2017. The business was divested on 1 May 2017 and has been reclassified to discontinued operations. Accordingly, underlying results have been adjusted to exclude Taharoa s contribution. Table 13 of BlueScope FY2017 Operating and Financial Review contains further detail on the restatements.

30 GROUP FINANCIALS

31 Underlying EBIT variances Net spread decrease $36.8M (378.8) 43.7 Raw material costs: Coal (net of coke margin +$19M) (50) Settlement of historical coal supply dispute 1 32 Iron ore (13) Scrap & alloys (incl North Star scrap) (185) Coating metals (49) External steel feed (116) NRV & opening stock adj, yield & other 2 (38.7) Conversion & other costs: Cost improvement initiatives 47 Escalation (67) Timing, one-off & other (19) 1H FY2017 Export prices Domestic prices Raw material costs Conversion & other costs Volume & mix 2 FX translation & other 4 1H FY2018 Net spread increase $33.3M (18.8) (67.6) Raw material costs: Coal (net of coke margin of +$24M) 34 Settlement of historical coal supply dispute 1 32 Iron ore (14) Scrap & alloys (incl North Star scrap) (63) Coating metals (15) External steel feed (7) NRV, opening stock adj, yield & other 14 Conversion & other costs: Cost improvement initiatives 30 Escalation (42) Timing, one-off & other 5 (56) 31 2H FY2017 Export prices Domestic prices Raw material costs Conversion & other costs Volume & mix FX translation & other 1H FY2018 Notes: 1) Cash settlement and reversal of prior year provisions 2) Volume / mix based on 1H FY2017 margins 3) Volume / mix based on 2H FY2017 margins 4) FX translation relates to translation of foreign currency earnings to AUD, transactional foreign exchange impacts are reflected in the individual categories 5) Comprised of historical legacy and settlements $40M, executive remuneration $8M, opex investment $4M and other $4M 3 4

32 Updated view on relationships with benchmark pricing for ASP Changed trading conditions and more frequent large moves in commodity prices has influenced the impact of benchmark prices on ASP Degree of correlation between realised domestic selling prices and regional benchmark HRC prices, and length of lags, in a given half-year can be influenced by: Domestic demand growth initiatives (such as project pricing and in targeting inter-material growth) Timing of anti-dumping reviews Strategic buying behaviour by customers For raw materials, increased volatility of prices, weather events and fluctuations of inventory levels can dampen relativity to benchmark pricing Further information on page 69 Degree of correlation between realised and benchmark prices can vary within a given half year but is more fully reflected over the medium term 32

33 Underlying earnings and net finance cost $M 1H FY2017 2H FY2017 1H FY2018 Underlying EBIT Underlying finance costs (45.9) (41.0) (41.0) Interest revenue Profit from ordinary activities before tax Underlying income tax (expense)/benefit (145.5) (144.8) (126.0) 26.3% effective underlying tax rate Underlying NPAT from ordinary activities Net (profit)/loss attributable to non-controlling interests (46.1) (37.2) (32.5) Underlying NPAT attributable to equity holders of BSL Breakdown of net finance costs 144a U.S. unsecured notes 20.9 Syndicated bank facility charges (mainly commitment fees) 3.8 Finance leases 6.7 Amortisation of borrowing costs and present value charges (non-cash) 4.4 Other finance costs (incl NS BlueScope interest costs) 5.2 Less, interest income (3.8) Total

34 Continued strong cash flow $M 1H FY17 2H FY17 1H FY18 Reported EBITDA Adjust for other cash profit items (8.6) Cash from operations Working capital movement (inc provisions) (183.8) 64.7 (261.9) Gross operating cash flow Financing costs (50.9) (39.9) (38.4) Interest received (Payment) / refund of income tax 1 (79.6) (78.7) (34.1) Net operating cash flow Capex: payments for P, P & E and intangibles (175.2) (207.8) (211.7) Other investing cash flow 28.1 (53.4) 10.3 Net cash flow before financing Equity issues / (buy-backs) (0.3) (150.2) (142.9) Dividends to BSL shareholders (17.2) (23.0) (28.3) Dividends to non-controlling interests (17.6) (45.8) (22.7) Transactions with non-controlling interests Net drawing / (repayment) of borrowings (269.4) Net increase/(decrease) in cash held Working capital build, mainly driven by inventory and payables includes unwind of $100M of favourable timing of working capital that was noted at 30 June 2017 Lower cash tax paid on lower U.S. (eg North Star) earnings $148M of shares bought under buy-back in 1H FY2018, with $5M settled after 31 Dec (1) As at 31 December 2017 the BlueScope Steel Australian tax consolidated group is estimated to have carried forward tax losses of approximately $2.2Bn. There will be no Australian income tax payments until these losses are recovered (2) Cash capex of $211.7M in 1H FY2018; new capital commitments of $179M

35 Net working capital 1, June 2017 benefitted by $100M from timing of year-end cash flows 1, , , ,156.1 (149.9) (4.5) 1,361.5 $M Mainly prices, and partly volume. Mostly in ASP Seasonality and timing of cash flows % of sales (half year results based on 6 months prior annualised) Jun-2015 Dec-2015 Jun-2016 Dec % 16.0% 11.3% 11.7% Jun % Consolidation of only 2 months revenue of North Star, but full working capital balance of $139.8M Receivables Inventory Payables 1 Deferred income Dec % 35 Note: (1) Trade and sundry payables

36 Investing in our businesses increasing capital and investment expenditures on strategic growth projects Pacific Steel - integration, billet caster & final consideration $116M in 1H, $251M in 2H $136M in 1H, $247M in 2H Growth capex Largest growth projects: Painting and coating capacity in Thailand Potential painting capacity in India Investment in next generation ZINCALUME steel technology across ASEAN and China Continued investment in building design and engineering systems ~ ~100 Growth capex $M Sustaining capex 78 ~200 Sustaining capex 101 FY FY2017 1H FY2018 2H FY2018 (expected) 36 Note: (1) Excludes $1,008m for acquisition of remaining 50% share in North Star

37 Net debt of $262M; liquidity of $2.0bn Net debt ($M) Liquidity (undrawn facilities and cash, $M) (10) (92) 1, , , (358) 171 Jun-17 Cash inflow from ops (Incl SOR) Share Buy Back & BSL dividend Capex & invest exp Other incl asset sales FX Dec-17 Est net debt/cash attrib to NCI 2 Dec-17 - BSL Dec-16 Jun-17 Dec (1) $262M net debt comprised of $1,078.0M gross debt less $815.9M cash (2) Non-controlling interests in the NS BlueScope Coated Products JV (3) Includes $429.0M liquidity in NS BlueScope Coated Products JV

38 Strong credit profile and improving credit metrics refinancings will lower finance costs Leverage net debt to LTM underlying EBITDA 1 Corporate ratings S&P and Moody s Step-up and rapid pay-down of North Star 50% acquisition BBB- BB+ Investment grade Baa3 Ba1 1.6x BB S&P Ba2 0.4x 0.4x 0.4x 0.7x 0.4x 0.8x 0.4x 0.2x 0.2x BB- B+ Moody s Ba3 B1 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Apr-13 Apr-16 Nov (1) Dec-15 and Jun-16 includes North Star proforma for previous 12 months

39 OUTLOOK & SUMMARY

40 2H FY2018 outlook segment comments 1 40 Building Products ASEAN, Nth Am & India Expect a similar result Australian Steel Products Overall, expect a stronger result Spreads improving with stronger benchmark HRC prices. Price rise correlation moderated by dumping and strategic pricing Raw materials: Expect benefit in raw material achieved cost (eg better than benchmark prices) Non-repeat of one-off coal supply dispute settlement Rising coating metal and scrap prices Assumed lower coke margins Soft demand in projects segment in South East Asia leading to selling prices lagging feed cost rises New Zealand & Pacific Steel Expect a stronger result on regional steel prices Expect ~$10M impact from lower vanadium margins, incremental depreciation charge and adverse timing of costs Note (1): Comparisons are to 1H FY2018. Outlook subject to assumptions and qualifiers referenced on page 41 North Star Average spread through 2H FY2018 expected to be ~US$40/t higher Spread expectations do not include any potential s232 impact Expect increased despatch volumes Expect ~A$5M of incremental consumables cost electrodes, refractories and alloys (& likely to see a similar further cost rise in 1H FY2019) BlueScope Buildings North America: expect stronger demand, improving margins and continuous improvement initiatives Coated China: expected similar operating performance Buildings China: expect continued positive EBIT despite seasonality Buildings ASEAN: progressing exit options

41 Outlook The Company currently expects, after deducting the one-off benefit of the $32.1M coal settlement from 1H FY2018 underlying EBIT, second half underlying EBIT to be around 25% higher Based on assumptions of average 1 : East Asian HRC price of ~US$600/t 62% Fe iron ore price of ~US$70/t CFR China Index hard coking coal price of ~US$210/t FOB Australia U.S. mini-mill spreads to be US$40/t higher than 1H FY2018 AUD:USD at US$0.79 Expect 2H FY2018 underlying net finance costs to be lower than 1H FY2018 due to lower average net debt; expect underlying tax rate and profit attributable to non-controlling interests similar to 1H FY2018 Expectations are subject to spread, FX and market conditions 41 Note: (1) all prices quoted on a metric tonne basis. Sensitivities can be found on page 64

42 42 Questions and answers

43 BLUESCOPE A VERY DIFFERENT KIND OF STEEL COMPANY

44 A very different kind of steel company 1 A portfolio of diversified, profitable businesses 2 Brands 3 Pivot to value added 4 Own our channels to market 5 Geographic diversity 6 Rebased earnings 7 High return on invested capital 8 Strong cash flow 9 Strong balance sheet 44

45 1 A portfolio of diversified, profitable businesses High value branded steel building materials businesses technology, quality and scale leader Highly competitive commodity steelmaking businesses Australian Steel Products New Zealand and Pacific Steel BlueScope Buildings North Star BlueScope Steel Building Products ASEAN, North America and India 45 Produces and markets a range of high value coated and painted flat steel products for Australian building and construction customers Broader offering of commodity flat steel products Key brands include zinc/aluminium alloy-coated ZINCALUME steel and galvanised and zinc/aluminium alloy-coated pre-painted COLORBOND steel Significant channels to market through our building components and distribution businesses Sole producer of steel products in New Zealand, with leading domestic market share of flat products Flat steel products include value-added coated and painted products, together with commodity grades Leading market share in New Zealand in long products through acquisition of Pacific Steel Leading designer and manufacturer of engineered building solutions Key markets in China & North America; plants in ASEAN, India, Middle East Supplying buildings to global customers China coating & painting Operates a 2.1Mtpa mini-mill in Ohio, with industry leading utilisation (~100% over last 6 years) North Star voted #1 sheet producer in North America (Jacobson Survey) for 13 out of the last 15 years Leader in metal coated and painted steel building products Comprises NS BlueScope Coated Products JV (50/50 JV; consolidated) and Tata BlueScope JV (50/50 JV; equity accounted) Operates metallic coating and painting lines and roll-forming in Indonesia, Malaysia, Thailand, Vietnam, India and North America

46 1 A portfolio of diversified, profitable businesses In commodity steelmaking but with highly competitive cost positions Aust Steel Products EBITDA per tonne vs spread EBIT margin North Star and North American peers Underlying EBITDA per tonne A$/t (50) (100) Bottom of cycle spreads 1 FY16 FY15 FY14 FY06 FY03 FY10 FY09 FY05 FY FY FY12 East Asia Lagged Spread A$/t Note: (1) USD170/t, AUD/USD0.73 FY17 1H18 FY13 FY04 FY07 North Star Peer no. 1 (1) Peer no. 2 Peer no. 3 Peer no. 4 (2) (3) 19.3% 16.1% 10.7% 9.5% 6.6% Peer no. 5 (4) 4.5% Peer no % 46 Note: 2017 data (1) Steel Business (2) America Mills segment (3) NAFTA segment (4) Flat rolled products Source: Company information

47 1 A portfolio of diversified, profitable businesses Leading to earnings diversity Underlying EBITDA by segment ($M) BlueScope Buildings BP segment 1, Premium branded products ASP 656 North Star NZPac Corp. / interseg CY2017 Costcompetitive commodity steelmaking Coated & painted and commodity steel 47

48 2 Brands our brand portfolio contains many well-known and respected names Australia New Zealand Buildings Asia Note: SuperDyma and VIEWKOTE are brands of our NS BlueScope Coated Products joint venture partner, Nippon Steel & Sumitomo Metal Corporation 48

49 3 Pivot in our sales mix increasing contribution from value-added products BlueScope despatch volume mix 100% BlueScope Buildings 80% 60% Building products Australia cold rolled and coated & painted Higher value added 40% 20% 0% FY03 FY05 FY07 FY09 FY11 FY13 FY15 FY17 North America steelmaking Aus steelmaking (domestic) NZ steelmaking (domestic) Aus steelmaking (exports) NZ steelmaking (exports) High performing, cost competitive commodity steelmaking Cost competitive commodity steel 49 Increased earnings from Asian coated and painted businesses, with balanced customer exposure across projects/commercial and retail/sme markets and now home appliance applications Full ownership of North Star, a high quality and competitive business

50 4 We own channels to end customers in our main markets We own channels to end customers in our main markets We know our customers and build brand awareness through this Australia Buildings Asia North America 50

51 5 Geographic diversity Underlying EBITDA by region ($M) Asia $188M New Zealand $133M 12% 9% 43% Australia $647M North America $549M 36% CY2017 Total: $1,422M Note: total includes corporate costs & eliminations of $95.3M, excluded from pie chart 51

52 6 Earnings rebased following two year transformation 52 $M Improvement in underlying EBIT 79 FY2013 underlying EBIT 221 FY2014 underlying EBIT Driven by productivity and cost improvements, with similar spreads 329 FY2015 underlying EBIT 377 BlueScope ANZ 299 North Star 103 Move to full ownership Spreads stronger Incremental volume Cost control Building Products segment 20 Driven by growth in: North America Vietnam India BlueScope Buildings (23) North America productivity initiatives Corporate / other 1,105 FY2017 underlying EBIT Cash flow (after capex): $154M (FY2015) $749M (FY2017) Around 25% higher than $484.7M 517 FY2018 underlying EBIT 2H outlook 1H actual Note (1): expectations are subject to spread, FX and market conditions 1 Rebased earnings to a higher level Macro volatility having lower % impact on earnings Improved earnings mix: Value added products Geographic diversity Strong position to fund growth, reduce debt and for capital management

53 7 High return on invested capital Group ROIC of 17.0% in CY2017 ROIC is a key discipline for (i) performance management, (ii) project assessment, and (iii) executive incentives BlueScope group and segmental return on invested capital (ROIC) in CY % 17.0% 19.3% 20.6% 16.4% 8.1% BlueScope Steel group New Zealand & Pacific Steel North Star Australian Steel Products Building Products ASEAN, Nth Am & India BlueScope Buildings 53

54 8 Strong cash flow following transformation $ M of free cash after capital expenditure and sale of receivables in CY2016 and CY2017 Returning funds to shareholders through dividends and on-market buy-backs (over $340M in CY2017) Free cash flow after capex / investing Sale of receivables $M CY2013 CY2014 CY2015 CY2016 CY

55 9 Strong balance sheet Clearly stated financial principles to support decision making and investment Target zero net debt or positive cash; $262M net debt at last balance date Key management long term incentives linked to balance sheet health do not vest if leverage ratio (ND/EBITDA) over three years exceeds 1.0x Leverage net debt to LTM underlying EBITDA 1 Corporate ratings S&P and Moody s Step-up and rapid pay-down of North Star 50% acquisition BBB- BB+ Investment grade Baa3 Ba1 1.6x BB S&P Ba2 0.4x 0.4x 0.4x 0.7x 0.4x 0.8x 0.4x 0.2x 0.2x BB- B+ Moody s Ba3 B1 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Apr-13 Apr-16 Nov (1) Dec-15 and Jun-16 includes North Star proforma for previous 12 months

56 ADDITIONAL INFORMATION GROUP-LEVEL MATERIAL

57 Financial headlines SIX MONTHS ENDED $M (unless marked) 31 DEC DEC H FY18 vs 1H FY17 Total revenue 5, ,490.5 External despatches of steel products (kt) 3, ,715.0 EBITDA Underlying EBIT Reported Underlying NPAT Reported Underlying EPS Reported 62.7 cps 78.6 cps Underlying cps 57.2 cps Underlying EBIT Return on Invested Capital 19.6% 16.8% Net Cashflow From Operating Activities After capex / investments Interim dividend 4.0 cps 6.0 cps Net debt Note: (1) Refer to page 58 for a detailed reconciliation of reported to underlying results 57

58 Reconciliation between reported NPAT and underlying NPAT 1 1H FY2018 NPAT $M Reported net profit after tax Underlying adjustments Asset impairments 11.1 Restructuring & redundancy costs 1.8 Asset sales (2.7) Tax asset impairment / (write-back) mainly utilisation of unbooked Australian tax asset (75.5) U.S. tax reform adjustment to deferred tax asset (52.1) Discontinued Business (gains) / losses (2.7) Underlying net profit after tax Note: 1 Underlying NPAT is provided to assist readers to better understand the underlying consolidated financial performance. Underlying information, whilst not subject to audit or review, has been extracted from the interim financial report which has been reviewed. Further details can be found in Tables 12 and 13 of the ASX Earnings Report for the six months ended 31 December 2017 (document under Listing Rule 4.2A) 58

59 Summary of financial items by segment Sales revenue $M 1H17 2H17 FY17 1H18 Australian Steel Products 2, , , ,565.7 North Star BlueScope Steel , Building Products ASEAN, NA & India , , ,028.6 BlueScope Buildings , New Zealand and Pacific Steel Intersegment, Corporate & Discontinued (165.6) (193.3) (359.1) (196.1) Total 5, , , ,476.4 Total steel despatches '000 tonnes 1H17 2H17 FY17 1H18 Australian Steel Products 1, , , ,515.3 North Star BlueScope Steel 1, , , ,037.5 Building Products ASEAN, NA & India , BlueScope Buildings New Zealand and Pacific Steel Intersegment, Corporate & Discontinued (106.8) (129.2) (235.9) (151.9) Total 3, , , ,715.0 Underlying EBITDA $M 1H17 2H17 FY17 1H18 Australian Steel Products North Star BlueScope Steel Building Products ASEAN, NA & India BlueScope Buildings New Zealand and Pacific Steel Intersegment, Corporate & Discontinued (50.3) (37.1) (87.4) (58.2) Total , Underlying EBIT $M 1H17 2H17 FY17 1H18 Australian Steel Products North Star BlueScope Steel Building Products ASEAN, NA & India BlueScope Buildings New Zealand and Pacific Steel Intersegment, Corporate & Discontinued (50.4) (37.4) (87.8) (58.3) Total , Note: The Taharoa export iron sands business generated underlying EBIT of $25.9M in 1H FY2017 and $0.3M in 2H FY2017. The business was divested on 1 May 2017 and has been reclassified to discontinued operations. Accordingly, underlying results have been adjusted to exclude Taharoa s contribution. Table 13 of BlueScope FY2017 Operating and Financial Review contains further detail on the restatements

60 Balance sheet $M 31 Dec Jun Dec 2017 Assets Cash Receivables * 1, , ,214.0 Inventory * 1, , ,860.7 Property, Plant & Equipment 3, , ,706.7 Intangible Assets 1, , ,646.2 Other Assets Total Assets 9, , ,588.8 Liabilities Trade & Sundry Creditors * 1, , ,543.0 Capital & Investing Creditors Borrowings 1, ,078.0 Deferred Income * Retirement Benefit Obligations Provisions & Other Liabilities Total Liabilities 3, , ,771.5 Net Assets 5, , ,817.3 Note *: Items included in net working capital 1, , ,

61 Inventory movement RM $409.6M WIP FG Other RM $494.7M WIP FG Other $127.5M increase comprised of segmental movements: 52.8 (8.8) 0.9 1, , ASP driven by higher volumes partly offset by lower raw material costs $M Jun 2017 Note: Rate / feed costs Volume FX NRV adjustment movement Dec 2017 RM is raw materials (including externally sourced steel feed to BSL businesses) WIP is work in progress FG is finished goods Other is primarily operational spare parts North Star driven by higher volumes and prices BlueScope Buildings NZ & Pacific Intersegment & discontinued Building Products driven by lower volumes 61

62 Debt facilities maturity profile at 31 December 2017 BSL Syndicated Bank Facility U.S. unsecured notes NS BlueScope JV facilities (100%) Inventory Finance Receivables securitisation program: In addition to debt facilities, BSL has $440M of off-balance sheet securitisation programs, of which $391M was drawn at 31 December 2017 A$M Current estimated cost of facilities: Approximately 6% interest cost on gross drawn debt; plus commitment fee on undrawn part of $914M of domestic facilities of 0.87%; plus 2H FY18 1H FY19 2H 1H FY20 2H 1H FY21 2H amortisation of facility establishment fees and the discount cost of long-term provisions of $10M pa; Notes: - based on AUD/USD at US$ at 31 December excludes $115M NS BlueScope JV facilities which progressively amortises less: interest on cash 62

63 Committed debt facilities as at 31 December 2017 Committed Drawn Maturity Local currency A$M A$M Syndicated Bank Facility - Tranche 1 Dec 2018 A$310M A$310M A$0M - Tranche 2 Nov 2019 A$300M A$300M A$0M - Tranche 3 Nov 2020 A$240M A$240M A$0M US unsecured notes May 2021 US$500M A$641M A$641M Inventory Finance Nov 2019 US$55M A$71M - NS BlueScope JV facilities (100%) - Corporate facilities Mar 2019 Mar 2021 US$283M A$364M A$188M - Thailand facilities Dec 2017 Jan 2025 THB 4,300M A$169M A$59M - Malaysian facilities Apr 2018 MYR 30M A$9M A$6M Finance leases Various Various A$136M A$136M Total A$2,240M A$1,030M Note: assumes AUD/USD at US$ In addition to debt facilities, BSL has: $440M of off-balance sheet securitisation of which $391M was drawn at 31 December 2017, and other items in total debt of ($48M).

64 Indicative half year EBIT sensitivities 1 Sensitivities may vary subject to volatility in prices, currencies and market dynamics refer to pages 32 and 69 Australian Steel Products segment +/- US$10/t move in average benchmark hot rolled coil price - direct sensitivity 2 +/- $8-9M - indirect sensitivity 3 +/- $7-9M +/- US$10/t move in iron ore costs -/+ $30-31M New Zealand Steel & Pacific Steel segment +/- US$10/t move in benchmark steel prices (HRC and rebar) - direct sensitivity 8 +/- $1-2M - indirect sensitivity 9 +/- $2-3M +/- US$10/t move in market-priced coal costs 10 -/+ $2-3M +/- US$10/t move in coal costs -/+ $14-15M +/- 1 move in AUD:USD exchange rate - direct sensitivity 4 +/- $1M 6 - indirect sensitivity 5 -/+ $7-9M 7 +/- 1 move in AUD:USD exchange rate - direct sensitivity 4 -/+ $1M 7 - indirect sensitivity 11 -/+ $2-3M 7 Hot Rolled Products North America segment +/- US$10/t move in realised HRC spread +/- $13-14M (HRC price less cost of scrap and pig iron) Group +/- 1 move in AUD:USD exchange rate (direct) 12 -/+ $2M 7 64 (1) Page shows full sensitivities to movement in key external factors, as if that movement had applied for the complete six months. Analysis assumes base exchange rate of US$0.77. There are other factors that impact the Company s financial performance which are not shown. The sensitivities provided are general indications only and actual outcomes can vary due to a range of factors such as volumes, mix, margins, pricing lags, hedging, one-off costs etc. (2) Includes US$ priced export products and domestic hot rolled coil sold into the pipe & tube market. (3) Sensitivity shows the potential impact on Australian domestic product prices (A$ priced) other than painted steels and hot rolled coil sold into the pipe & tube market. Sensitivity is subject to lags and market factors, and is less certain particularly in the short term. (4) Includes the impact on US dollar denominated export prices and costs and restatement of US dollar denominated receivables and payables. (5) Also includes potential impact on Australian domestic product prices (A$ priced) other than painted steels and hot rolled coil sold into the pipe & tube market. Sensitivity is subject to lags and market factors, and is less certain particularly in the short term. (6) A decrease in the A$/US$ suggests an unfavourable impact on earnings. (7) A decrease in the A$/US$ suggests a favourable impact on earnings. (8) Includes US$ priced export flat and long steel products (includes Pacific Steel products) (9) Sensitivity shows the potential impact on NZ domestic flat and long steel product prices (A$ priced) other than painted steels (includes Pacific Steel products). Sensitivity is subject to lags and market factors, and is less certain particularly in the short term. (10) Sensitivity encompasses the component of New Zealand Steel s annual thermal coal requirement which is imported and priced at prevailing market prices. Excludes the component coal supply which is domestically sourced on long term contract price. (11) Also includes potential impact on NZ domestic flat and long steel product prices (A$ priced) other than painted steels (includes Pacific Steel products). Sensitivity is subject to lags and market factors, and is less certain particularly in the short term. (12) Includes direct sensitivities for ASP and New Zealand & Pacific Steel segments, together with impact of translating earnings of US$ linked offshore operations to A$.

65 ADDITIONAL INFORMATION SEGMENT MATERIAL