Citigroup s 5 th Annual Australia & New Zealand Investment Conference, London

Transcription

1 Citigroup s 5 th Annual Australia & New Zealand Investment Conference, London Paul O Malley, Managing Director and Chief Executive Officer March 2008 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, 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 2

3 Introduction Page 3

4 Safety Our target remains Zero Harm Lost Time Injury Frequency Rate Medically Treated Injury Frequency Rate Lost time injuries per million man-hours worked NSW Manufacturing 27.9 in 2005 & 24.4 in 2006 Reported performance for IISI member companies (employees & contractors) YTD Medically treated injuries per million man-hours worked YTD Includes Contractor performance from 1996 Includes Butler performance from May 2004 Includes Smorgon performance from Aug 2007 Includes Contractor performance from 2004 Includes Butler performance from May 2004 Includes Smorgon performance from Aug 2007 Page 4

5 Sustainability - water conservation Port Kembla Steelworks Total Water Use (ml/day) for process and cooling Waste Water 2% Fresh Water 2% Western Port Operation $21.5 million water recycling project with South East Water, including funding from Victorian Government. Project expected to be competed in Salt Water 96% 50% REDUCTION IN FRESHWATER CONSUMPTION PLANNED 60% REDUCTION IN FRESHWATER USAGE Page 5

6 PKSW Cogeneration plant technology led solution that will displace greenhouse gas emissions Proposed Port Kembla Steelworks Co-Generation Plant 12 months feasibility study underway Surplus process gas from iron & steel making Reduce approximately 800,000 tpa CO 2 equivalent One of the largest GHG reduction projects in Australia - equivalent to taking 185,000 cars off the road Total investment in the range of $700m - $1,000m A workable Government policy for trade exposed industries is a critical part of assessing this major investment We will continue to look for projects that will reduce CO2 emissions Port Kembla Steelworks Co-Generation Plant Process Steam Electricity Up to 220MW Page 6

7 A unique global production footprint Asia 24 Lysaght and PEB Sites India Metal Coating 250kt Painting 150kt China MC 250kt Painting 150kt Vietnam MC 125kt Painting 50kt Coated and Building Products North America - Butler Buildings - HCI Steel - IMSA Steel Corp North Star BlueScope JV Hot Rolling 1.80mt (100%) Castrip JV w Nucor Thailand Cold Rolling 350kt Metal Coating 375kt Painting 90kt Brisbane Painting 90kt Malaysia Metal Coating 150kt Painting 60kt Australia 7 Service Centres 41 Lysaght Sites 7 BlueScope Water 90 Distribution Sites Indonesia Metal Coating 100kt (+165kt) Painting 40kt (+120kt) Western Port Hot Rollling 1.43mt Cold Rolling 1.0mt MC (3 lines) 830kt Painting (2 lines) 330kt (1) Includes CRC from packaging cold mill Sydney Paint Line (1 Line) 120kt Port Kembla/Illawara Raw Steel 5.2mt Hot Rolling 2.8mt Plate 360kt Cold Rolling 960kt (240kt) (1) MC (3 lines) 750kt PL (2 lines) 207kt New Zealand/Pacific Iron Sand Mining Raw Steel 625kt Hot Rolling 750kt Cold Rolling 360kt Metal Coating 230kt Painting 60kt Hollow Sections 45kt Pacific Roll forming sites 3 Page 7

8 Employee profile by country China 1,947 SE Asia 2, December 2007 Other 70 North America 4,804 Australia 9,876 1,449 New Zealand and Pacific Islands Total 20,966 Page 8

9 External sales despatches by destination broad geographic spread Exports 38% 21% 16% Exports 32% 16% 7% 15% Exports 33% 9% 12% Exports ROW Exports Americas North America 15% 3% 14% 8% 4% 34% 9% 11% 4% 38% 12% Australia 11% Asia 4% NZ 37% External Despatches Key 3,544kt 3,740kt 3,989kt Exports - Americas Domestic sales (produced and sold within country) Exports - Asia Exports Europe/Med/Middle East/India NA (HRPNA + C&BPNA) Australia New Zealand/Pacific Asia Note: Percentages have been rounded. Page 9

10 Total Australian despatches by segment Despatches 000 tonnes 1,600 1,400 1,200 1, SALES TONNES 1H FY2007 (1) Construction 1H FY2008 (1) 60% 60% Non-dwelling 26% Non-dwelling 25% Dwelling 22% Dwelling 23% Engineering 12% Engineering 12% Manufacturing 14% Manufacturing 19% Agriculture & Mining 12% Agriculture & Mining 12% Auto & Transport 8% Packaging 6% Auto & Transport 9% Principal variances: External sales volumes from our new Distribution business included 1H08 sales, into all segments, principally construction and manufacturing. improvement in manufacturing due to Distribution sales. When you normalise, the despatch variance is explained by lower unpainted sales into the distribution channel. However, strong share recovery evident from Q2 FY2008. Notes: (1) Percentages have been rounded and worked off Gross Despatches. (2) Stopped producing tinplate for the packaging segment in FY Gross Despatches 1,415kt +5% 1,487kt Page 10

11 BlueScope s steelmaking expected raw material usage in FY Port Kembla Steelworks, NSW, Australia Iron Ore: approximately 7.7mtpa indicative mix 20% lump, 50% fines and 30% pellets principally sourced from BHP Billiton. Other suppliers include OneSteel, Savage River, IOC (Rio) and Vale (CVRD) annual pricing review, with price effective from 1 July (for approx 90%) Coal: approximately 3.4mtpa (2.7mtpa coking coal and 0.7mtpa PCI coal) principally sourced from local BHP Billiton Illawarra mines (coking coal), approx. 30km from the steelworks, and Xtrata s Hunter Valley mines (PCI coal) (Northern New South Wales) long term contract typically annual pricing review, with price effective from 1 July Scrap: approximately 1.0 mtpa 40% sourced externally 2. New Zealand Steel captive iron sands resource (+ export) coal approx. 0.8mtpa (largely sourced locally) 3. North Star, USA Electric Arc Furnace uses scrap (sourced externally). Page 11

12 Financial Headlines 1H 2008 Page 12

13 Group financial headlines 1H FY2008 vs. 1H FY2007 Six months ended 31 December Variance % Revenue A$4,734M A$4,528M Up 5% External despatches 4.0M tonnes 3.7M tonnes Up 6% EBITDA Reported A$502M A$794M - Underlying A$668M A$785M Down 15% EBIT Reported A$328M A$635M - Underlying A$494M A$626M Down 21% NPAT Reported A$116M A$388M - Underlying A$305M A$384M Down 21% EPS Reported Underlying Down 24% After Tax Return on Invested Capital* 5.8% (12.6%) 17.0% (16.9%) - Return on Equity* 6.0% (15.9%) 24.0% (23.7%) - Net Operating Cashflow - From operating activities A$600M A$697M Down 14% - After capex / investments A$116M A$133M Down 13% Interim ordinary dividend (fully franked) 22cps 21cps Up 5% Gearing (net debt) 31.8% 35.6% - * ( ) Underlying Returns Page 13

14 High level reconciliation between Reported and Underlying NPAT EBIT ($M) NPAT ($M) EPS (cps) 1H H H H H H 2007 Reported Unusual or non-recurring events: Asset impairment (1) Profit on sale of Smorgon shares (2) (128) 0 (90) 0 (0.12) 0.00 Restructure & redundancy costs 24 (3) (5) 17 (3) (3) 0.02 (3) 0.00 Integration of Smorgon Steel s distribution business (4) Other (7) (4) (3) (1) (0.00) (0.01) Underlying Operational Earnings (1) Impairment of: China (190) outlook for coated margins remains very tight Vietnam (35) no resolution to the tariff status Lysaght Australia (23) and Lysaght Fiji (3) systems write-off and under performing assets resulting in a reassessment of the future cash flows and need to impair the assets (2) Associated with the acquisition of Smorgon Distribution (3) Redundancy costs associated with closure Port Kembla No. 1 paint line ($11m) and internal restructuring costs ($13m). (4) Integration of SSX Distribution ($7m) and recognised inter-company profit eliminations in inventory ($19m) Page 14

15 Asset impairment process Detailed business and market review undertaken as part of the half year process. Based on higher of: estimated future cashflows discounted at WACC plus country risk premium; or estimated recoverable value Subject to scrutiny by external auditors who test forecasts against actual performance China MCL Outlook for premium product margins remain very tight as competition intensifies Vietnam MCL No resolution to the tariff status Premium product demand growing slowly and margins remain tight Lysaght Australia Medium term outlook for Lysaght home improvement business is low due to soft NSW building market and loss of business expertise. Movex ERP system impairment due to intention to migrate to BlueScope Distribution ERP Lysaght Fiji Outlook reflects continued political unrest and low economic growth Under AIFRS impairment of physical assets can be reversed if conditions improve However impairment of goodwill cannot be reversed. Page 15

16 EBIT A$ Millions Business segment earnings variance Underlying EBIT $626m $12m ($60m) ($7m) ($9m) ($65m) $15m $494m ($18m) Half year ended Dec 2006 Hot Rolled Products A u s tr a lia Coated & Bldg Products A ust NZ & Pacific Steel Products Coated & Bldg Products A sia Hot Rolled Products Nth America Coated & Bldg Products Nth Am Corporate & Group - Discontinued Businesses EBIT Movements From 1H FY2007 $414M $38M $43M $39M $112M $23M $(43)M $0M To 1H FY2008 $354M $50M $36M $30M $47M $38M $(61)M $0M Core reasons: Improved spread higher steel prices partly offset by higher iron ore & scrap Offset by -higher freight & R&M costs - mix higher exports after tinplate closure - stronger A$ Improved spread higher export prices lower feed & coating costs Addition of SSX Dist Partly offset by -stronger A$ -higher units costs Reduced spread -higher steel prices -Offset by higher coal costs Unfavourabl e NZD:US$ Reduced margins, principally in Thailand Reduced spread North Star Improved spread Profit in stock eliminations Half year ended Dec 2007 Page 16

17 EBIT A$ Millions Underlying EBIT variance 1H FY2007 to 1H FY2008 by item $626m Net Spread improvement $62m $128m $10m ($76m) Iron Ore (44) Coal 17 Steel Feed (35) Coating metals 19 Scrap/alloys (21) Inventory movement (12) ($11m) Volume 27 Mix (38) Price (42) Scrap (22) ($64m) Escalation (47) Improvement initiatives 46 One off/discretionary (47) Other (mainly freight) (7) ($55m) ($40m) ($24m) $494m Half year ended Dec 2006 Export Prices Domestic Prices Raw Material Costs Volume / Mix NSBSS Conversion & Other Costs Exchange Rates Other Half year ended Dec 2007 Page 17

18 Continuing to reward our shareholders as we grow Shares on issue at listing (July 2002) Share buy backs to 31/12/07 on market 90m shares off market 26m shares Dividend reinvestment scheme to 31/12/07 Employee share plan issues to 31/12/07 Shares on issue 31/12/07 Av price paid $6.10 / share 793m (116)m 677m + 36m +29m 742m Total return to shareholders since BSL s public listing (July 2002): Share buybacks $ 707m Dividends paid $ 1,621m Interim dividend (to be paid 1 April 08) $ 164m $ 2,492m $3.37 per share or 79% payout ratio (NPAT) / / / / / FY2003 FY2004 FY2005 FY2006 FY FY2008 Interim Final Special Page 18

19 Cash strong operating cash flows have been reinvested in the business A$ millions H H Cash from operations 795 1,012 1, , Working Capital Movement (31) (94) (432) (98) (21) (55) (17) Net operating cash flow , , Net investing cash flows - Capital & investment expenditure (209) (585) (663) (816) (493) (283) (934) - Smorgon shareholding (1) (319) (319) Other Net cash flow before financing & tax Net financing cash flow (468) (506) (23) 142 Payment of income tax (29) (119) (312) (356) (229) (126) (139) Share buy-back (26) (259) (327) (96) Share issues Dividends - Ordinary (75) (191) (273) (314) (321) (169) (191) - Special - (53) (75) (142) Other (4) Net increase in cash held 1 27 (22) (25) (31) (15) (7) (1) Purchased 19.9% shareholding in Smorgon Steel in August 2006, disposal in August (2) Reflects shares issued under the shareholder dividend reinvestment plan ($49M) and the full underwriting of the FY2006 final ordinary dividend ($119M). (3) Includes shares issued under the shareholder dividend reinvestment plan ($60m) and general employee share plan ($5m). (4) Reflects capital injection by minority interests in subsidiaries. (5) All periods normalised to reflect sale of receivables program cash flow movements as debt. Page 19

20 Balance sheet lower gearing even with acquisition of Smorgon Steel distribution As at A$ Millions 30 June December 2007 Assets Distribution Acquisition Total Cash Receivables 1, ,274 Inventory 1, ,519 Other Assets 1,259 (40) (1) 1,136 Net Fixed Assets 3, ,448 Total Assets 7, ,418 Liabilities Creditors Interest Bearing Liabilities 1, ,745 Provisions & other Liabilities 1, ,118 Total Liabilities 3, ,764 Net Assets 3,865-3,654 Net Debt / (Net Debt + Equity) 35.6% 31.8% SSX Distribution offset by reduction in other receivables Impairment write-downs SSX Distribution largely offset by reduction in other creditors Payment of employee and restructure provisions Will increase to 40% following IMSA funding (1) Other assets mainly comprise goodwill on acquisition ($388m) less divestment in Smorgon Steel shares ($447m) Page 20

21 Strategy Page 21

22 Strategy for longer term earnings growth as introduced on 29 November 2007 Reinvigorate our position in the Australian/NZ markets, through ongoing focus on strengthening our customer relationships, product and service innovation and driving operational efficiency. Continue to improve our position in select geographies in Asia and North America where we can develop a sustainable competitive advantage through a focus on profitable differentiated products and solutions for the Building & Construction sector As in Australia, we will strengthen our market offers, improve our operations and supply chain, build our downstream businesses, support growth in Indonesia and India, in particular, and focus on improving the capability of our organisation Evaluate further growth opportunities with priority on: Brownfield capacity expansions and M&A rather than greenfield Expand presence in North America building products and solution markets Expanding our downstream capability in Australia and Asia New Zealand minerals development Target growth opportunities across our total value chain within our current geographic footprint New products and solutions with a focus on sustainability. Page 22

23 Acquisitions in the last 8 months Smorgon Distribution Australia, (August 2007) integration process on schedule HCI Steel Building Systems, Inc USA (October 2007) steel pre-engineered buildings (PEB) business adds geographic spread to our existing PEB business integration process on schedule IMSA Steel Corp, USA closed the deal on 1 February 2008 toured operations and commenced integration process Page 23

24 IMSA Steel Corp Acquisition BlueScope Steel has acquired the outstanding shares of IMSA Steel Corp from Ternium S.A, a NYSE-listed public company, effective February IMSA Steel Corp has four distinct businesses in North America: Varco Pruden (VP) Buildings: manufacturer of pre-engineered steel buildings (PEBs) to the non-residential construction market. Steelscape: West coast producer of metal coated and painted steel coils. Steelscape currently sources approximately 50% of its hot rolled coil from BlueScope Steel s Port Kembla Steelworks. MetlSpan: manufacturer of insulated steel panels for commercial, industrial and cold storage buildings. ASC Profiles: manufacturer of building components including architectural roof and wall systems and structural roof and floor decking. I would like to welcome all employees to the BlueScope Group. Page 24

25 IMSA Steel Corp Acquisition (cont.) Recap the deal cost US$730m (A$815m as at 1 February 2008) funded by a 12 month bridge facility gearing will increase to approx 40% expected EPS outcome EPS neutral, pre-aifrs adjustments, in FY 2008 EPS accretive from FY 2009 expecting significant synergies to be achieved EBITDA upside of approx. US$40m p.a. within 3 years high quality assets providing a platform for further growth in North America Please refer to 20 December 2007 presentation, available on our web site, for further information. Page 25

26 BlueScope Steel North American footprint recently expanded with the acquisition of IMSA Steel Corp. WA REVENUE: EBITDA: EMPLOYEES: INVESTED CAPITAL: A$661M A$98M 2,421 incl. North Star A$359M NB: Revenue excludes BSL s 50% interest in North Star BlueScope Steel. CA OR NV ID UT MT WY CO ND SD NE KS MN IA MO WI IL IN MI OH KY WV NY PA MD VA ME VT NH MA CT RI NJ DE AZ NM Mexico TX OK AR LA MS TN AL GA SC FL NC Key NorthStar BlueScope ASC MetlSpan Steelscape Varco Pruden Plant HCI Steel Butler Plant Koreteck BSL Steel Sales Offices Page 26

27 It is all about supply & demand DEMAND 1,200,000,000 1,000,000, ,000, ,000, ,000, ,000,000 0 POST WAR INDUSTRIALISATION World steel demand OIL SHOCKS 5-8% GROWTH NO GROWTH CHINA & EMERGING ECONOMIES % GROWTH 120 Global Steel Industry $ $ $80 SUPPLY Industry Consolidation $60 $40 20 $20 0 Arcelor Mittal Nippon Steel JFE POSCO Tata Corus Baosteel US Steel Nucor Thyssen Krupp Evraz Severstal Gerdau Wuhan China Steel Maanshan BlueScope CSN SSAB $0 Page 27

28 Previous super cycle (fuelled by Japan s industrialisation) resulted in 30 years of 5-8% growth in demand Historic world steel production evolution* World steel demand Tonne 1,200,000,000 1,000,000, ,000, ,000, ,000, ,000,000 0 Industrialisation fuelled by Japan First oil price shock (1974) * World steel production as taken from the numbers recorded in USGS Mineral Year Book Source: USGS; BSL Post industrialisation Second oil price shock (1980) Chinese growth era 5-8% Growth No Growth 5% Growth Steel production growth Percent Page 28

29 and during periods of demand growth, healthy spreads have prevailed, noting spreads are not at historic highs in real terms Historic global steel spreads ** over raw materials Real spreads ** 1945 = Industrialisation fuelled by Japan Post industrialisation China growth Once demand growth slowed 60 abruptly in the 70s the industry experienced a long 40 period of decline in spreads as capacity additions failed 20 to forsee the sustained demand slowdown Source: USGS; BSL First oil price shock (1974) * Un weighted average ** HRC Prices (Western Europe Export FOB) less raw materials (Iron ore & coal) indexed to 1945 prices Second oil price shock (1980) Page 29

30 Steel supply - global steel industry consolidation continues ,000 Europe / Americas Europe / Asia 100 Crude Steel Production (MT) Revenue (US$m) 90,000 80,000 Asia 80 70,000 60,000 Australia, Asia, Americas 60 50,000 Europe Americas ,000 30,000 20,000 10, Arcelor + Mittal Nippon Steel JFE POSCO Corus + Tata Baosteel US Steel Nucor Severstal Thyssen Krupp Evraz Gerdau Wuhan ChinaSteel Maanshan BlueScope SSAB + Ipsco CSN Note: Above analysis completed for calendar year 2006 Sources: IISI, company reports Page 30

31 In summary the outlook is China Steel demand remains strong Raw steel production growth slowing Evidence of higher spot raw material costs making some provincial steel plants uneconomic China s industrialisation process steaming ahead China s steel exports expected to fall significantly in CY2008. Rest of World Consolidation to continue Continued production discipline Russian economy using more steel Middle East demand strong India indicates a potential need to import steel But, North America outlook uncertain Steel prices are reacting strongly to raw material cost increases and tighter slab / HRC supply / demand conditions. Page 31

32 Blueprint Update Page 32

33 Blueprint recap on my approach to doing business at BlueScope and significantly improving shareholder value What we will do Areas of focus A. Reinvigorate our Australian and New Zealand businesses B. Continue the improvement process across our Asia and North America businesses C. Grow, or acquire, new businesses that build on our distinct competitive advantage Categories of Initiatives Grow domestic markets and steel penetration How we will do it Execution excellence Business essentials 1. Increasing customer and market focus 2. Improving productivity year on year 3. Optimising return on capital 4. Building an integrated BlueScope operating system 5. Further develop organisational capability Drive manufacturing excellence Enhance the supply chain Continue focus on productivity Procurement optimisation Improve capital planning and execution What we will be known for Safety 6. Improve on our world class safety performance Sustainability 7. Become a recognised leader in sustainability Shareholder value 8. Increasing shareholder value Monetise surplus assets Disciplined growth Page 33

34 BlueScope Steel will continue its focus on the Building and Construction Markets whilst concurrently looking after all of its customers in all segments Residential and commercial construction is a large and growing market for BlueScope. However, there is a high degree of variability of overall steel penetration (and BSL s market share) across those countries in which BlueScope has a presence. BlueScope will focus on the key themes of organic growth (increase in share, steel penetration and overall market development) and inorganic growth through acquisition, principally within its current global footprint. Page 34

35 Improving our delivery performance will better position us to improve cost efficiency and customer service Customers note delivery performance as the second most important reason for switching to imports Weekly DP (Business A) Percentage Week 15, 2005 Week 37, 2007 Page 35

36 Australia - Residential framing is one opportunity to increase steel penetration Framing and roofing can pull through most tonnes (2007E) Potential tonnes/home Framing Roofing Fencing Rain Water goods Garage doors Water tank Total potential tonnes/home and will make a step-change in overall steel penetration per home (2007E) Steel usage on new detached homes Tonnes/home Main difference in the top quartile is framing Avg= 2 tonnes / home Percent of homes 100 Residential Building remains an attractive end market for BlueScope Organisation aligned to this segment Strategic marketing function now created Investment in channel development planned Source: BlueScope Estimates Page 36

37 Manufacturing excellence - BSL will execute against key manufacturing outcomes at all operations BlueScope s Operating System Key Outcomes Technical system Management infrastructure Mindsets and behaviours Improve total cost per tonne produced Decrease variable costs Increase uptime Optimise changeovers Optimise inventory Grow ESVA All three dimensions of the operating system need to be addressed to sustain improvements Source PMO, BSL Page 37

38 As an example, there is further opportunity to improve uptime performance even relative to internal best practice BSL has significantly lifted its production levels over time with further potential to meet benchmark uptime performance Indexed production (Australian manufacturing facilities) Product Product Product Product 4 Product Product 1 Product 4 Product 1 Product 5 Product 3 Product 6 External benchmark BSL average BSL benchmark Source: BSL. Page 38

39 Balance Sheet - particular areas of opportunity are Property Working Capital Assessment BlueScope has an extensive property portfolio associated with its manufacturing locations which has not been optimised for value Large amounts of cash invested in working capital on the BlueScope balance sheet Potential opportunities Sale, lease or development of under utilised or not required properties Extension of existing processes to minimise levels of working capital Contracts Over time some contracts have have become ineffective with implications on operational security, flexibility and/or cost structure Improve contractual positions through improved contract management processes Page 39

40 and being a global leader in steel product innovation will greatly enhance our growth opportunities. We will invest more in this area CASTRIP Is a technology that allows steel makers to produce thin flatrolled products in far fewer process steps, saving money on both capital outlay and operating expenses LYSAGHT TRIMDEK Is a modern ribbed roofing profile with subtle fluting in the pans to provide strength and long spanning capabilities Is a specially designed prepainted steel with a unique paint system designed to resist tropical staining Is a pre-painted zinc/aluminium alloy-coated steel developed for low cost applications and interior panels Is a world leading brand for Pre- Engineered steel building systems and components designed for the non-residential construction industry Is a specially design residential framing product with protective zinc/aluminium coating and blue resin surface finish Page 40

41 Blueprint - update Progress report 29 November to present: Program Management Office established reporting to Managing Director & CEO track and report on: over 200 business improvement initiatives identified during the test & refresh review; and synergy initiatives emanating from recent acquisitions Project teams, to deliver key initiatives, established, eg. integrated BSL operating system, procurement optimisation and manufacturing line productivity Performance management and incentive systems aligned to revised KPI s consistent with 8 Blueprint Basics (referenced previous slide) driving accountability for all initiatives and execution plans Generating an additional A$200m in cash from the balance sheet during FY 2009 initiatives underway to deliver this target through working capital reductions and/or property sale(s) Page 41

42 Summary Page 42

43 Summary / Outlook Reasonable start to FY 2008 underlying first half profit in line with market expectations Asia detailed performance review in progress with management changes to bolster capability. Very pleased with the 3 acquisitions Smorgon Distribution HCI Industries IMSA Blueprint my approach to doing business at BlueScope Establishing infrastructure and deliverables. Second half FY 2008 outlook Expecting increased earnings vs 1 st half largely due to stronger global steel prices, principally from Q North Star s performance dependant upon relative movements between steel and scrap prices improved contribution from Smorgon Distribution and Coated Australia, and a contribution from the IMSA assets (Feb June 2008) Butler North America s order book remains strong but key market indicators are softening. Potential issues Stronger A$ Higher feed and zinc and aluminium costs for coated businesses Page 43

44 Questions & Answers Page 44

45 Citigroup s 5 th Annual Australia & New Zealand Investment Conference, London Paul O Malley, Managing Director and Chief Executive Officer March 2008 ASX Code: BSL

46 Supporting Information

47 Reporting Segment Performance Page 47

48 External reporting business segments for 1H FY2008 results Corporate / Group Australia New Zealand Asia North America Hot Rolled Products Australia Coated & Building Products Australia New Zealand & Pacific Islands Products Coated & Building Products Asia Hot Rolled Products North America Coated & Building Products North America Leading supplier of flat steel in Australia Global scale Port Kembla Steelworks Largest supplier of metallic coated and painted steel in Australia Leading market shares in most key products Western Port Springhill Lysaght Australia Service Centres Smorgon Distribution Only fully integrated flat steel maker in New Zealand Leading domestic market share of flat products Glenbrook, NZ Pacific Islands Pre-eminent seller of branded steel in Asia Lower cost backward integration growth strategy Indonesian, Malaysian, Thailand and Vietnamese operations China, including Butler Lysaght Asia India Tata BlueScope JV 50:50 joint venture with Cargill Inc. Again voted no. 1 flat rolled steel supplier in North America (Jacobson Survey) Delta, Ohio North American and European Export Trading Offices Pre-eminent global designer / supplier Preengineered buildings No 2 position in North America and no. 1 in China IMSA assets (from Feb 2008) Butler buildings Varco Pruden Buildings MetlSpan ASC Profiles Steelscape HCI Page 48

49 Australia Hot Rolled Products Australia Coated and Building Products Australia Page 49

50 EBIT A$ Millions Hot Rolled Products Australia (PKSW) operational strength continues to meet strong demand Reported Underlying (1) FY07-1H FY07-2H FY08-1H Notes: (1) 1HFY07 reported vs underlying variance largely due to margin loss from exporting product due to packaging closure. BF No. 5 Reline Capital Cost The latest estimate is $370M (up $40m) due to a reassessment of the labour costs (driven by the current resources boom in Australia) Markets Domestic HRC to pipe and tube sales - remained strong Plate - increased market share, driven by continued strong demand from mining, port infrastructure and other segments Exports Global slab and HRC markets - tight supply and higher raw material costs supporting higher prices (2H FY 2008) Underlying performance - First half FY2008 vs. 1H FY2007 EBIT reduction largely due to improved spread: higher steel prices partly offset by higher iron ore and scrap costs offset by increased freight and discretionary repairs and maintenance unfavourable domestic/export mix largely due to tinplate closure 2H FY 2007 unfavourable exchange rate movement 0.76 to 0.87 Excellent operations performance ironmake, slab and HRC production all at near record levels. Plate record. vs. 2H FY2007 Improvement largely due to higher steel prices and increased export sales partly offset by higher raw material costs Page 50

51 EBIT A$ Millions Hot Rolled Products Australia (PKSW) underlying EBIT variance analysis 1H FY2008 vs. 1H FY2007 Underlying EBIT down 14% to A$354M $414m Spread improvement +$8m $16m $41m Iron Ore (44) Coal 26 Inventory movement/revaluation (10) Scrap (16) Alloys (5) Discretionary R&M, consumables & Other (31) No. 5 BF support (10) Freight (11) ($49m) ($2m) ($10m) ($52m) ($10m) $6m - $354m 200 Shift to export after closure Tinplate 2H Half year ended Dec 2006 Export Prices Domestic Prices Raw Material Costs Volume Mix Conversion & Oth Costs Exchange Rates Other Half year ended Dec 2007 Page 51

52 (ktonnes) Port Kembla Steelworks - despatches by half year ,579 41% 16% 2,689 40% 15% 43% 45% FY06-1H FY06-2H FY07-1H FY07-2H FY08-1H External Product Sales Mix Internal Customers Domestic Customers Exports Customers * Slab 54% 42% 31% 29% 32% HRC 35% 45% 53% 55% 56% Plate/Other 11% 13% 16% 16% 12% * Including BlueScope Steel Asia feed 2,600 32% 21% 47% 2,609 2,608 32% 37% 18% 18% 50% 45% 40% sold domestically and 60% exported, with geographic split being: Asia 42% USA 36% Other 22% 100% exported, with geographic sales split Asia 68% USA 32% Other 0% Page 52

53 Australia Hot Rolled Products Australia net annual movements in PKSW raw material costs +34% +2% -2% (2) -3% +36% (1) FY2003 FY2004 FY2005 FY2006 FY2007 FY2008E S&A Conversion Costs Despatch & Freight Raw Materials * (1) Includes iron ore, coal, scrap and alloys but not scrap purchased on behalf of OneSteel. (2) The favourable movement in raw material cost reflects the favourable movement in exchange rate more than offsetting the increase in raw material costs. Page 53

54 Australia - Hot Rolled Products Australia - product flow (Indicative) 1H FY2008 Port Kembla Steelworks 2.6mt slab 1H FY2008 (2.7mt slab 1H FY2007) Hot Strip Mill 53% (53%) C&BP Australia (1) (Western Port) 21% (22%) Export Slab 17% (16%) Plate Mill 9% (9%) C & BP Australia (1) (Springhill & Distribution) 41% (48%) Domestic HRC 23% (26%) C & BP Australia (Distribution) 19% (0%) Domestic Plate 70% (85%) Export HRC (2) 36% (26%) Notes: (1) C&BP Australia is Coated and Building Products Australia (2) Included 134kt internal sales to BlueScope s Thailand operations Export Plate 11% (15%) Page 54

55 Port Kembla Steelworks Blast Furnace No. 5 reline and cogeneration plant 1. Blast Furnace No. 5 Reline remains on target for March 2009 (CURRENT EXPECTATION) Total capital cost A$370m ($106m spent by end of FY 2007). The increase from $330m to $370m reflects expected increase in labour costs largely due to the resources boom in Australia. Depreciated over 20 years. The project will take approx. 100 days, commencing in March 2009 and finishing June Expected lost slab production (shutdown and ramp up) is approx 680kt, reflecting part offset from increased BF No. 6 production and higher scrap use in basic oxygen steelmaking. At this stage a number of export customers will be affected during this exercise. Have contacted our customers who will make alternative arrangements during the reline project. Domestic external sales are not expected to be materially affected. Major raw materials impact: expect to purchase approx 700kt less iron ore (principally fines and pellets) than the 7,700kt purchased in 2007 and expected in 2008; approx 65kt of additional scrap purchased; and present intention is not to change coal consumption and to export excess coke (approx 240kt). However, if coke margins don t meet our requirements at the time then we would reduce our coking coal purchases by up to 300kt. 2. Co-generation plant Feasibility study continues Page 55

56 Port Kembla Steelworks - Blast Furnace No. 5 reline Page 56

57 Port Kembla Steelworks Sinter Plant Upgrade 3. Sinter Plant Upgrade (CURRENT EXPECTATIONS) Main shutdown planned for April May 2009 (approx. 35 days) Coincide with BF No. 5 reline, when demand for sinter is reduced. Total capital cost A$134m. What is planned? Principally: lengthen & deepen the strand, refurbish cooler install new strand feed device, ignition furnace install 2 new raw material conveyor sequences Where? On No. 3 sinter machine at PKSW is single source of 5.3mtpa of sinter for BF s No. 5 & No. 6 currently the typical blast furnace burden mix is: Outcome post upgrade: 57% sinter (fines based); 25% pellets; 18% lump Sinter Sinter is an agglomeration of fine ores, fluxes (limestone and sand) and fuels fused together by heat. increased sinter production by 1.1 mtpa to 6.6mtpa (capacity is expected to be 5.5mtpa by end CY 2008) this will require mpta of fines BUT would displace 1.0 mtpa of pellets (in FY07 the fines to pellet price differential was approx US$30/t). Increased Pulverized Coal injection rates (cost saving as use more thermal and less coking coal) due to blast furnace permeability being improved by higher quality sinter. Page 57

58 Port Kembla Steelworks Sinter Plant upgrade Exit End Rebuild cooler Increase Width Increase Fan Power Relocate Lowering wheel and extend building New cooler feed chute Entry End New Ignition Furnace New Strand Feeding Device Strand Increase Height Increase Length Precipitators Refurbish zones 2, 3 & 4 - R&M New Zone 1 Modern Electrics SINTER : AGGLOMERATION OF FINE ORES, FLUXES (LIMESTONE AND SAND) AND FUELS FUSED TOGETHER BY HEAT. Page 58

59 Australia Hot Rolled Products Australia - Slab and HRC price benchmarks The following Steel Business Briefing prices continue to be a reasonable public benchmark for BlueScope s domestic and Asian HRC prices (noting this can change over time). HRC Steel Business Briefing HRC East Asia Import CFR $800 $700 $600 Asian HRC Benchmark Price SBB HRC East Asia Import CFR $500 SLAB Steel Business Briefing Slab East Asia Import CFR US$/mt $400 $300 $200 $100 Source: Steel Business Briefing $0 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Page 59

60 EBIT A$ Millions Coated & Building Products Australia Improved margin management Reported Underlying (1) (2) Notes: (1) Underlying vs reported variance: - Erskine Park sale (-$7m) Packaging operating results closure (-$4m) (2) Includes 5 months of Smorgon Distribution earnings -8 FY07-1H FY07-2H FY08-1H -5 Reconciliation from Reported to Underlying EBIT Reported Unusual and non-recurring items in reported EBIT: $11m Closure of PK Service Centre paint line $23m Lysaght asset impairment SSX dist. integration $7m $3m West Sydney pre production costs Underlying $6m $44m $50m Underlying Performance First half FY2008 vs. 1H FY2007 EBIT up 32% largely due to increased spread higher sales prices lower steel feed & coating costs Smorgon distribution contribution partly offset by adverse mix due to clearance of imported product from 2H FY2007. stronger $A higher unit costs Packaging CRC not operating at capacity West Sydney ramp-up Distribution performance below expectations due to margin reduction to compete against imports vs. 2H FY2007 EBIT improvement increased spread inclusion of Smorgon Distribution sales Page 60

61 EBIT A$ Millions Coated and Building Products Australia - underlying EBIT variance analysis 1H FY2008 vs. 1H FY2007 Underlying EBIT up 32% to A$50m Spread Improvement +$43m Higher units costs Packaging cold mill & West Sydney ramp up (27) Cost reductions 11 Other $19m 80 $30m $14m ($9m) ($12m) $38m ($1m) Lower feed 3 Lower coating costs 11 Increased imports from 2H FY07 (9) ($19m) ($10m) Profit in stock elimination (11) Other 1 $50m 0 Half year ended Dec 2006 Export Prices Domestic Prices Raw Material Costs Volume Mix Conversion & Oth Costs Exchange Rates Other Half year ended Dec 2007 Page 61

62 Coated & Building Products Australia Smorgon Distribution review BlueScope took ownership of Smorgon Distribution in early August Also very pleased that Mark Vassella and his team have joined BlueScope Financial performance (5 months): Reported EBIT $3m Unusual and non-recurring items in reported EBIT: - Integration costs $5m - Smorgon brand name write-off $2m $7m Underlying EBIT $10m Earnings were down on 1H FY 2007 largely due to margin compression as a result of higher import competition and need to maintain share. Now getting some market traction and expecting an improved second half. Integration is going very well. Page 62

63 Coated Australia Project update West Sydney Colorbond Facility Plant handed over to manufacturing team and paint on strip August 2007 Capital cost $150m (including land, buildings and processing equipment) Nameplate capacity up to 120,000 tpa technical ramp up is expected to take 2 years but will also be subject to the market. Capability to meet 24hr delivering orders vs typically longer lead times at Springhill. Service Centre Paint Line (Port Kembla) closure To be clear, this is not the Springhill paint line but a second line in Port Kembla Oldest and most cost inefficient paint line in BSL network Adopted a staged approach to closure, ie. over months. Initially change from 7 to 5 days continuous production. Approx 90 employees will be affected. Page 63

64 Our customers are our partners Our Market Offer High quality products Advertising / promotional support Service Delivery Satisfaction Warranty Technical Support XLERPLATE Creating New products New markets TUBEFORM Page 64

65 New Zealand New Zealand Steel & Pacific Islands Products Page 65

66 EBIT A$ Millions New Zealand and Pacific Islands Products improved front end operating performance continues Reconciliation from Reported to Underlying EBIT Reported A$44m Unusual and non-recurring items in reported EBIT: - Redemption of preference shares by MIL investment A($11m) - Fiji Asset Impairment A$ 3m A($8m) Underlying A$36m Markets Domestic conditions softer than 1H FY07, largely due to import competition and residential slowdown. Export - very strong demand for HRC 25 0 Reported Underlying FY07-1H FY07-2H FY08-1H Underlying performance First half FY2008 vs. 1H FY2007 EBIT down 16%, largely due to reduced spread higher prices offset by higher coal cost unfavourable movement in NZD:USD slab production up 6% - improved operating practices. vs. 2H FY2007 Same as for 1H FY2007 Page 66

67 EBIT A$ Millions New Zealand and Pacific Islands Products underlying EBIT variance analysis 1H FY2008 vs. 1H FY2007 Underlying EBIT down 16% to A$36m 60 Spread contraction ($7m) Coal (10) 40 $43m $3m $3m $3m $36m ($10m) ($1m) ($5m) 20 0 Half year ended Dec 2006 Export Prices Domestic Prices Raw Material Costs Volume Mix Conversion & Oth Costs Exchange Rates Half year ended Dec 2007 Page 67

68 New Zealand Steel and sustainability benefits of cogeneration 1200 NZ STEEL EXTERNALLY PURCHASED AND INTERNALLY COGENERATED ELECTRICITY GWh 600 Internal Cogeneration Purchased Energy / / / / / / / / /07 Apr-Mar Year $200 million already spent to reduce energy demand. For example: 70% of our New Zealand operations electricity needs produced on-site by co-generation from captured process gasses. Other sustainability initiatives include: 100% of metallic scrap and slag material is recycled. Funding research in lower carbon steel technology. Page 68

69 New Zealand Steel (FY2007) product flow* Mine Sites Iron Sand Concentrate 2.0mt * Indicative annual prime production and sales (t) Export Iron Sand Concentrate 0.8mt Export Vanadium Slag 15 kt New Zealand Steel 0.6mt Slab 0.6mt Hot Rolled Export Hot Rolled 34% (6%+28%) Cold Strip Mill 54% Domestic Pipe 4% Domestic Hot Rolled 8% Export Cold Rolled 14% (1%+ 13%) Coating lines 74% Domestic Cold Rolled 12% Export Painted 6% (4%+2%) Export Metal Coated 13% (8% + 5%) Domestic Metal Coated 61% Domestic Painted 20% (External % + Internal %) Page 69

70 NZ Iron Sands feasibility studies underway, project teams are revitalised The abundant iron sand resource at New Zealand Steel is an increasingly valuable asset in the BlueScope Steel portfolio There are a number of brownfield opportunities to better exploit this strategic resource to increase the production of: slab and / or pig iron; vanadium bearing slag / vanadium pentoxide; ironsand exports;and new products such as titania slag and zircon 2 projects currently in feasibility stage of the approval process (Vanadium converter and Taharoa iron sands expansion) 4 projects in concept or pre-feasibility phases (Vanadium pentoxide, Titania, Iron Make, Pig Iron) Taharoa Glenbrook Page 70

71 Asia Coated & Building Products Asia Page 71

72 EBIT A$ Millions Coated and Building Products Asia its all about market development and margin management Reported Underlying (1) FY07-1H FY07-2H FY08-1H Notes: (1) The FY07-1H Underlying vs Reported variance relates to pre-operating and business development costs (principally China coated development). Reconciliation from reported to underlying earnings: Reported (A$195m) Unusual and non-recurring items in reported EBIT: Asset Impairment China A$190m Vietnam A$ 35m A$225m Underlying A$30m Markets Apart from Thailand, all regional markets remain strong. Underlying performance First half FY2008 vs. 1H FY2007 EBIT reduction of 23% largely due to reduced margins, principally in Thailand operations performance excellent across the board vs. 2H FY2007 the EBIT increase is largely due to improved performance from the Butler PEB business in China Page 72

73 EBIT A$ Millions Coated and Building Products Asia underlying EBIT variance analysis 1H FY2008 vs. 1H FY2007 underlying EBIT down 23% to A$30m 70 Spread Contraction ($12m) 60 Steel feed costs (18) $39m $4m $2m $13m $4m $30m ($18m) ($10m) ($2m) ($2m) 10 0 Half year ended Dec 2006 Export Prices Domestic Prices Raw Material Costs Volume Mix Conversion & Oth Costs Exchange Rates Other Half year ended Dec 2007 Page 73

74 Coated and Building Products Asia regional performance Thailand general election 23 Dec 2007 & coalition government formed Jan 08 increased exports to India & Europe significant improvement in operations second half economic conditions remain soft Indonesia strong domestic market operating at capacity. Sourcing product from BSL Vietnam second metal coating line remains on schedule Malaysia domestic sales down due to flat construction market exports to South Africa increased strong operations performance Vietnam intense competition and unfavourable tariffs outstanding operations performance with metal coating line at capacity supplied 17kt of product to BlueScope s Indonesian business China Coated improved sales largely due to increased sales force and new products margins continue under pressure as feed cost rises Buildings (PEB) strong sales and order intake stronger margins due to tighter process controls and financial discipline India PEB facilities are operating at full capacity due to strong demand. new coating lines now due to be completed in CY Page 74

75 BlueScope Steel China footprint REVENUE: A$234M EBITDA: (A$174M) EBITDA Underlying: A$9M EMPLOYEES: 1,940 INVESTED CAPITAL: A$207M SUZHOU GUANGZHOU BlueScope Steel in China 1 Metal Coating/Painting Line Facility 4 Lysaght Manufacturing Facilities 3 Butler PEB Manufacturing Facilities 60 Butler/CSC Sales Offices 24 Butler District Offices/Sales Office Page 75

76 North America Hot Rolled Products Coated & Building Products Page 76

77 EBIT A$ Millions Hot Rolled Products North America Scrap to HRC price spread squeezed in 1H FY 2008 This segment includes: North Star BlueScope Steel (50% interest) Castrip LLC and North American and European sales offices Reported FY07-1H FY07-2H FY08-1H Markets Softening, albeit North Star despatches increased 4% on 1H Underlying performance- First Half FY2008 vs. 1H FY2007 North Star BlueScope 63% EBIT reduction A$38m vs A$102m was due to lower spread higher scrap prices lower HRC prices Continued strong operations performance Voted No. 1 in Jacobson Survey for sixth year in a row Trading offices Castrip Product sold Americas 512kt (principally slab & HRC) Europe 179kt (HRC & coated) Strong demand for BSL products Increased HRC sales to Steelscape in 2H FY08 due to IMSA purchase. Nucor making outstanding progress on both quality and throughput. Underlying vs. 2H FY2007 (North Star) Lower EBIT due to spread contraction Page 77

78 EBIT A$ Millions Hot Rolled Products North America underlying EBIT variance analysis This segment comprises: 140 North Star BlueScope Steel (50% interest) Castrip LLC and North American and European sales offices 1H FY2008 vs 1H FY2007 EBIT variance analysis 120 $112m $2m $1m $47m 40 ($64m) ($2m) ($1m) ($1m) 20 0 Half year ended Dec 2006 Export Prices North Star Spread Conversion & Oth Costs (North Star BlueScope 50% only) Sales revenue down 17% to A$310M Underlying EBIT down 63% to A$38M 1H FY2008 annualised return on net assets (pre-tax) 32% Raw Material Costs Exchange Rates Other - Half year ended Dec 2007 Page 78

79 North America - North Star BlueScope Steel EAF operational excellence Focus on energy management given recent spike in electricity and natural gas prices Natural Gas Consumption Electricity Consumption (MMBTU per ton, FY) (KWH per ton, FY) Tap to Tap Time (minutes) EAF Power on Time per Heat (Minutes of Power Used per heat)) Page 79

80 Castrip - Scale comparison with current casting technologies Conventional Slab Casting 1-2m/minute Gas cutter Cooling Rougher Coil box Finisher Run out table cooling 1-10mm thick mm thick Reheat furnace m Coiler metric ton coil Thin-Slab Casting 4-6 m/minute Finisher Run out table cooling 1-10mm thick Strip Casting 50-60mm thick Holding furnace m Coiler metric ton coil Scale Control Chamber m/minute Run out table Mill cooling 60 m mm thick Coiler metric ton coil Page 80

81 EBIT A$ Millions Coated and Building Products North America a very strong half HCI Steel Building Systems, a steel PEB company in North America, was acquired by BSL in October IMSA Steel Corp was acquired by BSL in February Reported Underlying FY07-1H FY07-2H FY08-1H Notes: (1) All EBIT numbers normalised to exclude Vistawall business earnings. This business was sold in June (2) 1H FY08 difference of $5m represents a write back of over provided liabilities re Butler s UK pension fund. Markets (100% sales to non-residential) Non-residential market remained strong for most of half. Building s market share increased by approx 1% Total despatches up 3% vs 1H FY 2007 Softer market conditions expected in 2H Underlying performance First half FY2008 vs. 1H FY2007 EBIT up 65% largely due to Increased spread ie. sales prices increases exceeding cost raw materials lower conversion costs higher volumes; and lower costs in the Mexico facility partly offset by unfavourable foreign exchange movement strong operations performance continues vs. 2H FY2007 significant improvement due to increase in despatches lower conversion costs IMSA Steel Corp acquisition Page 81

82 EBIT A$ Millions Coated and Building Products North America underlying EBIT variance analysis Comprises: Butler buildings 1H FY2008 vs. 1H FY2007 underlying EBIT variance 60 Spread improvement +$17m $20m $2m $5m ($4m) $38m ($3m) ($5m) 30 $23m Half year ended Dec 2006 Export Prices Domestic Prices Raw Material Costs Volume Mix Conversion & Oth Costs Exchange Rates Other Half year ended Dec 2007 Page 82

83 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 July July 30 August 6 Page 83

84 North America acquisition of HCI Steel Building Systems, Inc On 1 November 2007 BlueScope acquired privately owned HCI Steel Building Systems Inc. (a pre-engineered steel buildings business) HCI designs & manufactures steel PEB s for heavy industry, commercial and community segments Generated sales revenue approx US$40m in FY Regional focus northwest USA and western Canada, which strengthens Butler s position in the region An excellent fit for our PEB business in North America. Truck Service Centre Dawson Building Skeleton Steel Dawson Office Building Page 84

85 Other Supporting Information Page 85

86 Major approved capital projects and investments summary PROJECTS All in A$million Total Est. Capex / Cost Actual to 30/6/07 FY2008 1H Actual FY2008 2H FY2009 FY2010 Projects completed Thailand Coating expansion Vietnam Coating / Painting China - Coating and Painting Facility - Guangzhou Butler / Lysaght India - Butler / Lysaght facilities (50% interest) Australia Port Kembla (PKSW) - HSM expansion - Sinter Plant Emissions WA Service Centre Western Sydney Colorbond Projects to be completed India - Coating / Painting (50% interest) Indonesia Coating / Painting PKSW Blast Furnace No. 5 Reline Sinter plant upgrade INVESTMENTS Smorgon Steel s Distribution business Butler Manufacturing (3) Lysaght and water acquisitions (1) (2) Total capital spending (4) 2,819 1, 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 (4) In addition, a Cogeneration feasibility study being undertaken over next 12 months and the capital cost of the project, will likely be in the range of A$700 1,000M. Page 86

87 BlueScope s global debt facilities maturity schedule Amount ($m) Maturity date Working Capital Facilities AUD 350 Oct-08 Loan Note Facility Tranche day AUD 92 Dec-08 Tranche 2-3 year AUD 550 Dec-08 Tranche 3-5 year AUD 550 Dec-10 1,192 US Private Placement Series A USD 100 Jul-11 Series B USD 200 Jul Bridging Facility USD 730 Feb-09 Refinancing required in calendar year 2008 Page 87

88 Indicative FY2008 Zinc and Aluminium usage vs FY2007 Tonnes Zinc Aluminium FY2008(E) FY2007 FY2008(E) FY2007 AUSTRALIA Springhill 21,423 22,787 11,281 10,632 Western Port 22,261 21,800 11,284 10,900 Sub-total 43,684 44,587 22,565 21,532 NEW ZEALAND 7,300 6,800 3,700 3,500 ASIA 19,814 14,888 18,094 13,092 TOTAL 70,798 66,275 44,359 38,124 Note: (1) In future years BSL Asia s usage will increase as new mid-stream projects ramp-up to full capacity (2) Av FY 2007 Zinc price was US$3,728 per tonne vs av 1H FY 2008 price of US$2,889 per tonne, with current spot price of US$2,416 per tonne (12 Feb 2008). Page 88

89 China is at a very early stage in steel intensity providing significant upside potential Crude steel intensity Kg/capita 1200 Taiwan ( ) 1000 South Korea ( ) Japan ( ) China ( ) USA ( ) India ( ) Developing Asia ( ) Source: Global Insight, IMF, OECD, IISI, USGS, John F King, BSL US$ GDP at 2000 Purchase Price Parity/capita Page 89

90 and it should reach peak in crude steel intensity at earliest in 10 years time Crude steel intensity Kg/capita GDP at 2000 PPP/capita USD/capita Source: Global Insight, IMF, OECD, IISI, USGS, John F King, BSL China following slope of US intensity curve China reaches maximum steel intensity by 2017 China following Japan intensity curve China reaches maximum steel intensity by 2024 Page 90

91 China s continued urbanisation and industrialisation are the key enablers for continued steel demand growth Real GDP growth Urbanisation Industry and service output Annual GDP growth rate Urbanisation rate 43.9% 51.5% GDP structure 11 % Agriculture Industry 10.7% 7.7% Service Rationale China GDP will continue to grow at a high CAGR in the next 5 years Percentage increase rate expected to decrease as the central government intends to avoid overheating Source: Global Insight; NPC planning; BSL Rationale Urbanisation is driven by GDP growth More 2 3 tier cities will develop 100 million people will urbanise by 2012 and 300 million by 2020 (current USA population) Rationale Urbanisation will drive industry and service GDP to occupy a larger portion of total GDP at the expense of agriculture Industrialisation will continue to increase the share of industry in the GDP, while the service sector will grow with GDP Page 91

92 Internal business structure has been reorganised to focus on our strategic priorities and execution Managing Director and CEO Paul O Malley Legal (Michael Barron) CFO (Charlie Elias) People and Organisational Performance (Ian Cummin) Aus/NZ Steel Manufacturing Businesses Australian Coated and Industrial Markets Australian Distribution and Solutions Corporate Strategy and Innovation; North America, Noel Cornish Paul O Keefe Mark Vassella Brian Kruger Kathryn Fagg Bob Moore Asia China Oversees all manufacturing facilities in Aus/NZ; NZS; responsible for driving safety, process excellence and meeting production schedule at lowest cost Customer oriented business responsible for all Australia sales, exports (other than downstream), key account management, supply chain, strategic pricing and setting the production mix for manufacturing Combines responsibility for Australian downstream businesses (Lysaght, Distribution, Service centres, Water and Butler Buildings) Oversees North American businesses with particular emphasis on growth, as well as leading corporate strategy and innovation Responsible for leading ASEAN businesses and Indian joint venture Direct CEO report for China to provide top management focus on turnaround effort Page 92

93 Marine freight continues to be one of the most volatile commodities in the world expect further rate hikes this CY BUT BlueScope largely insulated Marine freight market volatility all time high in Dec 2007 to some of the biggest one-day falls ever seen (in Jan) o The extent of the fall being due to An iron ore port closure in Brazil Flooding in Queensland halting coal exports Power crisis in China and South Africa restricting coal exports these are relatively short term and would expect a rebound BUT BlueScope s strategy is to manage this volatility through the negotiation of medium to long term contracts where possible Baltic Dry Index showing marine freight market over the last 3 years 12,000 Bulk Dry Index 10,000 8,000 6,000 4,000 2,000 0 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Page 93

94 BlueScope Steel s Financial Results Page 94

95 Calendar year earnings A$ Millions CY2003 CY2004 (2) CY2005 CY2006 CY2007 (3) Revenue 5,328 7,029 7,980 8,693 9,333 EBITDA (1) 857 1,501 1,411 1,052 1,130 EBIT (1) - reported 581 1,212 1, underlying - - 1, Net profit - reported underlying EPS ( ) - reported (1) Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue (2) Includes eight months of BlueScope Butler financial results (3) Includes five months of Smorgon Distribution financial results Page 95

96 Earnings performance leveraged to steel price spreads A$ Millions FY2003 FY2004 (2) FY2005 FY2006 FY H H Revenue 5,302 5,770 7,964 8,031 8,913 4,528 4,734 EBITDA (1) 881 1,104 1, , EBIT (1) Reported , , Underlying (3) 1, , NPAT Reported Underlying (3) 1, EPS (cps) Reported EPS (cps) Operating (3) (1) Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue, which was A$38M (1H 2008) vs. A$102M (1H 2007) (2) Includes two months of BlueScope Butler financial results. (3) Operating numbers represent Reported numbers adjusted for unusual or non-recurring events to reflect underlying financial performance from ongoing operations (4) Includes five months of Smorgon Distribution financial results. (4) Page 96

97 EBIT A$ Millions Reported EBIT variance 1H FY2007 to 1H FY2008 by item Net Spread improvement $62m 800 $128m $10m $635m ($76m) ($11m) ($64m) ($55m) ($40m) ($24m) 300 $328m 200 ($175m) Half year ended Dec 2006 Domestic Prices Volume / Mix Conversion & Other Costs Other Half year ended Dec 2007 Page 97

98 Reconciliation from Reported to Underlying EBIT for first half FY2008 EBIT $M Integration costs 5 Profit in stock eliminations 19 Smorgon Brand impairment 2 West Syd P/L Pre-ops 3 M&A costs 3 China MCL 190 Vietnam MCL 35 Lysaght Australia 23 Fiji 3 $251m $26m $11m $13m $6m $3m $494m $328m ($128m) ($11m) ($5m) Page 98