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FY2006 Results Presentation Period Ended 30 June 2006Kirby Adams, Managing Director and Chief Executive OfficerPaul O’Malley, Chief Financial Officer Business Presidents21 August 2006
ASX Code: BSL
Page 2
Important notice
THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE. RELIANCE SHOULD NOT BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN THIS PRESENTATION AND, SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BLUESCOPE STEEL DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR INVESTOR.
TO THE FULLEST EXTENT PERMITTED BY LAW, BLUESCOPE STEEL AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS.
Page 3
IntroductionIntroduction
Page 4
Today’s agenda
Overview FY2006 - Kirby Adams, Managing Director & CEO
Reporting Segment Results- New Zealand Steel & Pacific - Noel Cornish, President Australian and
New Zealand Industrial Markets - Hot Rolled Products Australia - Coated & Building Products Australia - Brian Kruger, President Australian
Manufacturing Markets- Hot Rolled Products North America- Coated & Building Products North America - Coated & Building Products Asia - Kathryn Fagg, President Asian Building &
Manufacturing MarketsSteel Industry and Strategy - Kirby Adams
Financial Results - Paul O’Malley, Chief Financial Officer
Q&A’s
- Lance Hockridge, President North America
Page 5
FY2006FY2006HeadlinesHeadlines
Page 6
Zero harm is our goal for our team and communities
8.0
4.83.4 4.1 3.4 2.8 1.8 1.5 0.8 0.8
1416
29
35
0
5
10
15
20
25
30
35
40
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Lost
time i
njurie
s per
milli
on m
an-h
ours
worke
d
Includes Contractor performance from 1996Includes Butler performance from May 2004
Medically Treated Injury Frequency RateLost Time Injury Frequency Rate
52.247.1
29.122.4 21.9
12.2 9.3 9.3 6.4
17
8.2
60
68
80
0
10
20
30
40
50
60
70
80
90
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Medic
ally t
reate
d inju
ries p
er m
illion
man
-hou
rs wo
rked
Includes Contractor performance from 2004Includes Butler performance from May 2004
Reported performance for IISI member companies
18,000 Employees, 91 manufacturing sites, 17 countries
Page 7
Continuing to reward our shareholders as we grow
Share Buybacks – Public listing to 30 June 2006Purchased and cancelled 116m shares− on market – 90m shares− off market – 26m shares
Shares on issue 699 millionDividend reinvestment scheme
Effective from and including final FY2006 ordinary dividend
Dividends – All fully franked (ordinary / special)
Total return to shareholders since BSL’spublic listing (July 2002):
Share buybacks $ 707m 30%Dividends paid $ 1,109mFinal dividend (to be paid 24 Oct 06) $ 168m
$ 1,984m 84%
$2.67 share or 84% payout ratio (NPAT)
1824
710
20
920
1218
2413
05
101520253035404550
FY2003-1H FY2003-2H FY2004-1H FY2004-2H FY2005-1H FY2005-2H FY2006-1H FY2006-2H
Interim Final Special
42 / 20¢
30 / 10¢
22 / 7¢ 44 / 0¢
54%
Cent
s Per
Sha
re
Page 8
Group financial headlines FY2006
Revenue A$8,031 million Up 1%External despatches 7.5 million metric tonnes Up 5%EBITDA A$850 million Down 49%EBIT A$556 million Down 59%NPAT A$338 million Down 66%EPS
Reported 48¢ Down from134¢Before June 06 one-off restructuring 67¢ Down from134¢Underlying operational EPS 80¢ Down from 154¢
After tax Return on Invested Capital 8.5% Down from 26% After tax Return on Equity 10.4% Down from 31% Net operating Cashflow
before capex $803 million Down 35% after capex / investments $10 million Down 98%
Dividendfinal ordinary 24¢ per share Constantfull year 44¢ per share Up 5%(fully franked)
Gearing (net debt) 38% 33% (Dec 05) – including SOR
Page 9
FY2006 EPS – meeting guidance
Guidance Actual
June Market Guidance (One Off costs) (2) (15 – 20) cps (19)
June Market Guidance FY2006 reported EPS 45 – 52 cps 48
February 2006 Market Guidance 65 – 75 cps 67June 2006 Market Guidance (update) – Lower end of range (1) 65 – 67 cps 67
(1) Major changes between February and June guidance:Higher zinc and aluminium costs Lower domestic Australian volumes/marketLower tin mill volumes and pricesTaiwan lossesFavourable North American earnings and Q4 Australian domestic/export prices
(2) One-off restructuring costs:Packaging products asset impairment write offTin mill closure costsOther internal restructuring (Chullora, Taiwan closure, employee redundancies)
Page 10
Dramatic changes to geographic product destination - volumes up 6% with North America the largest market destination
Diversified Global Sales Volumes (tonnes)
New Zealand / Pacific4%
FY2005
Europe / Africa4%
Australia43%
Asia10%
Asia17%
North America -NSBSS + C&BPNA
(15%)Americas
7%
7.159 mt
Exports28%
New Zealand / Pacific4%
Major Changes FY2005 to FY2006
FY2006
Australia32%
Asia9%
Asia14%
North America -NSBSS + C&BPNA
15%
Americas20%
Europe / Africa6%
Exports40%
7.593mtAdditional 1mt of product exported in FY2006:
Additional slab sales to USA due to Western Port Fire in 1HAdditional HRC sales to USA due to softer domestic pipe and tube market resulting from higher importsAdditional export sales from Coated Australia due to imports and softer Australian market conditions.
Page 11
Australian despatches decline on weak manufacturing / strong A$
Australian sales tonnes lower across all segments in FY2006 to varying degree.Western Port fire affected year.In sales volume terms:
Dwelling (down 2%)−Housing slower in NSW & Vic−BSL sales tonnes down
marginally on 2005 buto Colorbond® sales strongo residential framing growth
exceeding expectationsNon-dwelling (down 16%)−Steel demand remains strong−BSL sales tonnes decline on
galvanised importsManufacturing (down 25%)− Industry closures / off shoring− Imports of tinned food by
grocers
3.0
2.0
1.0
FY2005 FY2006
Dwelling 18%(0.534)
Manufacturing 16%
Packaging 9%
Agriculture & Mining 11%
Auto & Transport 11%
Engineering 12%
Packaging 6%
Auto & Transport 11%
Agriculture & Mining 12% Manufacturing 15%
Engineering 12% Dwelling 22%(0.523)
Non-dwelling 22%(0.652)
Non-dwelling 23%(0.546)
Construction
52%
57%
2.965 mt Despatches 2.375mt
Sales Tonnes
0
mt
Page 12
Global group revenue sales mix – downstream quadruples in size
+300%
+12%
+29%
+52%
Downstream
Midstream
Upstream
A$589M
A$3,026M
A$3,346M
FY2003
(A$1,689M)
A$5,272M
(A$2,057M)
A$8,013M
A$2,366M
A$3,383M
A$4,321M
FY2006
Less internal / otherTotal revenue
Page 13
New reporting business segments
Corporate / Group
Hot Rolled Products
Australia
Lowest quartile producerLeading supplier of flat steel in AustraliaGlobal scale
o Port Kembla Steelworks
New Zealand & Pacific Steel
Products
Only fully integrated flat steel maker in New ZealandLeading domestic market share of flat products
o Pacific Islandso Glenbrook, NZ
Pre-eminent global designer / supplier Pre-engineered buildingsNo 2 position in North America and no. 1 in China
o Butler buildingso Vistawall
Coated & Building Products
North America
Australia New Zealand Asia North America
Hot Rolled Products
North America
50:50 joint venture with Cargill Inc.Again voted no. 1 flat rolled steel supplier in North America (Jacobson Survey)
o Delta, Ohio
Coated & Building
Products Asia
Pre-eminent seller of branded steel in AsiaLower cost “backward integration” growth strategy
o Indonesian, Malaysian, Thailand and Vietnamese operations
o Lysaght Asiao China, including Butlero India – Tata
BlueScope JV
Largest supplier of metallic coated and painted steel in AustraliaLeading market shares in most key products
o Western Porto Springhillo Lysaght Australiao Service Centres
Coated & Building Products Australia
Page 14
EBIT variance FY2005 to FY2006 by reporting business segment
0
200
400
600
800
1000
1200
1400
1600
FY 2005 Hot RolledProductsAustralia
Coated &BuildingProductsAustralia
New Zealand &Pacif ic Steel
Products
Coated &Building
Products Asia
Hot RolledProducts North
America
Coated &Building
Products NorthAmerica
Corporate &Group
FY 2006
1,358
(693) (15)(84)
(84) (11) 45 40
556
From (FY2005) $1,149M $(183M) $189M $83M $199M $(18M) $(61M)
To (FY2006) $456M $(198M) $105M $(1M) $188M $27M $(21M)
Issues • Iron Ore +Coal costs
• Steel pricesdown
• WP fire• Zn & AL• Tin mill
performance
• Reliability• Production• NZ market
• Stocks• Growth• Taiwan
• Scrap spread• Production
record
• Restructured• Jackson fixed• Margin
growth
• Lower profit in inventory
EBIT movements
EBIT
A$ M
illion
s Net raw materials (286)
Page 15
Reporting SegmentReporting SegmentPerformancePerformance
Page 16
New Zealand and Pacific Steel Products performance
FY2006 vs. FY2005Sales revenue down 5% to A$709mEBIT down 44% to A$105m – second best year everFY2006 return on net assets (pre-tax) 32%
FY2006-2H vs. FY2006-1H− Higher repairs and maintenance
in steelmaking− Higher zinc and aluminium
costs
FY2006 vs. FY2005− Softer NZ residential market− Lower steel prices and volumes in export markets− Higher electricity costs due to drought− Lower vanadium sales prices− Production issues− Higher zinc and aluminium costs
0
20
40
60
80
100
120
140
160
180
200
FY June 03 FY June 04 FY June 05 Prices Volume Conversion &Oth Costs
Raw MaterialCosts
Other FY June 06
($28m)
$105m$3m($12m)
($30m)
($17m)$62m
$49m
EBIT
A$ M
illion
s
$189m
Page 17
New Zealand and Pacific Steel Products – markets and business improvement initiatives
MarketsExternal sales tonnes (domestic vs. export)
Domestic ExportFY2005 51% 49%FY2006 46% 54%
External sales (tonnes) by destination (indicative)
Business improvement initiativesImprove cost and productivity through further debottlenecking of the steelmaking and coating plantsGrow domestic sales and market share of coated products and pipe & tubeImprove margins through lowering overhead costsDevelop new revenue streams from the ironsand resource
FY2006
New Zealand 46%
Australia 13%
Other 11%North America25%
Japan 5%
Page 18
Hot Rolled Products Australia (PKSW) – higher raw material costs and lower prices
0
200
400
600
800
1000
1200
1400
FY June 03 FY June 04 FY June 05 RawMaterialCosts
ExportPrices
(Slab, HRC)
DomesticPrices(HRC,Plate)
Volume Mix Conversion& Oth Costs
Other FY2006 PreOne-offs
One-offs FY June 06
(446) (25)(60)
(286)
(30)
1,149
45648695095488389
EBIT
A$ M
illion
s
FY2006 vs. FY2005 Sales revenue down 7% to A$3,472mEBIT down 60% to A$456mFY2006 return on net assets (pre-tax) 24%
FY2006-2H vs. FY2006-1H- Lower slab, HRC and plate prices- Higher iron ore costs- Redundancy provisions- Margin squeeze
FY2006 vs. FY2005- Lower steel prices- Higher coal and iron ore prices- Unfavourable sales mix- Lower domestic pipe and tube sales- Annual production records, incl. 5.283m slab- Successful cost reduction programme
Page 19
Hot Rolled Products Australia – markets and business improvement initiatives
ProductsSlab - Global demand and prices stronger in Q4HRC - Tight global market and stronger prices in Q4Plate - Domestic demand stronger, but domestic
sales down due to:- offshore fabrication- lower priced imports - project deferral
Business improvement initiativesNo5 Blast Furnace Reline – Work continues in FY2007 to prepare for the planned reline late CY2007. Spent $56M to 30/06/06Restructuring program – Significant cost savings will be realised following implementation of the recent announcements in staff and management positions.Sinter Plant Upgrade – Feasibility work is well advanced to expand capacity of the sinter plant. Additional high grade sinter will reduce the cost of raw material feed.Supply Chain Velocity – Work has commenced on initiatives to further lower working capital.Continued conversion cost focus – Targeted programs to further reduce cost base.
2003 2004 2005 2006 2007
S&A Conversion Costs Despatch & Freight Raw Materials
Page 20
Improved disclosure – new Slab and HRC price benchmarks
Previously recommended the Japan to Korea HRC price as being a reasonable public benchmark for BlueScope’s domestic and Asian HRC sales – still valid and
Continue to recommend the following better benchmarks
HRCSteel Business BriefingHRC East Asia Import CFR
SLAB Steel Business Briefing Slab East Asia Import CFR
Asian HRC Benchmark Price
$0
$100
$200
$300
$400
$500
$600
$700
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06
US$
/mt
SBB HRC East Asia Import CFR
Source: Steel Business Briefing
Page 21
Port Kembla Steelworks despatches – stronger production –Australian external demand lower
External Product Sales Mix
Slab 34% 51% 54% 42%HRC 48% 36% 35% 45%Plate/Other 18% 13% 11% 13%
0200400600800
1000120014001600180020002200240026002800
FY05-1H FY05-2H FY06-1H FY06-2HInternal Domestic Exports *
(kto
nnes
)2,7232,5792,589
2,332
54% 48% 43% 45%
23% 20%16% 15%
40%41%32%23%
* Including BlueScope Steel Asia feed
Page 22
Coated & Building Coated & Building Products AustraliaProducts Australia
Page 23
Coated and Building Products Australia (excluding Packaging Products) – another difficult year
-150
-100
-50
0
50
100
150
200
250
FY June 03 FY June 04 FY June 05 ExportPrices
DomesticPrices
Mix Conversion& Oth Costs
RawMaterials -
Zinc &Aluminium
RawMaterials -
Steel / Other
Other FY2006 PreOne-offs
One-offs FY June 06
156
238
2
(89)
102
(35)(18)
(67)
104 16 15
(18) (3)
EBIT
A$ M
illion
s
FY2006 2H vs. FY2006-1H (EBIT + $19M to $8M)− Lower steel input costs− Significantly improved volumes and conversion
costs− Partly offset by:
− higher volumes into export markets− lower selling prices− significantly higher zinc and aluminium
costs
FY2006 vs. FY2005− Lower export prices and steel input costs reflecting lower average
global steel prices− Total despatch volumes consistent with last year, but shift to export
(record despatches in Q4)− Significant increase in zinc and aluminium costs (mainly H2)− Conversion costs – mainly Western Port HSM fire− Improved domestic pricing in building market− One-offs reflect restructuring, including exiting Solid Block Painting
Page 24
Coated and Building Products Australia – Packaging Products Closure of tin mill announced 29 June
EBIT
A$ M
illion
s
-250
-200
-150
-100
-50
0FY June 03 FY June 04 FY June 05 Prices Volume
Conversion &Oth Costs Other
FY2006 PreOne-offs One-offs FY June 06
(41) (45)
(185)
3124
(31)(11) (172)
(23) (195)
FY2006 vs. FY2005− Significant impairment and restructuring in
both years - $120M in 2006, $97M in 2005− Improved domestic pricing, but lower
domestic volumes and No. 2 Electrolytic Tinning Line closure affect conversion costs
Closure− Decision on 29 June to exit tinplating business− Timing to follow discussions with customers− Approx 250 positions redundant− Pickle line and cold mill to continue
Page 25
Coated and Building Products Australia – markets
MarketsBuilding market− Branded product price increases implemented,
further increases in September− Record sales revenue− Dwelling soft, mainly NSW and Victoria− TrueCore® (steel framing) sales exceeding expectations
(30% on 2005)− Non-dwelling remains strong
Manufacturing and distribution markets− Lost market share in commodity products− Decline in domestic manufacturers− Responded with new market offers, including faster response times
o improving share in FY2006-2H, continuing in Q1 2007Packaging market− Reviewed earlier – exit during FY2007
Page 26
Coated and Building Products Australia – key initiatives to drive business improvement
Business improvement initiativesContinue recovery in domestic market share - responsive offers, reliable supply and differentiated productsContinue focus on inter-material share growthContinue improvement in utilisation of critical production units, build on numerous records in 2006Implement overhead cost reduction programInformation systems changes driving supply chain improvements and improved inventory turnoverImprove margin management processes to cope with increasing volatility, including zinc hedging programSuccessful start-up of Western Sydney paintline in H2
Page 27
Hot Rolled Products Hot Rolled Products North AmericaNorth America
Page 28
North America – stronger market – stronger performance
Steel industryStrong demandSteel industry rationalisation providing improved production discipline in marketplaceFavourable price environment
BlueScope’s activitiesNorth Star – 50% owned JV, mini-mill steel productionButler Buildings – Engineered building solutionsVistawall – Architectural aluminium building productsSales offices – representing BlueScope imports into North & South America, the Caribbean and EuropeCastrip – 47.5% owned JV, commercialisation of steel casting technology
North Star BlueScope (2M short tons HRC production via EAF)Maintained # 1 position on Jacobson customer survey in North America for third year in a row
Butler (downstream)Acquisition – paid US$251m in 2004 for US$800m in sales vs. NCI / RC deal (US$370m for US$430m in sales)Buildings – delivered on the turnaround with best financial results since 2001.Vistawall – record backlog going into FY2007.
Sales officesContinue to maintain / develop core customer relationships for slab, HRC and plate sales. Outstanding performance in FY2006 with increased exports from Australia.
Page 29
Hot Rolled Products North America – another excellent year
Performance (North Star BlueScope)FY2006 vs. FY2005− Lower scrap / HRC spread− Record annual production and
despatches of 1.9mt (100%)− Paid dividends to BSL of A$168m
in FY2006
FY2006-2H vs. FY2006-1H− Spread improvement
FY2006 vs. FY2005 (North Star BlueScope 50% only)Sales revenue down 7% to A$712mEBIT down 13% to A$169mFY2006 return on net assets (pre-tax) 63%
0
20
40
60
80
100
120
140
160
180
200
220
240
FY June 03 FY June 04 FY June 05 Trading offices North Star FY June 06
199
(25)188
14
7883EBIT
A$ M
illion
s
New reporting segment comprising:North Star BlueScope Steel (50% interest)Castrip LLC and North American and European sales offices
FY2006 vs FY2005 EBIT variance analysis
Page 30
North Star BlueScope Steel – EAF operational excellence
Natural Gas Consumption (MMBTU per ton, FY)
2002 2003 2004 2005 2006
Electricity Consumption(KWH per ton, FY)
2002 2003 2004 2005 2006
Tap to Tap Time (minutes)
2001 2002 2003 2004 2005 2006
EAF Power on Time per Heat(Minutes of Power Used per heat))
2001 2002 2003 2004 2005 2006
Focus on energy management given recent spike in electricity and natural gas prices
Annual Steel Prod 1.5 1.6 1.6 1.7 1.8 1.9(mtonnes) (100%)
Page 31
Coated and Building Products North America – acquisition turnaround
Comprises:Butler buildingsVistawall
FY2006 vs FY2005 EBIT variance
Sales revenue up 7% to A$1,213mEBIT to A$27m (turnaround)FY2006 return on net assets (pre-tax) 12%
Performance FY2006 vs. FY2005− Buildings
− Increased despatches− Higher transition costs
associated with closing Galesburg and opening new Tennessee plant
− Vistawall− Higher sales− Partly offset by higher
aluminium and energy costs
FY2006-2H vs. FY2006-1H− Overall margin improvement due
to overcoming start-up issues at the Tennessee plant and lower steel feed costs
-40
-30
-20
-10
0
10
20
30
40
50
FY June 03 FY June 04 FY June 05 Volume Net Price Raw Materials Conversion &Other Costs
FY June 06
EBIT
A$ M
illion
s
(18)
5
2739
10
(9)
(28)
(19)
Page 32
Coated and Building Products North America
MarketsOverall US economy currently shows strong GDP growth.The macroeconomic measures that have historically had strong correlations with the PEB and architectural aluminium markets continue to trend up.PEB tonnage shipments up for the year.
Business improvement initiatives completed during FY06Strengthened primary channel to market in Buildings group and preparing to enter alternate channels.Ramp-up phase at Jackson, Tennessee plant complete. Addressing opportunities for further efficiency improvements.
Video
Vistawall increased production capacity with new extrusion press; strengthened market channels by adding service centres and expanded corporate account program.
Forward looking initiativesImprove Buildings cost position by lowering conversion costs and further improving delivery performance.Grow market share through increased Builder recruitment and segmentation.Improve lead times and on-time deliveries of Vistawall product by adding fabrication and metal processing capacity.Pursuing opportunities to build global alliance relationships.Increased use of BlueScope product
Page 33
Coated & Building Coated & Building Products AsiaProducts Asia
Page 34
Coated and Building Products Asia – it is time to deliver
FY2006 vs. FY2005Sales revenue up 5% to A$1,075m, including A$227m from BlueScope Butler China EBIT down 101% to (A$1m)FY2006 return on net assets annualised (pre-tax) 0%
EBIT variance analysis
Main variances− Lower sales prices across Asia− Higher unit costs from ramp-up of new
facilities (Thailand, Vietnam & China)− Higher zinc and aluminium costs− Taiwan performance and closure− Partly offset lower HRC & CRC feed
costs
-20
0
20
40
60
80
100
120
FY June 03 FY June 04 FY June 05 Prices Volume / Mix Conversion &Oth Costs
Raw MaterialCosts
Other FY2006 PreOne-offs
One-offs FY June 06
EBIT
A$ M
illion
s
(41) (3)
(46) (26) (1)
34
(2)
83
25
102
84
Page 35
Coated and Building Products Asia – meeting the challenges
-20
0
20
40
60
80
100
120
2002 2003 2004(I) 2005 2006 2007 2008 20090
200
400
600
800
1000
1200
EBIT Sales Revenue
FY2007 onwards stronger revenue growth andEBIT recovery
EBITA$m
Sales RevenueA$m
High Capex Phase
New production ramp-up phase
Notes(1) Acquired Butler China April 2004
Fiscal Years
Page 36
0
20
40
60
80
100
120
Arce
lor +
Mitt
alPO
SCO
JFE
Nipp
on S
teel
Baos
teel
US S
teel
Nuco
rCo
rus
Seve
rsta
lTh
ysse
n Kr
upp
Evra
z
Gerd
auW
uhan
Chin
aSte
el
Maan
shan
Blue
Scop
eCS
N
SSAB
Tata
Ste
el
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
IndustryConsolidation
Reve
nue (
US$m
)
Stee
l Pro
duct
ion
(mt)
Downstream
Midstream
Upstream
Global Steel IndustryGlobal Steel IndustryStrategyStrategy
STRATEGY
Millio
n To
nnes
Compound Annual Growth Rates
0
200
400
600
800
1000
1200
1950 1960 1970 1980 1990 2000 2005
Page 37
Global steel industry – our long term view has not changed
Current industry issues:
China’s capacity growth / fragmentation
Higher raw material costs
Higher energy and other costs (coating metals)
Increased volatility
Steel availability
Non-China steel world
Continued production and capex discipline
Continuing industry consolidation
India – growing steel requirements (3 - 5 years)
Likely industry outcomes long term:
China – steel reform initiatives taken / exports discouraged
China – increased demand / steel displaces other materials
Prices and spreads improve and then stabilise
Raw material costs moderate – steel industry backward integrates
Other costs remain high
Competition BUT on increased global demand
Expansion programs being re-evaluated
Consolidation continues
Page 38
Global steel industry consolidation into “mega companies”
0
20
40
60
80
100
120Ar
celo
r + M
ittal
POSC
O
JFE
Nipp
on S
teel
Baos
teel
US S
teel
Nuco
r
Coru
s
Seve
rsta
l
Thys
sen
Krup
p
Evra
z
Gerd
au
Wuh
an
Chin
aSte
el
Maan
shan
Blue
Scop
e
CSN
SSAB
Tata
Ste
el
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Base Production (Mt) Revenue (US$m)
80mt GAP
Page 39
World crude steel production - 1950 to 2005 – China driving growth
0
200
400
600
800
1000
1200
1950 1960 1970 1980 1990 2000 2005
Millio
n To
nnes
6.0%
3.1%
0.3%
2.8%
Compound Annual Growth Rates
Source: IISI, BSL
China: 9.1%
World Excluding China: 1.2%
(1995-2005)
Japan: 6.9%
World Excluding Japan: 1.8%
(1965-1980)
USSR: -4.1%
World Excluding USSR: 1.1%
(1980-1995)
Page 40
Our strategy remains unchanged and is focused on growing value and diversification and more stable revenue / earnings profile
Downstream
Midstream
GROWTH PROJECTS
FY2006 Completed
AsiaIndia - start-up PEB and Lysaght facilities at PuneChina – Guangzhou buildings start-up
USA Successful turnaround of Tennessee facility.Vistawall expansion
AsiaThailand – start-up second metal coating line (MCL2)– ramp up CRC
Vietnam – start-up metal coating (MCL) and paint line (PL)China – start-up paint line (PL)
USANorth Star BlueScope best ever operating performance
FY2007 FY2008
AsiaThailand – start up PEB facility (1Q)India – start up Lysaght facility at Chennai & New Delhi (2Q)China – new panels, residential plants & new beam facility
AsiaThailand – MCL2 & CRC Ramp up, start up PEB facilityVietnam – MCL & PL ramp upChina – start up MCL (1Q), ramp up MCL & PL
AustraliaSydney Colorbond ® plant start up (2H)
AsiaIndia – new MCL & PL constructionIndonesia – MCL2 & PL2 (project deferred)
Australia400kt HSM expansion at PKSW (1Q)
New ZealandFront end study
USANorth Star BlueScope – new bag house
AustraliaBF No 5 reline (expected 2Q)Upstream
Page 41
Acquisition of stake in Smorgon Steel
The Global steel industry is consolidating and BlueScope Steel has repeatedly stated the existing Australian structure works effectively and that we would not initiate a changeA change is now occurringSmorgon Steel has indicated a preparedness to sell and break-up its businessThe proposed merger of OneSteel and Smorgon Steel, in its current form, is not in the interests of BlueScope Steel’s shareholders BlueScope Steel has acquired approximately 19.9% of the outstanding shares in SmorgonSteel at an average price of $1.77 per share at a total cost of approximately $320mA revised ‘Scheme of Arrangement’ may represent an opportunity for BlueScope Steel to acquire businesses which:
fit our strategy and portfolio of businessesadd value to commodity HRC and other flat steel products, andprovide improved channels to market
BlueScope Steel has no intention to acquire further Smorgon Steel shares, but reserves the right to do so in different circumstances
Page 42
FinancialsFinancials
Page 43
Earnings performance remains leveraged to steel prices
A$ Millions 2002(1) FY2003 FY2004(3) FY2005 2006-1H 2006-2H FY2006
Revenue 4,593 5,302 5,770 7,964 3,892 4,139 8,031
EBITDA(2) 412 881 1,104 1,655 593 257 850
EBIT(2) 160 611 818 1,358 449 107 556
Reported NPAT 452 584 982 312 26 338
Reported EPS(cps) 57.1 77.8 134.0 44.0 3.9 47.9
(1) 2002 normalised.(2) Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue.(3) Includes two months of BlueScope Butler financial results.
Page 44
Underlying FY06 BSL financial performance
June ’06 restructuring includes:A$m
- PP impairment and closure costs 120- Staff and executive restructuring 32- Taiwan closure 8- CPL7 closure 13- Rail operation outsourcing 9- Other 3
185
Other unusual and one-off adjustments include:
- Business development and pre-operating costs 40
- Western Port fire 40- Losses from Packaging Products
and Taiwan business to be closed 43- Asset sales (Myaree & Galesburg) (14)- Other 6
115
Total 300
June 06Restructure Costs
Other One-off & UnderlyingReported Results Restructuring
Results B4unusual Results
556
115
185
856
741
EBIT A$m
NPAT 338 132 470 94 565
EPS 0.48 0.19 0.67 0.13 0.80
Page 45
EBIT variance FY2005 to FY2006 by reporting business segment
From (FY2005) $1,149M $(183M) $189M $83M $199M $(18M) $(61M)
To (FY2006) $456M $(198M) $105M $(1M) $188M $27M $(21M)
Issues • Iron Ore +Coal costs
• Steel pricesdown
• WP fire• Zn & AL• Tin mill
performance
• Reliability• Production• NZ market
• Stocks• Growth• Taiwan
• Scrap spread• Production
record
• Restructured• Jackson fixed• Margin
growth
• Lower profit in inventory
0
200
400
600
800
1000
1200
1400
1600
FY 2005 Hot RolledProductsAustralia
Coated &BuildingProductsAustralia
New Zealand &Pacif ic Steel
Products
Coated &Building
Products Asia
Hot RolledProducts North
America
Coated &Building
Products NorthAmerica
Corporate &Group
FY 2006
1,358
(693) (15)(84)
(84) (11) 45 40
556
EBIT movements
EBIT
A$ M
illion
s
Net raw materials (286)
Page 46
EBIT variance FY2005 to FY2006 by itemEB
IT A
$ Milli
ons
0
200
400
600
800
1000
1200
1400
1600
FY 2005 ExportPrices
Local Market Volume / Mix NSBSS Conversion& OtherCosts
Coal / IronOre
RawMaterialOther
ExchangeRates
Other FY2006 PreOne-offs
One-offCosts
FY June 06
Iron Ore (310)Coal (104)Opening Inventory 78
External Feed 132Scrap 44Coating Metals (101)
Restructuring / Redundancy (102)Asset Impairment 22Taiwan (23)
1358
(637)
246 56
(25)(77)
(336)
75556
65923
(24) (103)
Domestic Prices
Margin crunch:
Iron ore, coal, zinc and aluminium gross costs increase by over $500m
Net realised prices down by nearly $400m
Page 47
Balance sheet – BlueScope to focus on working capital
As at A$ Millions 30 June 2006 31 December 2005
Assets Cash 62 79 Receivables 1,344 1,081 Inventory 1,329 1,439 Other Assets 783 732 Net Fixed Assets 3,743 3,592
Total Assets 7,261 6,923
Liabilities Creditors 959 728 Interest Bearing Liabilities 1,952 1,709 Provisions & other Liabilities 1,265 1,207 Total Liabilities 4,176 3,644
Net Assets 3,085 3,279 Net Debt / (Net Debt + Equity) 38.0% 33.2%
Page 48
Cash - $551 million to shareholders and $816 million in capex
A$ millions 2002(1) 2003 2004 2005 2006-1H 2006-2H 2006 Cash from operations 795 1,012 1,671 569 334 903
Working Capital Movement (31) (94) (432) (222) 122 (100)
Net operating cashflow before borrowing costs and income tax
381 764 918 1,239 347 456 803
Net investing cashflows - Capital expenditure & Investments - Other
(162) 8
(209) 44
(585) 7
(663) 41
(381) 15
(435) 8
(816) 23
Net cashflow before financing & tax 227 599 340 617 (19) 29 10
Net financing cashflow (468) 309 348 642 230 872
Payment of income tax (29) (119) (312) (240) (116) (356)
Share buy-back (26) (259) (327) (74) (21) (95)
Dividends - ordinary - special
(75)
-
(191) (53)
(273) (75)
(174) (142)
(140)
-
(314) (142)
Net increase in cash held 1 27 (22) (7) (18) (25)
(1) 2002 normalised.(2) All periods normalised to reflect sale of receivables program cash flow movements as debt.
Page 49
Dividend reinvestment plan to be introduced
Implementation of the BlueScope Steel Limited Dividend Reinvestment Plan (DRP)
The DRP will be established commencing with the 2006 Final Dividend
The DRP provides benefits to both BSL and its shareholders including:A flexible capital management tool for BSLChoice for shareholders around how they receive their dividendCost effective method of increasing ownership in BSL
The DRP will be available to shareholders with registered addresses in Australia and New Zealand only
Eligible shareholders will receive detailed information on the DRP in September 2006 with participation responses to be returned by 5pm on 4 October 2006
The company intends to fully underwrite the DRP in respect of the FY2006 final ordinary dividend
63% of ASX 100 companies have DRPs
Page 50
EBIT remains sensitive to realised hot rolled coil prices and raw material costs – both were adverse in FY2006
Estimated impact on forecast EBIT
(A$mil)
Assumption
86
Full Year Full Year(previous)(current)
76+/– US$25 / tonne movement in BlueScope’s average realised export HRC price (1)
+/ 1¢ movement in Australian dollar / US dollar exchange rate(2)– 10 713 13+/– US$10 / tonne movement in NSBSL HRC price to scrap spread17 17+/– 2% movement in slab production in Australia, New Zealand & USA
50+/– US$10 / tonne movement in coal costs (3) 50+/– US$10 / tonne movement in iron ore costs 100(3) 100(1) The change in export HRC price assumes proportional effect on export slab, and flow on to domestic pipe and tube market and to other export
products. This does not include the potential impact on Australian domestic coated product prices, as the flow on effect in the short term is less certain. (2) The movement in the Australian dollar/US dollar exchange rate includes the restatement of US dollar denominated receivables and payables and the
impact of translating the earnings of offshore operations to A$.(3) Coal and iron ore US dollar prices are predominantly locked in for FY2007.
Page 51
SummarySummary
Page 52
Questions and Answers
Dynamic Global Steel
Market
Dynamic Global Steel
Market
Geographic and Product
Diversity
Geographic and Product
Diversity
Strong Board & Management
Team
Strong Board & Management
Team
Growth Opportunities in
Asia
Growth Opportunities in
Asia
Low Cost Producer
Low Cost Producer
Strong and Flexible Capital
Structure
Strong and Flexible Capital
Structure
Profitable Through the
Cycle
Profitable Through the
Cycle
Consistently Strong Cash
Flows
Consistently Strong Cash
Flows
Strong Operating
Track Record
Strong Operating
Track Record
Value Added Branded Products
Value Added Branded Products
A VERY DIFFERENT KIND OF STEEL
COMPANY
FY2006 Results Presentation Period Ended 30 June 2006Kirby Adams, Managing Director and Chief Executive OfficerPaul O’Malley, Chief Financial Officer21 August 2006
ASX Code: BSL
Page 54
Supporting InformationSupporting Information
Page 55
Annualised production capacities and approved growth as at June 2006
ThailandCold Rolling 300kt
Metal Coating 375kt Painting 90kt
MalaysiaMetal Coating 160kt
Painting 70kt
IndonesiaMetal Coating 100kt
Painting42kt
Western PortHot Rolling 1.43mtCold Rolling 1.0mt
MC (3 lines) 830kt +Painting (2 lines) 330kt +
BrisbanePainting 90kt Port Kembla / Springhill
Raw Steel 5.1mtHot Rolling 2.4mt +400kt
Plate 360ktCold Rolling 930kt
[Tinplate/Black plate 450kt*]MC (3 lines) 750kt +PL (2 lines) 207kt +
New Zealand / PacificIron sand MiningRaw Steel 625ktHot Rolling 750ktCold Rolling360kt
Metal Coating 230kt +Painting 60kt
Hollow Sections 45ktPacific Roll forming sites 4
• Coated and Building Products North America
• North Star JVHot Rolling 1.80mt (100%)
• Castrip JV
Australia7 Service Centres31 Lysaght Sites
7 BlueScope Water
VietnamMC 125kt
Painting 50kt
Asia20 Roll forming
5 sites
ChinaMC 250kt
Painting 150kt3 Butler PEB
India(50:50 JV with Tata Steel)
MC 250kt (100%)Painting 150kt (100%)
2 Roll forming sites1 Butler PEB
SydneyPaint Line (1 line) 120 kt
* To be reallocated when business closed
Page 56
Calendar year earnings
A$ Millions CY2003 CY2004(2) CY2005 1H-CY2006
Revenue 5,328 7,029 7,980 4,153
EBITDA(1) 857 1,501 1,411 258
EBIT(1) 581 1,212 1,111 107
Net profit 436 859 792 26
EPS (¢) 56 116 110 4
(1) Includes EBITDA & EBIT for North Star BlueScope Steel but not revenue(2) Includes eight months of BlueScope Butler financial results
Page 57
From construction to production
All in A$millionTotal Est.
Capex / CostActual to 30/6/05
Actual FY2006 FY2007 FY2008 FY2009
Thailand – Coating expansion 80 78116
-
China- Coating and Painting Facility(3) 280 155 101 24 - -
India- Butler / Lysaght facilities(3)(5) 44 11 21 12 - -
Port Kembla:- HSM expansion 100 60 38 2 - -
6
-12
4442
- - -22010
25
-65
52334
-Indonesia – Coating / Painting(3)
(deferred in April 2006)145 - - -
Western Sydney Colorbond® 130 53 - -
- Blast Furnace No. 5 Reline(6) 300(4) 244 -
-
-
67
2
-
-
20 46
470… over 3 years
Vietnam – Coating / Painting(1) 136
- Guangzhou Butler / Lysaght(4) 33
133
1,381
- Coating / Painting(3)(5)
Total spending on major projects
Major project capital spending profile
(1) Key variation from total estimate to actual capex is currency movements. Original approved capital cost was $160m(2) Capital spent from approval to 30/06/06.(3) Estimated capital costs based on forecast exchange rate assumptions at time of project approval.(4) Key variation from total estimate to actual cost is better cost performance. Original approved capital cost was $35m(5) India developments represent BlueScope’s 50% interest, noting these developments will be funded by the BlueScope Steel and Tata Steel joint venture.(6) Indicative, based on project study. Final cost and phasing confirmed later in CY2006
Page 58
Huge increase in FY2006 Zinc and Aluminium costs
Tonnes Zinc Aluminium
AUSTRALIASpringhill 21,250 10,000
Western Port 17,500 9,500
Sub-total 38,750 19,500
NEW ZEALAND 6,500 3,500
NORTH AMERICAVistawall - 30,000
ASIA 12,250 11,250
TOTAL 57,500 64,250
Note:In future years BSL Asia’s usage will increase as new mid-stream projects come into operation and ramp-up to capacity
Page 59
Hot Rolled Products Australia - product flow (Indicative) FY2006
Port Kembla Steelworks5.3mt slab FY2006
(5.1mt slab FY2005)
Hot Strip Mill (1)
49%(51%)
Export Slab (1)
27%(20%)
Plate Mill8%(8%)
C&BP Australia (2)
(Western Port)16%(21%)
Export HRC25%(12%)
C & BP Australia (2)
(Springhill)54%(60%)
Domestic HRC21%(28%)
Notes:(1) +400kt HSM expansion was completed July 2006. Technically it will take approximately 6 months to
ramp-up production by the additional 400kt. This will reduce slab sales by an equivalent amount.(2) “C&BP Australia” is Coated and Building Products Australia
Page 60
New Zealand Steel (FY2006) product flow*
Export Hot Rolled 39% (28%+11%)
Domestic Pipe4%
Domestic Hot Rolled8%
Export Cold Rolled14% (8%+ 6%)
Domestic Cold Rolled11%
Coating lines75%
Export Metal Coated17% (10% + 7%)
Domestic Painted19%
Domestic Metal Coated57%
ExportIron Sand
Concentrate0.9mt
Export Vanadium Slag
15 kt
Mine SitesIron Sand Concentrate
2.1mt * Indicative annual prime production and sales (t)
New Zealand Steel0.6mt Slab
0.6mt Hot Rolled
Cold Strip Mill49%
Export Painted7% (5%+2%)
(External % + Internal %)
Page 61
Our customers are our partners
Our Market OfferHigh quality productsAdvertising / promotional supportServiceDeliverySatisfaction WarrantyTechnical Support
Creating New productsNew markets
TUBEFORM®
XLERPLATE®
Page 62
Our Asian Coating / Painting / Roll-Forming / PEB Capacity to improve twofold by FY2009
490
990
175
420
0100200300400500600700800900
10001100
FY2006 FY2007 FY2008 FY2009Metal coating Painting
By Region
X 2
X 2.4
(k to
nnes
)
Page 63
Coated and Building Products Australia – packaging products material flow chart
1. Pickling
2. Cold Reduction
3. Annealing
4. Temper Rolling
5. Electrolytic Tinning
6. Final ProcessingContinuous
..& Batch
or
Single Reduce (TM1)
Double Reduce (TM2)
or
ET2
or
ET3
Cleaning..
TemperMill 2
Page 64
Value-added Solutions
Graffiti Remover
FY2006 Results Presentation Period Ended 30 June 2006Kirby Adams, Managing Director and Chief Executive OfficerPaul O’Malley, Chief Financial Officer Business Presidents21 August 2006
ASX Code: BSL