First Half FY2012 Results and Business
Update Presentation
Paul O’Malley, Managing Director and Chief Executive Officer
Charlie Elias, Chief Financial Officer
20 February 2012
ASX Code: BSL
Page 1
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.
Page 2
Lost Time Injury Frequency Rate
Medically Treated Injury Frequency Rate
18
16
14
70
16.0
14.0
12
10
8
8.0
Includes period of Australian
operational restructure
6
4.8
4
4.1
3.5
3.5
2.8
1.8 1.6
2
0.9 0.8
0.6
60
60.0
52.2
50
47.1
40
30
29.1
22.4 21.9
20
17.0
12.4
10
0.9 0.9 0.9 0.7
0.5
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
YTD
Includes Contractors from 1996
Includes Butler from May 2004
Includes 2007/8 acquisitions
Medically treated injuries per million man-hours worked
Lost time injuries per million man-hours worked
Progress towards our goal of Zero Harm
9.4
8.3 9.3
6.6
6.8
6.4 5.7
5.1
6.3 5.3
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
YTD
Includes Contractors from 2004
Includes Butler from May 2004
Includes 2007/8 acquisitions
*
* The MTIFR baseline has been reset from 4.4 to 6.3. This change relates to revised principles
that raise the bar on BlueScope’s MTI definition
Page 3
Financial & Business
Headlines
Page 4
Reconciliation between 1H FY2012 reported NLAT and underlying NLAT1
1H FY2012
NLAT A$M
Reported net loss after tax
(530)
Underlying adjustments
Restructuring & redundancy costs
254
Borrowing amendment fees
6
Asset impairment
3
Deferred Tax impairment 2
184
Steel Transformation Plan advance 3
(46)
Underlying net loss after tax
(129)
1H FY2012 underlying NLAT before period end net realisable value adjustments of A$76M
(A$129M less A$53M NRV) was in accordance with our earnings guidance for 1H FY2012
Note:
1 – Underlying EBIT 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 is been reviewed. Detail can be found in Table 2b of the ASX Earnings Release for six months ended 31 December 2011 (document under
listing rule 4.3a)
2 – In respect of the impairment of deferred tax assets, the company has deferred the recognition of a tax asset totalling $184M in respect to tax losses generated during the half year, mainly in
relation to export losses and restructuring costs. Australian Accounting Standards impose a stringent test for the recognition of a deferred tax asset where there is a history of recent tax
losses. The company has deferred the recognition of any further tax asset for the Australian tax group until a return to taxable profits has been demonstrated. Unrecognised Australian tax
losses are able to be carried forward indefinitely.
3 – $100M cash received in January 2012. $46.3M post-tax ($66.1M pre-tax) earnings recognised in 1H FY2012; balance of $23.7M post-tax ($33.9M pre-tax) to be recognised in 2H FY2012
Page 5
Group financial headlines 1H FY2012 vs. 1H FY2011
SIX MONTHS ENDED
A$
Revenue
External despatches
EBITDA
− Reported
(1)
− Underlying
EBIT
− Reported
− Underlying
NPAT
(1)
− Reported
− Underlying
EPS
(1)
− Reported
− Underlying
(1)
EBIT Return on Invested Capital
Return on Equity
1H FY2012 vs 1H FY2011
31 DEC 2010
30 JUN 2011
31 DEC 2011
%
4,622M
4,531M
4,549M
-2%
3.8M tonnes
3.9M tonnes
3.6M tonnes
-5%
127M
(814M)
(270M)
-
134M
120M
32M
-76%
(48M)
(995M)
(435M)
-
(41M)
(60M)
(132M)
-222%
(55M)
(999M)
(530M)
-
(47M)
(71M)
(129M)(2)
-174%
(2.5¢)
(46.1¢)
(26.6¢)
-
(2.2¢)
(1.5%)/(1.2%) (3)
(3.3¢)
(30.9%)/(1.9%) (3)
(6.5¢)
(16.1%)/(4.9%) (3)
-155%
(2.0%)/(1.7%) (3)
(38.5%)/(2.8%) (3)
(25.5%)/(6.2%) (3)
-
-
Net Operating Cashflow
− From operating activities
(A$16M)
A$158M
(A$30M)
-88%
− After capex / investments
(A$196M)
(A$26M)
(A$135M)
+31%
2cps
0cps
0cps
14.2%
19.5%
15.7%
Dividends (fully franked)
Gearing (ND/ND+E)
Note:
Below 25-30% target
1 – Please refer to page 44 for a detailed reconciliation of reported to underlying results.
2 – 1H FY2012 underlying NLAT before period end net realisable value adjustments of A$76M (A$129M less A$53M NRV) was in accordance with our earlier
earnings guidance.
3 – Underlying returns in brackets
Page 6
BlueScope Steel lays foundation for return to profitability
• On track to deliver $400-500M working capital release
• Reduced net debt from $1.55Bn at 31 October 2011 to $796M at 31 December 2011
• Underlying Net Loss After Tax of $76M (before period end NRVs), in line with guidance
• Australian restructure on track with exposure to export losses reducing
• Benefits of restructure will appear in 2H underlying results, particularly in Q4
• Significant progress has been made to improve the Company’s financial performance
Page 7
Global Steel market supply/demand dynamics changed since GFC. Developed
world starting to see supply-side constraint; needs demand improvement
Monthly Crude Steel Capacity Utilisation* (%)
115%
• Demand in developed
economies remains soft
110%
World
China
World (Excl China)
• Strong growth in
developing economies
expected to continue
105%
100%
95%
90%
85%
85%
80%
75%
74
72
70%
70
65%
60%
55%
• Blast furnace idling
continues in Europe
• Chinese steel industry
profitability appears
marginal
• Chinese steel production
expected to stay within
600-700mtpa during CY
2012
50%
Jan 00
-Source: WSA
Jan 01
Jan 02
Jan 03
Jan 04
Jan 05
Jan 06
Jan 07
Jan 08
Jan 09
Jan 10
Jan 11
Jan 12
Global Steel capacity utilisation needs to return to around 85% for steel spread to
improve and stabilise
-Data to December 2011
* Notes – Crude steel capacity utilisation is calculated based on the WSA 66 reporting countries, representing approx 96% of global crude steel capacity; At 85% pricing power may shift towards steelmaker
Page 8
…however encouraged by some recent weakness in raw material
input costs
Iron Ore and Hard Coking Coal Prices (FOB)
Iron ore fines price US$/t
180
Hard coking price US$/t
160
US$132/t
(Jan 2012)
140
240
120
US$221/t
(Jan 2012)
100
80
60
320
160
Hard coking coal
40
20
Iron ore fines
0
80
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: CRU, Platts, TSI, BlueScope Steel calculations
Note:
• Indicative iron ore pricing: 62% Fe iron ore fines price assumed. Industry annual benchmark prices up to March 2010. Quarterly index average prices lagged by one quarter from April 2010 to March 2011; monthly
index average thereafter. FOB estimate deducts baltic cape index freight cost from CFR China price.
• Indicative hard coking coal pricing: low-vol; FOB. Industry annual benchmark prices prior to, and including, March 2010; quarterly prices from April 2010 to March 2011; monthly average spot price thereafter.
Page 9
…however the continued strength of A$ exacerbates the contraction of
USD spread and leads to increased import price pressure in Australia
USD/AUD
1.10
Monthly Average Foreign Exchange Rate
July 1990 to January 2012
$1.04 (Jan avg)
1.00
0.90
Avg: $0.89
High: $1.08
Low: $0.65
0.80
0.70
Avg: $0.69
High: $0.83
Low: $0.49
0.60
0.50
0.40
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Page 10
…and steel spreads remain at historical lows
Indicative Steelmaker HRC Spread (A$/t)
SBB East Asia HRC price less cost of 1.5t iron ore fines and 0.71t hard coking coal
$800
$700
$600
$500
A$/t
$400
$300
$200
$100
$0
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Source: SBB, CRU, Platts, TSI, Reserve Bank of Australia, BlueScope Steel calculations
FY2010
FY2011
1H FY11
2H FY11
1H FY12
Indicative steelmaker HRC spread (US$/t)
365
271
252
291
260
Indicative steelmaker HRC spread (A$/t)
414
275
266
283
253
A$ / US$ FX
0.88
0.99
0.95
1.03
1.03
Notes on calculation:
• ‘Indicative steelmaker HRC spread’ representation based on simple input blend of 1.5t iron ore fines and 0.71t hard coking coal per output tonne of steel. Chart is not a specific representation of BSL realised export HRC spread (eg does not account for iron
ore blends, realised steel prices etc), but rather is shown primarily to demonstrate movements from period to period arising from the prices / currency involved.
• Indicative iron ore pricing: 62% Fe iron ore fines price assumed. Industry annual benchmark prices up to March 2010. Quarterly index average prices lagged by one quarter from April 2010 to March 2011; 50/50 monthly/quarterly index average thereafter.
FOB estimate deducts baltic cape index freight cost from CFR China price.
• Indicative hard coking coal pricing: low-vol; FOB. Industry annual benchmark prices up to March 2010; quarterly prices from April 2010 to March 2011; 50/50 monthly/quarterly pricing thereafter.
Page 11
Segment underlying EBIT summary
Underlying EBIT (A$M) (1)
Comments
FY2010
FY2011
1H
FY2011
108
(258)
(97)
(161)
(182)
Restructure well advanced. BF No.6 /
other assets closed October 2011.
Australia Distribution &
Solutions
2
(34)
(15)
(19)
(29)
Lower margins
New Zealand Steel and
Pacific Steel Prod.
73
82
49
33
34
Higher utility costs; unfavourable FX;
lower production (gas supply outage)
Coated & Building Products
Asia
116
108
46
62
47
Thailand floods and Indonesia MCL2
start-up costs
Coated & Industrial
Products Australia
2H
FY2011
1H
FY2012
Coated & Building Products
North America
(16)
(20)
(16)
(4)
6
Targeted profit improvement program
and manufacturing integration result in
positive earnings
Hot Rolled Products North
America
61
72
8
64
20
Reduced spread
Corporate
& inter-segment
(89)
(51)
(16)
(35)
(28)
TOTAL GROUP
255
(101)
(41)
(60)
(132)
Note: (1) – Underlying EBIT is provided to assist readers to better understand the underlying business segment financial performance. Please refer to page 45 for a detailed reconciliation of reported
EBIT to underlying EBIT for each segment.
Page 12
Coated & Industrial Products Australia – segment summary
Comments on results and business direction
Half yearly underlying EBIT comparison (A$M)
188
• 1H FY2012 underlying EBIT loss of $182M driven by
(vs. 1H FY2011):
 Reduced spread is the major driver
 Higher unit costs (fixed cost conversion over lower
production from Oct 2011)
• Reduced raw steelmaking capacity from 5.3mtpa to
2.6mtpa in October 2011 to reduce exposure to loss
making export markets and increase focus on
domestic markets
(80)
(97)
1H FY10
1H FY11
(182)
2H FY11
1H FY12
Underlying EBITDA progression (A$M)
1,427
• 2H FY2012 currently expecting:
 Q3 – some earnings improvement BUT scheduled major
hot strip mill shut, export losses and stronger A$
2H FY10
(161)
1,207
727
989
891
765
 Q4 – a significant improvement expected (quantum
dependent upon steel spread and FX)
337
305
(56)
2003
2004
2005
2006
2007
2008
2009
2010
(94)
2011 1H 2012
Page 13
Coated & Industrial Products Australia restructure (to exit export
business) well advanced
• All major plant closures successfully completed by mid October 2011.
• On track to deliver targeted fixed cost reductions in FY2012 (pro-rata, from BF closure in mid
October 2011)
• Total cash costs of restructuring expected of $430-450 Million
 $231 million to 31 December 2011
 Estimated $120 to $140 million expected to 30 June 2012
 $80 million beyond 30 June 2012
• Raw materials contracts renegotiated to match the reduced requirements1, and other supply
contracts well advanced
• Significant working capital release of $400-500 million by 30 June 2012 across the entire
business (off 31 October 2011 base)
$357M release achieved to 31 December 2011; targeting further $50-150M in 2H FY2012
• Additional cost reduction opportunities identified; implementation in process
Note: (1) Please refer to separate supporting information pack for details of the raw material requirements under a one blast furnace operation at Port Kembla
Page 14
Australian Distribution & Solutions (AD&S) – segment summary
Comments on results and business direction
Half yearly underlying EBIT comparison (A$M)
3
• 1H FY2012 underlying EBIT loss of $29M driven by
(vs. 1H FY2011):
(1)
 Reduced spread
(15)
 Increased conversion costs driven by volume
• Distribution sales volumes in 1H FY2012 increased
by 6% (cf 1H FY2011) with BlueScope
manufactured products up 16%. Highlights
importance of AD&S as a channel to market.
• Distribution business improvement review.
Bringing focus on
(19)
(29)
1H FY10
2H FY10
1H FY11
2H FY11
1H FY12
Underlying EBITDA progression (A$M)
121
 Volume growth through targeted initiatives
 Pricing / margin improvement initiatives
 Business simplification
37
11
14
18
40
22
32
 Warehousing / network cost reductions
(3)
2003
2004
2005
2006
2007
2008
2009
2010
(18)
2011 1H 2012
Page 15
1H FY2012 Australian demand broadly in line with preceding two halves
TOTAL BSL AUSTRALIAN EXTERNAL DOMESTIC DESPATCH VOLUMES(1,4)
1,800
1,600
1,400
2H FY2008 1H FY2009 2H FY2009
64%
‘000 tonnes
800
600
400
200
0
Gross
Despatches
Less(2)
Normalised
Despatches
65%
27% (436kt)
23% (341kt)
15% (243kt)
14% (202kt)
9% (144kt)
9% (130kt)
(9%)
(264kt)
1,368kt
1,466kt
1,274kt
29% (340kt)
29% (344kt)
29% (346kt)
Non-dwelling
27% (313kt)
26% (308kt)
26% (301kt)
Dwelling
11% (133kt)
12% (154kt)
10% (119kt)
11% (123kt)
10% (124kt)
11% (128kt)
Engineering (3)
Manufacturing
13% (157kt)
14% (164kt)
15% (174kt)
9% (106kt)
9% (106kt)
824kt
FY2009
684kt
--
14% (198kt)
13% (156kt)
10% (134kt)
8% (105kt)
51%
(140kt)
(46%)
11% (152kt)
13% (160kt)
13% (109kt)
11% (90kt)
11% (92kt)
8% (62kt)
(44%)
14% (187kt)
13% (161kt)
28% (235kt)
(192kt)
(7%)
Construction
65%
23% (320kt)
25% (312kt)
29% (236kt)
13% (192kt)
15% (239kt)
1,614kt
70%
14% (212kt)
13% (208kt)
67%
28% (391kt)
28% (349kt)
21% (344kt)
67%
66%
27% (389kt)
1,200
1,000
(Blast furnace
No. 5 Reline)
63%
2H FY2010 1H FY2011 2H FY2011 1H FY2012
1H FY2010
1,243kt
1,381kt
11%
(164kt)
58%
1,079kt
17%
--
9% (102kt)
(15%)
(166kt)
13%
1,215kt(4)
FY2010
1,168kt
3%
(161kt)
(17%)
(11%)
-Notes:
1,958kt
2,294kt
(1)
Percentages have been rounded.
(2)
Normalised despatches exclude third party sourced products, incl long products.
(3)
Engineering includes infrastructure such as roads, power, rail, water, pipes, communications and some mining-linked use
(4)
The work to get closer to our customers has resulted in greater insight on how our domestic sales are being converted into end use sales
1,007kt
--
1,198kt
(2%)
(160kt)
3%
1,038kt
Agri & mining
Auto & transport
1,174kt
(160kt)
(2%)
1,013kt
FY2011
2,045kt
Page 16
… and absolute export tonnage starting to reduce
Export Tonnes (kt)
Australia (CIPA)
NZ
Asia
NA
Total BlueScope Group External Despatches
Exports
33%
(1,259kt) 12%
1H FY2011
3%
2H FY2011
Exports
33%
(1,276kt)
20%
9%
11%
30%
Total External
Sales
3,833kt
31%
14%
3%
2% increase
22%
7%
13%
14%
7%
12%
18%
Q2
260
79
14
1
354
1H FY2012
Exports
26%
(939kt)
19%
Q1
488
76
20
1
585
17%
32%
3%
3%
3,913kt
8% decrease
3,614kt
Key
Exports – Americas
Domestic sales (produced and sold within country)
Exports – Europe/Med/Middle East/India
NA (HRPNA + C&BPNA)
New Zealand/Pacific
Exports – Asia
Australia
Asia
Note: Percentages have been rounded.
Page 17
New Zealand and Pacific Steel Products – segment summary
Comments on results and business direction
Half yearly underlying EBIT comparison (A$M)
52
• 1H FY2012 underlying EBIT of $34M driven by
(vs. 1H FY2011):
49
33
34
2H FY11
1H FY12
 Higher utility costs
 Unfavourable FX (USD/NZD)
21
 Lower production (melter issue & gas pipeline outage
North Island)
• Expansion of Taharoa iron sands export capacity
by 400ktpa to 1.2Mtpa
 Larger charter vessel expected to commence
operations in CY2012, replacing the existing vessel
 Supported by new contracts with existing customers
1H FY10
1H FY11
Underlying EBITDA progression (A$M)
216
 Mining capacity expanded for $17M capital cost
• Contract signed for sale of a further 1.2Mtpa iron
sands from Taharoa, commencement of which is
conditional on customer delivering a shipping
solution over next two years
2H FY10
132
87
98
119
115
117
107
122
55
 Low cost to BSL to initiate: $10-15M
2003
2004
2005
2006
2007
2008
2009
2010
2011 1H 2012
Page 18
Coated & Building Products Asia – segment summary
Comments on results and business direction
• 1H FY2012 underlying EBIT of $47M driven by (vs.
1H FY2011):
 Higher sales prices - mainly Thailand, China and
Indonesia
 Higher despatches in Indonesia and Thailand
 Impacted by costs associated with starting second
Indonesian coating line, and Thailand floods.
Normalising to remove this impact would add $13M to
1H FY2012 EBIT
• China: construction of Butler PEB / Lysaght
rollforming plant in Xi’an to capitalise on strong
market demand in central China and leverage
BlueScope’s global PEB capability. Expected to be
operational by 2H FY2013.
Half yearly underlying EBIT comparison (A$M)
66
Thailand
Indonesia
Malaysia
14
13
9
11
20
1H FY10
2H FY10
6
5
10
12
17
(6)
China
15
47
11
12
1
13
(6)
18
5
18
(6)
(6)
1H FY11
2H FY11
1H FY12
4
21
4
24
Underlying EBITDA progression (A$M)
157
103
115
150
125
117
98
78
• Thailand. Two anti-dumping applications being
processed
• Further incremental investments in capacity and
efficiency across ASEAN to support our growth
strategy
46
17
5
14
(4)
Vietnam
Other
50
62
71
28
2003
2004
2005
2006
2007
2008
2009
2010
2011 1H 2012
Page 19
China - urbanisation continues to drive growth in
the building and construction sector
New Gov’t
Focus
Old Gov’t
Focus
China Trends
• Chinese Central Government is directing a much higher proportion of
investment towards the interior versus coastal cities
• The continued rise of inland cities is a fresh source of rapid growth
• Knowledge of these markets is critical to strategy development
BlueScope China Highlights
• Best in class market coverage for
buildings solutions
• Best in class products and quality
• New facility in upcoming growth
areas
• Supporting global PEB growth plans
Xi’an Plant - under construction
Page 20
Coated & Building Products North America – segment summary
Comments on results and business direction
Half yearly underlying EBIT comparison (A$M)
11
• 1H FY2012 underlying EBIT of $6M driven by (vs.
1H FY2011):
6
 Lower costs and higher margins driven by targeted
profit improvement program
(4)
(16)
 Higher domestic volumes (+7%)
 Cost savings
• Restructuring initiatives for the Building business
in North America is well under way and is
expected to substantially improve earnings in the
short term, noting the Coated segment was
profitable in October, November and December
2011, eg.
 Engineering better aligned with manufacturing to
maximise plant utilisation
 Ability to efficiently manufacture both Varco Pruden
and Butler frames across the entire NA manufacturing
footprint
 Some improvement in volumes
(27)
1H FY10
2H FY10
1H FY11
2H FY11
1H FY12
Underlying EBITDA progression (A$M)
Butler acquired
27 April 2004
(2 month contribution
in 2004 financial year)
IMSA acquired
1 February 2008
(5 month contribution
in 2008 financial year)
135
66
51
29
27
19
25
0
2003
(8)
(8)
2004
2005
2006
2007
2008
2009
2010
2011 1H 2012
Page 21
Restructuring of Coated & Building Products North America business to
improve current and future earnings potential
Coated & Building Products North America – Underlying EBITDA vs MBMA Despatches 1
90
89
1,400
80
70
Annualised industry shipments (metric kt) (RHS) 1
Underlying EBITDA (A$M) (LHS) 2
65
60
50
1,200
1,000
800
40
34
30
25
20
15
10
0
400
4
1
200
-5
-10
2H FY08
1H FY09
2H FY09
Notes:
(1)
Metal Building Manufacturers Association domestic building shipments
(2)
Underlying EBITDA for the Coated & Building Products North America segment
1H FY10
2H FY10
600
0
1H FY11
2H FY11
1H FY12
Page 22
Global Building Solutions opportunity
• Established a global sales network and multinational company account management
program, in addition to BlueScope’s existing USA and China capability
• Better utilisation of BlueScope’s manufacturing footprint gives capability to deliver
projects across the globe competitively and to expand market presence
Recent project locations include Africa, Latin America, Australia, India for leading global
companies
• Common engineering system (Vision) has been rolled out in North America and will be
released in ASEAN this quarter. More efficient building designs (improving margins) &
expanding offerings
 Low cost global engineering centres will reduce engineering costs
• Global procurement and logistics base recently established in Guangzhou China
First global building sales conference in Shanghai (Jun 2011), with 47 customers
attending from 13 countries and delivering immediate business.
Page 23
Hot Rolled Products North America – segment summary
Comments on results and business direction
Half yearly underlying EBIT comparison (A$M)
64
• 1H FY2012 underlying EBIT of $20M driven by (vs.
1H FY2011) increased spread
47
• Potential upgrade in production capacity from
~2.1 million to ~2.5 million tons per annum
• Involves installing a second steel slab caster,
enhancing the existing electric arc furnace, installing
a new shuttle furnace and undertaking general
reconfiguration of associated infrastructure
20
14
8
1H FY10
2H FY10
1H FY11
2H FY11
1H FY12
Underlying EBITDA progression (A$M)
193
167
155
105
74
70
61
72
20
(58)
2003
2004
2005
2006
2007
2008
2009
2010
2011 1H 2012
Page 24
Strengthened the balance sheet
• Raised gross $600M (net $577M) equity in December 2011
• Balance sheet metrics:
 Net debt
 Gearing (net debt)
 Liquidity (undrawn facilities & cash)
30 June 2011
31 Oct 2011
31 Dec 2011
$1,068M
$1,555M
$796M
19.5%
27.7%
15.7%
$1,137M
$701M
$1,501M
Net Debt (A$M)
+147
+1,068
+110
+230
Other:
Cash working profits
Capital & invest. expend.
Finance costs
Tax
Other
Net Debt
Jun 2011
Restructuring
costs
+1,555
Working
capital(1)
-577
+121
Other:
Cash working profits
Finance costs
Capex
Tax
FX / leases / other
(5)
79
42
39
(8)
Other
Net Debt
Oct 2011
-357
(57)
23
26
17
45
Restructuring
Equity
costs
raising (net)
Working
capital(1)
+54
Other
+796
Net Debt
Dec 2011
Note: (1) $127M working capital benefit from Jun to Dec 2011 ($357M less $230M) reconciles to $235M benefit shown in cash flow statement on page 31 after allowing for +$182M of restructure cost provisions, -$66M net
Steel Transformation Plan and +$8M of other items
Page 25
Improvement in operating working capital
Working Capital (A$M)1
+242
• $230M increase from June 2011 to Oct 2011, as reported
at Nov 2011 equity raising (subsequently adjusted to
$242M for $12M FX impact on restatement of working
capital balances)
-357
1,391
1,149
(2,3)
792
CIPA
Other
businesses
684
465
1,034
486
599
548
 $110M in CIPA: creditors reduction (ramp down in activities
following restructuring) combined with higher receivables offset
by lower inventories as export tonnes are sold down
 $120M in other businesses: major item being inventory build-up
(mainly Steelscape, Thailand and NZ), but also unfavourable
receivable/creditors/provisions movements
• $357M decrease in working capital from Oct 2011 to
Dec 2011. Key drivers:
 $210M reduction in CIPA receivables (exiting exports)
 $102M reduction of inventory at CIPA, namely finished goods
Jun 2011
Oct 2011
Dec 2011
Note: (1) Includes receivables, inventory, operating intangible assets, payables, provisions, deferred income,
retirement benefit obligations and other assets & liabilities.
(2) $115M working capital benefit from Jun to Dec 2011 ($357M less $242M) reconciles to $235M
benefit shown in cash flow statement on page 31 after allowing for +$182M of restructure cost
provisions, -$66M net Steel Transformation Plan and +$4M of other items
(3) $100M receivable (received 13 January 2012) and $34M deferred income at 31 Dec 2011 in respect
of Steel Transformation Plan payment and net restructure provisions excluded from CIPA working
capital. Working capital balances exclude defined benefit superannuation actuarial adjustment of
$250M (CIPA $67M, other businesses $183M).
 $45M increase in creditors and other
• Expect further $50-150M working capital release to
30 June 2012 (from 31 Dec 2011), predominantly through
further monetisation of inventory from CIPA
Page 26
… with initiatives on track to further reduce net debt by 30 June 2012
• Initiatives:
 $50-150M further estimated release of working capital
 $100-150M potential from sale of non-core assets
 $100M Steel Transformation Plan received in January 2012
 However expected payment of $120-140M restructuring costs
• Target for Coated & Industrial Products Australia to be cash neutral in 4Q FY 2012,
dependent upon steel spread, FX and market conditions.
Page 27
Financial Results
Page 28
Underlying EBIT variance 1H FY2012 to 1H FY2011 by major item
Net Spread Reduction ($117m)
Raw Material Costs:
Coal
Iron ore
Scrap
Alloys
External Steel Feed
Net realisable value provision
Opening Stock Adjustment
Coating Metals
Other
+51
+53
-41
Conversion & Other Costs:
Cost Improvement Initiatives
Volume
Escalation
One-off / discretionary
Other
(122)
(62)
(1)
(1)
(21)
(18)
10
(6)
-
-221
Domestic Prices:
C&IPA
(39)
AD&S
(9)
NZPac
2
C&BP Asia
33
C&BP NA
64
Other/InterSeg -
Exchange Rates:
Revenues
Costs
Translation
-14
(42)
69
(4)
+11
+79
-77
+4
+23
1H FY2011
Export
Prices
Domestic
Prices
Raw
Material
Costs
Volume(2)
84
(1)
(103)
(57)
(2)
1
Mix (2)
North Star Conversion Exchange
Costs
Rates
Other
-132
1H FY2012
Note:
1) Volume impact on costs reflects the effect of higher unit costs as a result of lower production / sales volumes in 1H FY2012.
2) Volume / mix based on 1H FY2011 margins
Page 29
Underlying EBIT variance 1H FY2012 to 2H FY2011 by major item
Net Spread Reduction ($70m)
Domestic Prices:
C&IPA
AD&S
NZPac
C&BP Asia
C&BP NA
Other/InterSeg
Raw Material Costs:
Coal
Iron ore
Scrap
External Steel Feed
Net realisable value provision
Opening Stock Adjustments
Coating Metals
Other
15
4
1
(2)
21
(1)
-60
(33)
(18)
2
(13)
10
(12)
5
-
Conversion & Other Costs:
Cost Improvement Initiatives
Volume
Escalation
One-off / discretionary
Other
-7
-49
Exchange rates:
Revenues
Costs
Translation
Debtor Re-statement
+38
-59
-44
+59
-34
2H FY2011
Export
Prices
Domestic
Prices
Raw
Material
Costs
Volume(2)
(2)
Mix
23
(7)
2
1
+5
-132
Other
1H FY2012
+19
North Star Conversion Exchange
Costs
Rates
Note:
1) Volume impact on costs reflects the effect of higher unit costs as a result of lower production / sales volumes in 1H FY2012.
2) Volume / mix based on 2H FY2011 margins
93
(70) (1)
(54)
(9)
6
Page 30
Cashflow
A$ millions
FY2007
FY2008
FY2009
FY2010
FY2011
1H FY11
1H FY12
1,364
1,579
534
596
308
166
(265)
(21)
69
250
(133)
(166)
(182)
2353
1,343
1,648
784
463
142
(16)
(30)
- Capital & investment exp1
(508)
(1,990)
(780)
(384)
(404)
(184)
(111)
- Smorgon shareholding2
(319)
447
-
-
-
-
-
- Other
271
22
34
48
37
4
6
Net cash flow before
financing & tax
787
127
38
127
(225)
(196)
(135)
Cash from operations
Working capital movement
Net operating cash flow
Weaker spreads and
restructuring costs
See working
capital slide
Net investing cash flows
costs1
Financing
(141)
(132)
(143)
(93)
(108)
(62)
(66)
Interest received
6
7
6
9
7
5
1
(Payment)/refund of income tax
(229)
(208)
(205)
7
(12)
4
(56)
Net drawing / (repayment) of
borrowings
(356)
331
(943)
(155)
366
145
(309)
221
229
1,836
-
-
-
577
(321)
(357)
(253)
(4)
(93)
(51)
(1)
2
-
-
-
-
-
(31)
(3)
336
(109)
(65)
(155)
Equity issues
Dividends
Other
Net increase/(decrease) in
cash held
Expenditure reduced
Higher margins
and facility fees
Tax paid in the
U.S., NZ and Asia4
$600M raising,
net of $23M costs
11
(1) Capitalised interested, previously shown in financing costs, has been recategorised as capital and investment expenditure. FY2011 amount recategorised was $7M
(2) Purchased 19.9% shareholding in Smorgon Steel in August 2006, disposal in August 2007.
(3) Includes movements in provisions relating to restructuring costs
(4) The BlueScope Steel Australian tax consolidated group is estimated to have carried forward tax losses, as at 31 December 2011, in excess of $1.7Bn. There will be no Australian income tax
payments until these losses are recovered.
Page 31
Movements in total equity (A$M)
+577
-524
+4,396
-175
+2
+4,277
Predominantly after tax actuarial loss on defined benefit plans (largely NZ), which was composed of:
• actuarial asset loss due to turbulent international and domestic equity markets
• actuarial liability loss due to significant decrease in long term bond rates in all countries in a
short period of time following concerns over the Eurozone debt crisis
Total equity Jun 2011
Equity raised
(net of costs)
Net loss after
minorities (to
retained earnings)
Other comprehensive
loss items (to
retained earnings)
Other
Total equity Dec 2011
Page 32
Indicative EBIT sensitivities for 2H FY2012
Estimated impact on
2H FY2012 EBIT A$m (1)
Assumption
+/– US$25 / tonne movement in BlueScope’s average realised export HRC price(2)
+/– 1¢ movement in Australian dollar / US dollar exchange rate (3)
+/– US$10 / tonne movement in coal costs
+/ – US$10 / tonne movement in iron ore costs
27
3
10
20
(1) 2H base exchange rate is US$1.00.
(2) The change in export HRC price assumes proportional effect on export slab, and flow on to domestic pipe and tube market and to other export products. This does not
include the potential impact on Australian domestic coated product prices, as the flow on effect in the short term is less certain.
(3) The movement in the Australian dollar/US dollar exchange rate includes the restatement of US dollar denominated receivables and payables and the impact of
translating the earnings of offshore operations to A$. Does not reflect impact on Australian domestic pricing.
Page 33
Business Potential
& Outlook
Page 34
Management has taken a number of significant actions since the GFC to
improve business performance
• Significant business-wide cost savings initiatives
 Reduced expenditure in aggregate by $696M to June 2011 (off FY2008 cost base, pre-escalation)
• Asian business restructured during FY2009 and FY2010
 Improved feed sourcing, revised distribution & pricing strategies and reduced cost, eg. through removal
of management duplication and consolidation of functions within the region
 FY2010 and FY2011 EBIT tripled the average of FY2006 to FY2009
• North American Buildings business:
• Restructured significantly during FY2010 and FY2011 – rationalised manufacturing footprint
• Second round of restructuring enacted in 1H FY2012
• Streamlining of Australia / New Zealand business structure in CY2011
 Enhancing customer service. Reducing duplication / integrating business functions
• Exiting Australian export business during FY2012
 Focusing Australian steel production on domestic market
 Closed one of two blast furnaces; closures and shift pattern changes to other assets
• Business improvement review of Australian Distribution business
 Further update in August 2012
Page 35
Further business potential
• Delivering on our investment in Asia
 Material upside as we grow sales from our existing investments
• Continue to grow our global presence in building construction markets
• Taharoa iron sands expansions progressing well
 Larger charter vessel expected to commence operations in CY2012, taking volume to 1.2Mtpa
 Making good progress on 2.4Mtpa project
• Continue to focus capability in Australia on our domestic market and coated steel product
development. Distribution rationalisation
• North America business
 Expansion opportunity at North Star
 Buildings restructured – material earnings upside when US economy recovers
• Cash release and redeployment program to capture growth opportunities
Page 36
Second half FY 2012 outlook
• For 2H FY2012, we expect a slightly lower underlying Net Loss After Tax
(excluding period end NRV adjustments and/or impairments), subject to
spread, FX and market conditions, compared with the 1H FY 2012 result,
including our expectation of a return to a profitable underlying run rate by
the end of FY2012
Page 37
Questions & Answers
Page 38
Further Detail on
Financial Results
Page 39
Historical earnings performance
A$ Millions
FY2007
FY2008(3)
FY2009
FY2010
FY2011
1H FY12
1H FY11
Revenue(1)
8,913
10,495
10,329
8,624
9,153
4,549
4,622
EBITDA – Reported(2)
1,423
1,420
380
590
(687)(6)
(270)
127
1,374
1,630
536
60
254
32
134
1,099
1,063
15
240
(1,043)(6)
(435)
(48)
1,057
1,273
171
255
(101)
(132)
(41)
686
596
(66)
126
(1,054)(6)
(530)
(55)
643
816
56
113
(118)
(129)
(47)
95.3
80.1
(7.1)
6.9
(57.4)(6)
(26.6)
(2.5)
89.3
109.6
6.1
6.2
(6.4)
(6.5)
(2.2)
– Underlying(4)
EBIT(2) – Reported
– Underlying(4)
NPAT – Reported
– Underlying(4)
EPS(5)(cps) – Reported
– Underlying(4)
Notes:
(1) Does not include North Star BlueScope Steel revenue, which was A$697M (FY2011) vs. A$626M (FY2010).
(2) Includes 50% share of North Star BlueScope Steel net profit before tax.
(3) Includes eleven months of BlueScope Distribution financial results and five months IMSA steel businesses financial results.
(4) Underlying numbers represent Reported numbers adjusted for unusual items to assist in understanding the underlying financial performance of the business.
(5) EPS for periods prior to the May / June 2009 entitlement offer have not been restated for the bonus element of the entitlement offer.
(6) Includes asset impairment write downs:
1H 11 – $9M - Distribution $77M partly offset by China write-back of $68M.
2H 11 – $913M CIPA $797M, Distribution $100M & Steelscape $16M
Page 40
Balance Sheet
As at
A$M
31 Dec 2010
30 Jun 2011
31 Dec 2011
Cash
86
172
186
Receivables
987
1,050
1,059
Inventory
1,962
2,029
1,791
Other Assets
1,198
1,041
1,099
Net Fixed Assets
4,175
3,501
3,466
Total Assets
8,408
7,793
7,601
See cash flow slide
Assets
Liabilities
Creditors
973
1,163
988
Interest Bearing Liabilities
999
1,240
982
Provisions & Other Liabilities
929
994
1,354
Total Liabilities
2,901
3,397
3,324
Net Assets
5,507
4,396
4,277
 Net Debt / (Net Debt + Equity)
14.2%
19.5%
15.7%
See working capital
slide
Mainly due to lower
inventory volumes in
Australia
See working
capital slide
Reduced drawings on
LNF and payment of
Jul-2011 USPP tranche
Increased primarily due
to retirement obligations
actuarial loss ($250M)
and provisions
(restructuring)
Page 41
Balance Sheet … $238M reduction in inventory since June 2011 mainly
due to reduction in volumes held
+2,815
RMS $338M
WIP
569
FGS
498
Other 182
+1,702
+1,660
Jun 2008
Volume change
from June 2008
Dec 2008
+25%
Jun 2009
-12%
RMS $397M
WIP
639
FGS
618
Other 175
+1,829
RMS $421M
WIP
690
FGS
679
Other 172
+1,962
RMS $388M
WIP
750
FGS
714
Other 177
+2,029
RMS $344M
WIP
770
FGS
509
Other 168
+16
-294
+1,587
Dec 2009
-9%
vs Jun-2008 vs Jun-2008 vs Jun-2008
Jun 2010
-1%
Dec 2010
+14%
vs Jun-2008 vs Jun-2008
Note: “RMS” – Raw Materials (including externally sourced steel feed to BSL businesses)
“WIP” – Work in Progress
“FGS” – Finished Goods
June 2011
Rate /
feed costs
Volume
+30
FX
+10
+1,791
NRV
Dec 2011
adjustment
movement
+11%
-10%
vs Jun-2008
vs Jun-2008
Page 42
Debt facilities and maturity profile as at 31 December 2011
753
675
Syndicated Loan Note Facility
US Private Placement Notes
Other
Cost of Debt
 Effective average cost of drawn
debt in 1H FY2012 was 7.16%
675
 Plus:
240
197
80
other related costs
78
2H
FY12
1H
FY13
Notes:
 Assumes AUD/USD at 1.0134
2H
FY13
1H
FY14
2H
FY14
1H
FY15
2H
FY15
Commitment fees on
undrawn bank facilities
average 1.1%pa
1H
2H
FY16 FY16+
Page 43
Historical Earnings Performance – Reconciliation of Reported to
Underlying (A$M)
FY 2010
FY2011
Reconciliation of EBITDA and EBIT
EBITDA 2
Reported
Reported
EBIT 2
Discontinued Business (gains)/losses
Business Development
Restructure / redundancies
Asset Impairments
Profit on sale & leaseback of properties
Steel Transformation Plan Advance
Underlying 1
EBITDA 3
3
Underlying 1
EBIT
590
240
(7)
4
31
(13)
605
255
(687)
(1,043)
(2)
7
14
922
254
(101)
127
(48)
(2)
9
134
(41)
(814)
(995)
0
7
14
913
120
(61)
(270)
(435)
1
364
5
(66)
32
(132)
Reconciliation of NPAT / (NLAT)
NPAT / (NLAT)
Reported
Discontinued Business (gains)/losses
Business Development
Restructure / redundancies
Asset Impairments
Profit on sale & leaseback of properties
Steel Transformation Plan
NZ Tax Adjustment
Borrowing Amendment Fees
Deferred Tax Asset Impairments
NPAT / (NLAT)
Underlying 1
126
(6)
3
21
(9)
(22)
113
(1,054)
(1)
5
10
922
(118)
(55)
(1)
9
(47)
(999)
5
10
913
(71)
(530)
1
254
3
(46)
6
184
(129)
EPS (¢) 4
EPS (¢) 4
Notes
1.
2.
3.
4.
Reported
Underlying 1
6.9
6.2
(57.4)
(6.4)
1H FY2011
(2.5)
(2.2)
2H FY2011
(46.1)
(3.3)
Management have provided an analysis of unusual items included in the reported IFRS financial information. These items have been considered in relation to their size and
nature, and have been adjusted from the reported information to assist readers to better understand the financial performance of the underlying business in each reporting period.
These adjustments are assessed on a consistent basis from period to period and include both favourable and unfavourable items. Non-IFRS financial information whilst not
subject to audit or review has been extracted from the interim financial report which has been subject to review by our external auditors.
EBIT = EBITDA - Depreciation & Amortisation
Underlying adjustments are the same for both EBITDA & EBIT
Earnings per share (EPS) reflects reported and underlying NPAT / (NLAT) divided by average shares on issue for the period
1H FY2012
(26.6)
(7.1)
Page 44
EBIT Segment Summary – Reconciliation of Reported to Underlying
(A$M)
Coated & Industrial Products Australia
Reported EBIT
Restructure / redundancies
Asset Impairments
Steel Transformation Plan
Underlying EBIT 1
Notes
1.
FY2010
FY2011
1H FY2011
2H FY2011
1H FY2012
84
24
108
(1,063)
8
797
0
(258)
(97)
(97)
(966)
8
797
(161)
(463)
347
(66)
(182)
Australian Distribution & Solutions
Reported EBIT
Restructure / redundancies
Asset Impairments
Profit on sale & leaseback of properties
Underlying EBIT 1
12
3
(13)
2
(218)
7
177
(34)
(92)
77
(15)
(126)
7
100
(19)
(33)
4
(29)
NZ & Pacific Steel Products
Reported & Underlying EBIT 1
73
82
49
33
34
Coated & Building Products Asia
Reported EBIT
Asset Impairment Write Back
Underlying EBIT 1
116
116
176
(68)
108
114
(68)
46
62
62
47
47
Coated & Building Products North America
Reported EBIT
Restructure / redundancies
Asset Impairments
Underlying EBIT 1
(21)
5
(16)
(36)
16
(20)
(16)
(16)
(20)
16
(4)
(10)
11
5
6
Hot Rolled Products North America
Reported & Underlying EBIT 1
61
72
8
64
20
Corporate & intersegment
Reported EBIT
Restructure / redundancies
Business Development Costs
Underlying EBIT 1
(93)
4
(89)
(58)
7
(51)
(16)
(16)
(42)
7
(35)
(29)
1
(28)
Total Group
Reported EBIT
Underlying EBIT 1
232
255
(1,045)
(101)
(50)
(41)
(995)
(60)
(435)
(132)
Management have provided an analysis of unusual items included in the reported IFRS financial information. These items have been considered in relation to their size and
nature, and have been adjusted from the reported information to assist readers to better understand the financial performance of the underlying business in each reporting period.
These adjustments are assessed on a consistent basis from period to period and include both favourable and unfavourable items. Non-IFRS financial information whilst not
subject to audit or review has been extracted from the interim financial report which has been subject to review by our external auditors.
Page 45
First Half FY2012 Results and Business
Update Presentation
Paul O’Malley, Managing Director and Chief Executive Officer
Charlie Elias, Chief Financial Officer
20 February 2012
ASX Code: BSL
Page 46