FY2009 Results Presentation Period Ended 30 June 2009€¦ · FY2009 Results Presentation Period...

FY2009 Results Presentation Period Ended 30 June 2009Paul O’Malley, Managing Director and Chief Executive OfficerCharlie Elias, Chief Financial Officer 17 August 2009

ASX Code: BSL

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.

Introduction and Introduction and HeadlinesHeadlines

Safety – Our target remains Zero Harm

16.0

14.0

8.0

4.8

3.54.1

3.52.8

1.8 1.50.9 0.8 1.2 0.9

0.5 0.8

0

2

4

6

8

10

12

14

16

18

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Lost

time i

njurie

s per

milli

on m

an-h

ours

worke

d

Medically Treated Injury Frequency RateLost Time Injury Frequency Rate

60.0

52.2

47.1

29.1

22.4 21.9

17.0

12.49.4 8.0 9.3

6.5 8.25.66.7 6.5

0

10

20

30

40

50

60

70

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009FY

Medic

ally t

reate

d inju

ries p

er m

illion

man

-hou

rs wo

rked

Includes Contractors from 1996Includes Butler acquisition from May 2004Performance if IMSA & Smorgon Distribution acquisitions incl. for FY2008

Includes Contractors from 2004Includes Butler from May 2004Performance if IMSA & Smorgon Distribution acquisitions incl. for FY2008

Reported performance for World Steel member companies(employees & contractors)

NSW Manufacturing

2005 – 27.92006 – 24.42007 – 23.8

FISCAL YEARS FISCAL YEARS

− Underlying − Reported − Underlying − Reported − Underlying − Reported − Underlying − Reported

TWELVE MONTHS ENDED 30 JUNE VARIANCE2009 2008 %

Revenue A$10,329M A$10,495M Down 2% External despatches 6.0M tonnes 8.1M tonnes Down 26% EBITDA A$380M A$1,420M -

A$536M A$1,630M Down 67%EBIT A$15M A$1,063M -

A$171M A$1,273M Down 87%NPAT A$(66)M A$596M -

A$56M A$816M Down 93%EPS (7.1)¢ 66.2¢(1) -

6.1¢ 90.6¢ Down 93%After Tax Return on Invested Capital 0.1% /1.9%* 12.0%/15.9%* -Return on Equity (1.4)%/1.2%* 15.7% /21.5%* -Net Operating Cashflow− From operating activities A$784M A$1,648M Down 52%− After capex / investments A$56M A$138M Down 59%Full Year ordinary dividend (fully franked) 5cps 49cps Down 90% and no final dividendGearing (net debt) 11.8% 30.4% Also down from 35.9% at

31/12/08

Group financial headlines FY2009 vs. FY2008…underlying NPAT down 93%

*Underlying Returns (1) EPS restated for bonus element of the entitlement offer.

Underlying EBIT variance FY2008 to FY2009 by major item…largely driven by weaker steel demand

Unde

rlyin

g EB

IT A

$ Milli

ons

(1) Includes $243m favourable profit in stock adjustments - relevant when reconciling to the sum of divisional spread variances.(2) Volume impact based on FY 2008 margins.(3) Volume reflects the effect of higher unit costs as a result of lower production/sales volumes.

0

500

1000

1500

2000

2500

3000

June 08 FY Export Prices DomesticPrices

Raw MaterialCosts

Volume/Mix Conversion &Oth Costs

ExchangeRates

North Star Other June 09 FY

($86m)

$171m

($665m)

($164m)

$155m

$1,352m

($321m)

Other:NRV adjs. (166)Asset Sales (4)Depreciation 10Other (3)

($163m)

Raw Materials:Coal (657)Iron ore (403)External Steel Feed (373)Scrap (34)NZ Raw Materials (27)Opening Stock Adj 151Coating Metals 126Other 7

$1,273m

($1,210m)

Net spread improvement $56m(1)

Conversion & Other costs:Volume(3) (471)Escalation (113)Other (29)One-off / Discretionary (3)Improvement Initiatives 295

Volume(2) (714)Mix 49

-800

-600

-400

-200

0

200

400

600

800

1000

Underlying EBIT variance 1H FY 2009 to 2H FY 2009…which is a tale of two halves

June 09 HY Other North StarExchange RatesConversion & OthCosts

Volume/Mix Raw Material Costs

Domestic PricesExport Prices Dec 08 HY

price and volume collapse, partly mitigated by raw material costs (feed, and coal price averaging)

(1) Volume impact based on 1H 2009 margins

Raw Materials:Coal 115Ext Stl Fd 103Alloys 58Coating Metals 29Scrap 20Iron ore 7NZS (mainly coal) 6Op Stock Adj (121)

Other:NRV adjs. 38Other 4

Net spread reduction ($819)

$753m

($582m)($99m)($86m)

($317m)($56m) $42mVolume(1) (373)

Mix 56Lower volumes across all segments

Mainly reflects the unit cost impact of lower volumes ($387M unfavourable), partly offset by cost reductions and lower spend ($331M)

($784m)

$217m

($252m)

-200

0

200

400

600

800

1000

1200

1400

Underlying EBIT variance FY 2008 to FY 2009 by business segment …the lower demand in FY 2009 was reflected in BlueScope’s global operations producing at lower utilisation rates

EBIT

A$ M

illion

s

electricity and alloy cost e

provisions favourable FX

benefit provisionhigher

Vanadium sales− inventory NRV

spread improvement

volumespartly offset by

partly offset by:−unfavourable FX −higher costs

provisions partly offset by:− slight FX

costslower volumesinventory NRV

− FX benefit − Mix benefit

− lower volumes− lower iron

sands &

inventory NRV provisionspartly offset by

inventory NRV provisionslower export

$4M$(178)M$105M

reduced spread− lower prices,

higher scrap & pig iron

$(58)Mlower volumes margin compressioninventory NRV

$9M$99M

large favourable profit in stock elimination movement

reduced spread (lower export prices, higher raw material costs)

$141M$1,000M

reduced spreadreduced volumespartly offset by:

spread improvement FX benefit partly offset by

weaker volumes higher freight cost

Core Reasons:$(21)M$87M$9MTo FY 2009$76M$85M$86MFrom FY 2008

EBIT Movements

$1,273m

($859m) $171m

$2m

($163m)

$182m($97m)

($77m)

($90m)

Corporate & Group June 09 FY Coated & Building Products Nth

America

Hot Rolled Products Nth America

Coated & Building Products Asia

NZ & Pacific Steel Products

Aust Distribution & Solutions

Coated & Industrial Products Australia

June 08 FY

21%

38%4%

9%

12%

4%

12%

18%

38%4%

13%

8%8%

11%

Exports29%

(2,374kt)

8,133kt

Exports - Americas

Exports - Asia

Exports – Europe/Med/Middle East/India Australia

NA (HRPNA + C&BPNA) New Zealand/Pacific

Asia

KeyDomestic sales (produced and sold within country)

FY2008

Our markets - external sales by region …and lower demand was also reflected across all our markets

FY2009Exports

25%(1,492kt)

5,986kt (3,101kt)

26% decline

Note: Percentages have been rounded.

(2,290kt)

SALES TONNESConstruction

61%

FY2008(1) FY2009(1)

Non-dwelling 26%

Dwelling 22%

Engineering 12%

Manufacturing 19%

Agriculture & Mining 11%

Auto & Transport 10%

Desp

atch

es ‘0

00 to

nnes

400

800

1,200

1,600

2,000

2,400

2,800

3,200

Non-dwelling 26%

Dwelling 24%

Engineering 12%

Manufacturing 19%

Agriculture & Mining 10%

Auto & Transport 9%

62%

3,101kt (26%) 2,290kt(437kt) (332kt)

2,664kt (27%) 1,958kt

Gross DespatchesLessNormalised Despatches

(2) (2)

Total Australian external domestic despatches by market segment…and across all of our segments in Australia

(1,420kt)

(1,892kt) Principal variances:Slowing activity levels and high inventory through the channel combined to result in lower overall sales volumes across all segments in FY 2009 vs. FY 2008.

The Non-Dwelling and Engineering Construction segments were significantly impacted by project deferrals and cancellations.

However improved market share in Q4 underpinned a modest recovery off a low base.

And evidence of continued improvement in domestic demand through Q1 FY 2010.

Notes: (1) Percentages have been rounded and worked off Gross

Despatches.(2) Normalised despatches exclude long products sourced

from OneSteel.

Our markets …however both our domestic and export markets and sales are recovering

Global de-stocking appears to have ceased for most steel products Received a large number of enquiries across our product range Improved sales volumes to long term relationship customers BlueScope’s competitive position in the export markets remain compelling:

Tier 1 quality product Strong relationships with “repeat business” customers Proximity to stronger Asian market Locked in freight contracts at competitive prices Network of BSL international sales offices and representatives across the globeRelatively low production costs

And Steel prices appear to have bottomed China

Steel supply / demand largely in balance Their stimulus package is working Australia’s GDP performance benefits from being their “resources” engine room

Significant actions taken through FY 2009 …we strengthened the Balance Sheet

Equity December placement and February SPP raised $400M net Entitlement offer raised net A$1,360M

Debt Termed-out loan note facility with new A$1,275M multi currency facility (replacing old Loan Note Facility) Applied equity proceeds to repay debt

Benefits No material refinancing obligations due until July 2011 30 June 2009 gearing of 11.8% (30 June 2008: 31.8%)Strong liquidity: 31 July 2009 total undrawn facilities and cash of $A$1,757M

Significant actions taken through FY 2009…aggressively monetised inventory

$1,660M $1,711M

$2,815M

Jun-2009Dec-2008Jun-2008

Carrying value of inventory at period end

Volume change from June 2008

~ +25%vs Jun-2008

-12%vs Jun-2008

+70%vs Jun-2008

+3%vs Jun-2008

At 1H FY 2009 we indicated we were pursuing $150m of cost reductions. Achieved $295m in the nine months to June 2009

$182m of ‘new’ savings against 2008 cost base, in addition to $113m of savings to defray 2008 cost escalation$132m of the $295m are permanent savings

Savings delivered from the following major initiativesNo STI awards; general labour cost reductions, inc some redundanciesReduction of non-essential repairs and maintenance spendFixed conversion / opex reduced through plant closures, outages and reschedulingSignificant sales & administration reductions: eg reduced head count, consultants, IT spend and travel

Successfully lowered the break-even production level across a number of plantsChina coated: reduced by 40%Vietnam coated: reduced by 35-40%Buildings North America: Butler reduced by 18%, Varco Pruden by 35%

Significant actions taken through FY 2009…also achieved significant fixed cost and overhead reduction of $295 million, in addition to lower volume-linked conversion costs

Outlook…encouraged by improving market conditions in early 1H FY 2010

OUTLOOK Encouraged by improving global steel demand and pricing in early FY 2010

However, demand improvement off a low base BSL will not receive full pricing benefit in 1Q FY 2010

Steelmaking raw material prices lower than 2009 Global steelmaking capacity progressively increasing but at this stage largely matching increased demand

BlueScope to operate its two blast furnaces at Port Kembla (initially at 75% annual capacity) effectively from 2Q FY 2009

Negative earnings impact of a strong A$ (vs. US$)Expect to deliver small negative underlying NPAT in 1H FY 2010Will update market in November at AGM

BLUESCOPE’S ACTIONS OVER 1H FY 2010:Increase sales on a positive / growing margin Further cost reductions Limit capital spending

BLUESCOPE IS VERY LEVERAGED TO THE UPSIDE

Strategy…our strategy has not changed but moving forward with an element of caution

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 greenfieldExpand presence in North America building products and solution markets Expanding our downstream capability in Australia and Asia Target growth opportunities − across our total value chain− within our current geographic footprint

New products and solutions with a focus on sustainability. Capital management

NOW TO OUR APPROACH ON ENVIRONMENTAL MATTERS

We support the need to reduce global CO2 emissions and we will work to reduce our CO2 emissions.But we have grave concerns about the current design of the proposed CPRS and the negative impact it will have on the Australian steel industry, without achieving an environmental benefit.Without comparable global action why would anyone impose a compounding tax that discriminates against the world competitive Australian steel industry, needlessly putting Australian jobs and investment at risk? We strongly believe that the cumulative net cost impact of the CPRS on the Australian steel industry will be highly significant and material, and that it will severely damage our competitiveness, putting domestic investment, Australian jobs and the Australian steel industry at high risk.Steel will always be consumed in Australia – if not made in Australia, it will be imported for a worse global environmental outcome.

Carbon Pollution Reduction Scheme (CPRS)

Investment Track Record:BlueScope has invested $500 million on environmental related improvements globally.150 separate pollution reduction projects - improving air, water and waste management at Port Kembla Steelworks (PKSW) alone. PKSW recycles around 1 million tonnes of scrap steel each year*.* based on typical annual production levels and includes a combination of internally generated and post-consumer scrap.

Environmentally Responsible ….a proven track record - with 30 years of environmental footprint improvements

Leader in Water Conservation:Port Kembla Steelworks:

Over 14 billion litres of water recycled since Oct 2006 - world class water efficiency for an integrated steelworks.

Western Port:A water recycling project will cut fresh water use by 65 per cent and reduce wastewater discharge by 75 per cent -due for completion July 2011.

We support the global objective to reduce CO2 emissions We will continue work to reduce our CO2 emissions

CPRS…. does not meet the Government’s stated policy objectives: to address the competitive challenges facing emission-intensive trade-exposed (EITE) industries in Australia.

BlueScope Steel’s Australian operations are world competitive – exporting 50 per cent of steel production.Australia manufactures only 0.6 per cent of global steel production (7.6mt v 1,380mt)Eight of the world’s top 10 steel-producing countries produce 70 per cent of global steel production – but no mandatory carbon constraints. Blast furnace technology (basic oxygen steelmaking) is the predominant process for manufacturing virgin steel around the world.Around 80 per cent of BlueScope’s Australian GHG emissions come from using coal for blast furnaces. These emissions cannot be abated given current and foreseeable alternative technology available anywhere today.Steelmaking has high fixed costs requiring intensive capital investment – we need the right scheme to promote investment certainty.

Current CPRS unfairly discriminates against the Australian steel industry relative to international competitors

Australian steel industry needlessly at risk – our competitors are unlikely to face a comparable cost

1. Source: World steel association, ‘World Steel in Figures’, 2008 data2. Source: International Energy Agency, ‘Tracking Industrial Energy Efficiency and CO2 Emissions’, 2007

500 kg/t (South America)NoLow-Medium33.7 (2.6%)Brazil

710 kg/tNoHigh55.2 (4%)India

490 kg/tNo. ETS proposed but no date set.High53.6 (4%)South Korea

495 kg/tNo. ETS proposed but no date set.High19.9 (1.5%)Taiwan

Medium

High

N/A

Propensity to increase steel

exports to Aust?

118.7 (9%)

500.5 (38%)

7.6 (0.6%)

Annual production - Mt1

(% of world)

500 kg/t

580 kg/t

500 kg/t

Blast Furnace efficiency

approx. avg. coal use (kg/t hot metal2)

No. Voluntary ETS - no mandatory capJapan

NoChina

Yes. CPRS commences 2011Australia

Mandatory carbon cost from 2011?

Country

615 kg/tNoLow37.1 (2.8%)Ukraine

510 kg/t (includes Canada and Mexico)No. Cap and trade proposed from 2014Low91.4 (7%)United States

Variable

Low

Low

Low

263.9 (20%)

30.6 (2.3%)

45.8 (3.5%)

68.5 (5%)

495 kg/t (EU15)EU ETS – Free PermitsItaly550 kg/t (world average)

490 kg/t

570 kg/tNoRussia

EU ETS – Free PermitsGermany

Countries subject to EU ETS comprise approx. 15% of global productionCanada ETS planned 2012NZ ETS – subject to parliamentary review

Rest of world

CPRS – Our Objection….without comparable global action, a compounding tax

CPRS is not a one-off, one-year decision.Without comparable global action, the cumulative cost of the CPRS is a compounding tax over many years - it will impair our trade competitiveness:

At a $10 permit price (Year 1) and a $25 permit price (Year 2, rising by CPI thereafter) –the net cost to BlueScope from 2012-2020 could be as much as $500 million*.If suppliers succeed in passing on all carbon costs, the cumulative net cost could be as much as $1.4 billion over the period*.

These sums are dollars paid in tax – not spent on technology reducing BlueScope’s emissions (eg. Steelworks Co-generation Plant).Steel will continue to be consumed in Australia – if not made in Australia it will be imported for a worse global environmental outcome.

*Assumptions: Emissions constant and based on FY2008 levels (Scope 3 emissions estimated). Figures shown are maximum estimated costs and assume no abatement of emissions and no ability to offset costs. Scope 3 cost estimate assumes suppliers are successful in passing on all Scope 3 costs to BlueScope. Cost estimates are expressed as nominal dollars. Permit price of AUD$10 in FY2012. Permit price of AUD$25 in FY2013, rising by 2.85% CPI p.a. thereafter. Permit allocation commences at 94.5% in FY2012 and decays 1.3% p.a. Global recession buffer removed after FY2016. EITE activity definition excludes hot rolling and downstream processes.

CPRS….unfair on regional Australia – threatening jobs and undermining investment

Our total impact on the Illawarra regional economy* :Employment: over 12,000 full time equivalent jobs (+ more than 1000 employees and contractors at Western Port in Victoria)Gross Regional Product: over $2 billionHousehold Income: over $900 million

At PKSW, over $500 million has recently been invested on the reline of the No. 5 Blast Furnace and the Sinter Plant upgrade:

Employing an additional 3,500 people on-site Over 100 Illawarra companies supplied goods and servicesA $430 million one-off impact to the Illawarra economy*

* Source: Illawarra Regional Information Service Research: Economic Impact of BlueScope Steel on the Illawarra Region - 2008

CPRS….can be designed to deliver a ‘fair go’ for the Australian steel industry and regional Australia

The Government stated: “There is no point in imposing a carbon price domestically which results in emissions and production transferring internationally for no environmental gain.”To meet the Government’s stated CPRS policy objectives, three simple amendments to the CPRS are required:

1. Certainty that permit allocations are maintained, as long as competitors do not face the same carbon costs.

2. Inclusion of hot rolled products (HRP) in the activities to receive permit allocation:

Hot rolled coil and plate are major internationally traded products.Illogical to exclude HRP – would damage Port Kembla and Western Port competitiveness.

3. We need assurance that Scope 3 coal costs will not be passed on to the steel industry.

BlueScope Steel BlueScope Steel Financial Results Financial Results

154.0

134.0

1,129

982

1,559

1,358

1,655

7,964

FY2005

80.0

47.9

555

338

840

556

850

8,031

FY2006

89.3

95.3

643

686

1,057

1,099

1,423

8,913

FY2007

109.6

80.1

816

596

1,273

1,063

1,420

10,495

FY2008(3)A$ Millions FY2009 2009-1H 2009-2H

Revenue (1) 10,329 6,156 4,173

EBITDA (2) 380 857 (477)

EBIT (2) – Reported 15 665 (650)

– Underlying (4) 171 753 (582)

NPAT – Reported (66) 407 (473)

– Underlying (4) 56 479 (423)

EPS(5)(cps) – Reported (7.1) 52.7 (43.4)

– Underlying (4) 6.1 62.0 (38.8)

Earnings performance …second half of FY 2009 heavily impacted by materially weaker spreads and lower despatches

(1) Does not include North Star BlueScope Steel revenue, which was A$669M (2009) vs. A$721M (2008). (2) Includes 50% share of North Star BlueScope Steel net profit after 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 or non-recurring events to reflect underlying financial

performance from ongoing operations.(5) EPS for periods prior to the May / June 2009 entitlement offer have not been restated for the bonus element of the entitlement

offer.

-200

0

200

400

600

800

1000

1200

1400

Underlying EBIT variance FY 2008 to FY 2009 by business segment …the lower demand in FY 2009 was reflected in BlueScope’s global operations producing at lower utilisation rates

EBIT

A$ M

illion

s

electricity and alloy cost e

provisions favourable FX

benefit provisionhigher

Vanadium sales− inventory NRV

spread improvement

volumespartly offset by

partly offset by:−unfavourable FX −higher costs

provisions partly offset by:− slight FX

costslower volumesinventory NRV

− FX benefit − Mix benefit

− lower volumes− lower iron

sands &

inventory NRV provisionspartly offset by

inventory NRV provisionslower export

$4M$(178)M$105M

reduced spread− lower prices,

higher scrap & pig iron

$(58)Mlower volumes margin compressioninventory NRV

$9M$99M

large favourable profit in stock elimination movement

reduced spread (lower export prices, higher raw material costs)

$141M$1,000M

reduced spreadreduced volumespartly offset by:

spread improvement FX benefit partly offset by

weaker volumes higher freight cost

Core Reasons:$(21)M$87M$9MTo FY 2009$76M$85M$86MFrom FY 2008

EBIT Movements

$1,273m

($859m) $171m

$2m

($163m)

$182m($97m)

($77m)

($90m)

Corporate & Group June 09 FY Coated & Building Products Nth

America

Hot Rolled Products Nth America

Coated & Building Products Asia

NZ & Pacific Steel Products

Aust Distribution & Solutions


June 08 FY

Reconciliation from Reported to Underlying EBIT for FY 2009

0

50

100

150

200

250

ReportedResult

Packaging ColdM ill Closure

IM SA PlantRationalisation

Other Re-structures

Pro jectFeasibility

Costs

ImpairmentsChina

Western PortFire

IM SAIntegration

Costs

Defined BenefitCurtailment Nth

America

Other Discontinuedbusinesses

UnderlyingResult

$15m

$15m

$171m($8m)

($15m)$22m

$36m

$20m

NZ Growth Projects Feasibility write-offs

Australia 52Nth America 9Asia 14

$75m

($3m)

$10m

China impairments:Metal Coating Line 25Panels 11

$4m

Australia 17Nth America 3

Restructure & Redundancy $110m

A$M

Overhead 28%

Direct Labour

19%Conversion/Opex 30%

Repairs & Maintenance 23%

Aggressive cost reduction …$295m of savings in nine months to June in fixed conversion and discretionary items

Permanent $132mTemporary

$163m

Permanent vs Temporary Split

Fixed conversion and overhead cost base matched with current

volume levels – expected to return with volumes

Cost Category Split of the $295m

Examples:reduced travel, reduced consultants, lowered IT spend &site closures

Example:reduction of

non-essential maintenance

Manufacturing production scheduled to minimise cash costs, reduced

contractors, procurement contract negotiation

Examples:reduced head count, reduction in leave, no short term incentive

payments for FY 2009, reduction in overtime

Exceeded our $150m target$113m of savings to neutralise impact of escalationA further $182m of savings achieved off 2008 cost base

Volume related conversion cost savings achieved as well

Cost saving initiatives…and spend has been reduced across our divisions

Divisional Split of the $295m Divisional Split of $132m Permanent Savings

Coated & Building Products Australia

52%

Australian Distribution & Solutions 12%

North America 31%

Australian Distribution & Solutions 16%

Coated & Building Products

Australia 41%

Corporate, 4%


Asia 8%

NZS 2%

North America 18%

Corporate 5%


Asia 11%

Cashflow…strong working capital inflow in 2H FY 2009 more than offset negative cash from operations

336--

(253)

1,836-

(205)(1,098)

5634

-

(762)

784250534

FY2009

354--

(45)

1,481 (3)-

37(1,399)

28023

-

(464)

7211,113(392)

A$ millions FY2007 FY2008 2009-1H 2009-2HCash from operations 1,364 1,579 926Working capital movement (21) 69 (863)Net operating cash flow 1,343 1,648 63Net investing cash flows- Capital & investment

expenditure(493) (1,979) (298)

- Smorgon shareholding(1) (319) 447 -

-Other 271 22 11Net cash flow before

financing & tax802 138 (224)

Net financing cash flow(2) (506) 195 301Payment of income tax (229) (208) (242)Share buy-back - - -Share issues 221 229 355 (2)

Dividends- Ordinary (321) (357) (208)- Special - - -Other (4) 2 - -Net increase in cash held (31) (3) (18)

Monetisation of inventory in 2H, and

lower sales vols/prices reducing receivables

Higher capex in 2H principally due to reline and sinter

plant.

Debt repayment from equity issuance and release of working

capital

Proceeds of equity raisings

Material cash balance arising from higher than

expected proceeds from equity raising

(1) Purchased 19.9% shareholding in Smorgon Steel in August 2006, disposal in August 2007. (2) Includes shares issued under the shareholder dividend reinvestment plan ($58m), net cash from institutional investor investor placement ($291M) and general employee share plan ($6m).(3) Includes shares issued under the shareholder dividend reinvestment plan ($12m) and net cash from institutional investor investor placement ($1,469M).(4) Reflects capital injection by minority interests in subsidiaries.(5) All periods normalised to reflect sale of receivables program cash flow movements as debt.

Impact of economic slowdown

As at A$ Millions 30 June 2008 31 Dec 2008 30 June 2009

Assets Cash 44.1 35.1 369.2 Receivables 1,537.2 1,323.2 1,013.1 Inventory 1,659.9 2,815.2 1,711.4 Other Assets 1,417.8 1,768.1 1,484.4 Net Fixed Assets 3,807.3 4,139.9 4,290.8

Total Assets 8,466.3 10,081.5 8,868.9

Liabilities Creditors 1,289.5 1,059.3 953.6 Interest Bearing Liabilities 1,675.8 2,675.3 1,124.9 Provisions & other Liabilities 1,559.1 1,623.8 1,116.9 Total Liabilities 4,524.4 5,358.4 3,195.4

Net Assets 3,941.9 4,723.1 5,673.5

Balance sheet – significant improvements in working capital and gearing

11.8%35.9% 30.4%Net Debt / (Net Debt + Equity)

[Duncan to verify comments][Tim – remove decimal

place/round]Material cash balance arising

from equity raisings and favourable exchange rates movements

Material cash balance arising from equity raisings and favourable

exchange rates movements

11.8%35.9% 30.4%Net Debt / (Net Debt + Equity)

Material cash balance arising from equity raisings

and favourable exchange rate movements

Lower raw material purchases due to economic slowdown, and

stronger AUD since Dec 08.

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As atA$ Millions 30 June 2008 31 Dec 2008 30 June 2009

AssetsCash 44 35 369Receivables 1,537 1,323 1,013Inventory 1,660 2,815 1,702Other Assets 1,418 1,768 1,490Net Fixed Assets 3,807 4,140 4,290

Total Assets 8,466 10,081 8,864

LiabilitiesCreditors 1,290 1,059 960Interest Bearing Liabilities 1,766 2,675 1,125Provisions & other Liabilities 1,468 1,624 1,116

Total Liabilities 4,524 5,358 3,201

Net Assets 3,942 4,723 5,663

Balance sheet …significant improvements in working capital and gearing

Lower sales volumes and prices combined with a stronger AUD since Dec 08

Lower value of tangibles and equity accounted investments on

account of stronger AUD since Dec 08. Capex slightly greater in 2H09.

Predominantly lower defined benefits, super employee

benefits and tax provisions.

Balance Sheet…delivered on monetising inventory

Note: “RMS” – Raw Materials (including steel feed to BSL businesses)“WIP” – Work in Progress “FGS” – Finished Goods

Total $166M full year NRV adjustments as follows: C&IPA ($83M), AD&S ($41M), NZS($12M), C&BP ($5M) and C&BP North America ($25M). Post tax total $130M.

0

500

1000

1500

2000

2500

3000

3500

4000

June 2008 Price Volume FX Impact NRVAdjustments

December2008

Price Volume FX Impact NRVAdjustments

June 2009

$1,660m $1,702m

($862m)

$319m

$385m

$655m

RMS 546WIP (30)FGS 110Other 29

Nth Am 184Asia 130NZ 5

Aust 31Nth Am (2)Asia 20NZ (11)

$2,815m

($204m)

Aust (155)Nth Am (23)Asia (25)NZ (1)

($207m)

($82m)

$38m

Nth Am (49)Asia (28)NZ (5)

RMS (260)WIP (84)FGS (509)Other (9)RMS 617

WIP 167FGS 712Other 164

RMS 994WIP 571FGS 1,057Other 193

RMS 519WIP 475FGS 517Other 191

A$M

0

1000

2000

3000

4000

5000

6000

7000

June 2008 Profits ExchangeFluctuationReserveAccount

IncreasedShare Capital

MinorityInterests

Dividends Paid DB Super &Pension Plan

Shortfalls

Other June 2009

Balance Sheet …net equity increased by $1,720m largely on account of equity raisings

A$M

In addition to equity raisings, exchange rate fluctuation ($182m favourable) and dividend payments ($252m outflow) were the other large movements.Post tax impact of defined benefit super and pension plan adjustments of $28m for the full year was significantly improved from $128m at the half year.

$3,942m

$5,663m

($28m)

$1,881m

($252m)($6m)

$9m

($66m)

$182m

Defined Benefit super fund actuarial adjustments:Pre-tax (104)Tax 76

Mainly exchange movements

Capital Raising 1,760Dividend Reinvest Plan 70Employee Shares 29Tax Deductions 22

EBIT

A$M

0

500

1000

1500

2000

2500

3000

3500

Net Debt June2008

Net CashMovement in

period

FX Translation Net Debt Dec2008

Net CashMovement in

period

FX Translation Net Debt June2009

Balance Sheet…positioned with conservative gearing

A$M

Gearing at 11.8% (ND/ND+E), below our normal 30-35% target band

FX was unfavourable in 1H 2009, but helped in 2H 2009

Net debt at 30 June of $756m, comprised of $1,125m of drawn debt less $369m cash

31 July 2009 total undrawn facilities and cash of A$1,757M

$1,723m

$756m

$392m

$526m

30.4%ND/ND+E

11.8%

$2,640m

35.9%

($1,687m)($197m)

FX:Debt (205)Cash 8

FX:Debt 543Cash (17)

Debt Facilities and Maturity Profile…no material refinancing obligation due until July 2011

Note:- Facilities chart is at 31 July 2009; assumes AUD at US$0.8249- Less material faciilities not illustrated (including an US$85m trade payables facility and A$33m of US facilities); see supporting material for facilities table

170121

6352001,075

1070200400600800

1,0001,200

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 >1H15Other USPP Sy ndicated Loan Note Facility

The new A$1,275m loan note facility announced on 5 May 2009 was successfully syndicated

The facility has an effective date of 10 July 2009 and comprises two tranches, A$200m maturing in two years and A$1,075m maturing in three years from the effective date

Strong demand saw fifteen Australian and international banks participate in the facility

A$M

In view of material changes to domestic & export demand in FY 2009 it would be misleading to include the 09 sensitivities. Included FY 2008 as a reference point (full production and typical domestic/export sales split)

(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$.

Estimated impacton EBIT (A$mil)

Assumption

+/– US$25 / tonne movement in BlueScope’s average realised export HRC price(1)

1¢ movement in Australian dollar / US dollar exchange rate(2)

US$10 / tonne movement in NSBSL HRC price to scrap spread2% movement in slab production in Australia, New Zealand & USAUS$10 / tonne movement in coal costs

+/– US$10 / tonne movement in iron ore costs

14 11 28 45 90

FY 2008

85 +/–+/–+/–+/–

Summary

1H FY 2009 – good first quarter 2H FY 2009 – material market contraction 1H FY 2010

increasing sales both in domestic and export improving supply chain further material cost reductions expect small negative reported NPAT

Ensure future of Australian steel manufacturing Build off our successes

increase Australian market share / penetration No. 1 global Pre-engineered Building manufacturer

Continue to work safely

Questions & AnswersQuestions & Answers


ASX Code: BSL

Supporting InformationSupporting Information

Reporting SegmentsReporting SegmentsAdditional InformationAdditional Information

Reporting Segments Corporate / Group


Leading supplier of flat steel products in Australia Global scale steel works Largest supplier of metal coated and painted steel in Australia

Port Kembla Steelworks, NSWSpringhill, NSWWestern Port, VICWestern Sydney Colorbondfacility, NSWNorth America, Europe & Asia Export trading offices

New Zealand & Pacific Islands

Products

Only fully integrated flat steel maker in New ZealandLeading domestic market share of flat products

Glenbrook, NZPacific Islands

Pre-eminent global designer / supplier Pre-engineered buildingsNo 2 position in North America and no. 1 in ChinaIMSA assets (from Feb 2008)

Buildings North America− Butler − Varco Pruden− HCI

IMSA− Steelscape− MetlSpan− ASC Profiles


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)

Delta, Ohio


Asia

Pre-eminent seller of branded steel in AsiaLower cost “backward integration” growth strategy

Indonesian, Malaysian, Thailand and Vietnamese operationsChina, including ButlerLysaght AsiaIndia – Tata BlueScope JV

Leading supplier of flat steel solutions in Australia

BlueScope Steel DistributionLysaght RollformingBlueScope WaterServices CentresBlueScope Buildings

Australian Distribution & Solutions

Australia Australia Coated & Industrial ProductsCoated & Industrial Products

Distribution & Solutions Distribution & Solutions

766602

1000

553

-412

141398

-600

-300

0

300

600

900

1200

FY07 FY08-1H FY08-2H FY08 1H 09 2H 09 FY 09


EBIT

A$ M

illion

s

Underlying EBITMarkets

Domesticstrong Q1, followed by material fall in demand in Q’s 2&3 and modest improvement in Q4 off a very low base.

Exports similar demand pattern to the domestic market albeit the downturn in margins (in particular) was more pronounced.

Underlying performance - FY2009 vs FY 2008EBIT reduction 86% largely due to

reduced spread:− principally lower export steel prices; and − higher US$ coal, iron ore and scrap costs

inventory net realisable value provision lower sales volumes higher unit costs of production on lower volumes partly offset by

− favourable A$ vs. US$Slab make was 3.52mt vs. 5.29mt in FY 2008 due to

reduced demandBF No. 5 reline in 2H; plus BF No. 6 operating at annual capacity rate 73% in 2H

Completed core BF No. 5 activities and Sinter Plant upgrade in June 2009. Western Port pickle tanks were reinstated and operations resumed39 days after the fire.

986

1,000

FY 08

602

602

2H 08

644

553

1H 09

384

398

1H 08

206(438)799Reported141(412)766Underlying

FY 092H 09FY 07

Coated & Industrial Products Australia – underlying EBIT variance analysis (FY2009 vs FY 2008)

$155m

0

200

400

600

800

1000

1200

1400

1600

1800


Raw MaterialCosts

Volume Mix Conversion &Oth Costs

ExchangeRates

Other June 09 FY

$1,000m

$141m$128m

($458m)

($191m) ($83m)

$35m

Net Spread Reduction ($291m)Raw materials:Coal (657)Iron ore (403)Scrap (34)Op Stock Adj 151Coating Metals 70Alloys 4

Conversion & other costs:Volume (332)Escalation (32)Cost Reductions 166Other 7

Other:NRV Adjs (83)

($129m)

$707m

($869m)

EBIT

A$M

BlueScope Steel – Key drivers of Coated & Industrial Products Australia FY2009 result

Note: (1) Average of monthly Steel Business Briefing East Asia HRC US$/t CFR price(2) Benchmark prices(3) Coated & Industrial Products Australia division(4) Includes despatches to parties external to BSL, and despatches to other BSL divisions (eg C&BP Asia, C&BP North America and Aust. Distribution & Solutions)(5) Despatches to parties external to BSL

91.1450.66Iron ore fines2, US$/dmt

30098Coking coal2, US$/wmt

1,2011,4161,8562,136C&IPA3 ext despatches5, kt

1,4302,0512,6272,577C&IPA3 total despatches4, kt

1,1172,4002,6532,632PKSW slab production, kt

0.8100.6910.9620.876End of period AUD

0.7120.7810.9250.868Average AUD

452752901612East Asia HRC price1, US$/t

2H 20091H 20092H 20081H 2008

Significant increase from around US$700/t at start of half to above

US$1,000/t at end

Moved down to circa US$400/t in May and recovered back to US$500/t by

end of May. July SBB price US$555/t.

Material demand contraction lead to inventory build

Production adjusted, together with BF No. 5 reline, to reduce inventory

Large increases in FY2009 compounded margin pressure.2010 iron ore benchmark price

US$61/dmt; coking coal benchmark price US$129/wmt

Held above or around US$1,000/t through August, then declined to around US$500/t by December

Western Port – Pickle Line Fire

Fire occurred in pickle-line at Western Port plant, Hastings Victoria on 13 May 2009

Pickle process precedes cold rolling Fire started in pickle tanks Damage contained largely to pickle tanks and non-structural roof damage; no other process impacted other than pickling

Pickle line operation resumed on 21 June 2009, 39 days after the fire able to use decommissioned pickle tanks from BlueScope Steel’s Packaging Products facility at PKSWfinancial impact less than initial estimates − $3m net impairment charge (non cash)− $16m capital cost of recovery − $7m cash earnings impact (pre-tax)

Springhill supported the supply of customer needs during recovery period through either direct supply or provision of cold rolled coil

Notes:(1) Slab, HRC and plate.(2) See Coated Australia Annual Capacities slide for Western Port Works capacities(3) Domestic HRC ex Port Kembla Steelworks only; ie excludes export HRC despatches from Western Port when reconciling from the ASX Release, Attachment 1(4) Export HRC ex Port Kembla Steelworks only; ie excludes export HRC despatches from Western Port when reconciling from the ASX Release, Attachment 1(5) See Coated Australia Annual Capacities slide for Springhill Works capacities (6) See ASX Release, Attachment 1 for detail

PKSW – Production & Despatch Flow

Export302 763

Port Kembla SteelworksSlab Production

FY09 FY083,517 5,285

Domestic425(3) 653

Interco796 1,146

Domestic900 1,183

Export409(4) 561

Interco1,241 1,667

HRC2,075 2,881

Export341 484

Domestic72 88

Interco72 88

Export46 40

Domestic175 292

Plate293 420

Western Port (2)

Springhill(5) / DistributionAsia / Nth

Am(6)

Distribution

Slab 1,098 1,909

Hot Strip Mill

Plate Mill

Product / DestFY09 kt FY08 kt

Legend:

Port Kembla SteelworksDespatches(1)

FY09 FY083,466 5,210

Inventory movements& yield losses

Hot Strip Mill1,430

Port Kembla Steelworks

Metal Coating Lines 830

Cold Mill1,000

HRC

Pickle Line1,150

Coated Australia – Annual Capacities

Paint Lines330

HRC

CRC

Painted Strip

Metal Coated Strip

Western Port

Notes:(1) Numbers reflect capacities in kt.

Slab

Springhill

HRC

Coupled Pickled Cold Mill990

Metal Coating Lines 825

Paint Lines200

CRC

Metal Coated Strip

Painted Strip

0

1,000

2,000

3,000

4,000

5,000

6,000

FY2005 FY2006 FY2007 FY2008 FY2009Internal Customers Domestic Customers Export Customers

Port Kembla Steelworks despatches

External Product Sales Mix

(1) The difference between HRC external despatches reported here and Attachment 1 to ASX Release relates to HRC sales from Western Port (old Coated Products Australia).

16%14%16%12%15%Plate/Oth62%(1)53%53%39%41%HRC 22%33%31%49%44% Slab

5,2095,268 5,210

3,466

4,922

51%

21%

28%

61%

17%22%

56%

18%

26%

50%

18%

32%

44%

16%

40%

(kto

nnes

)

100% exported, with geographic sales split:Asia 98%USA 2%Other 0%

51% sold domestically and 49% exported, with geographic split being:

Asia 36%USA 3%Other 61%

0

2,000

4,000

6,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

250

500

750

1,000

1,250

1,500

1,750

2,000

Employees Productivity (Tonnes per person per year)

Prod

uctiv

ity (C

rude

Ste

el Ou

tput

, Ton

nes/E

mpl

oyee

/Yea

r)

Port Kembla Steelworks productivityEm

ploy

ee N

umb e

rs

FISCAL YEARS Largely due to: Undertaking blast furnace reline; and Material reduction in global steel demand

FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 1H09 2H09 FY2009

S&A Conversion Costs Despatch & Freight Raw Materials

Port Kembla Steelworks – cost profile

− Chart shows cost of despatches− Conversion costs include depreciation− Raw material includes iron ore, coal, scrap and alloys but not scrap purchased on behalf of OneSteel

A$m

Total cost $

PKSW – Consumption of primary raw materials

Note: (1) 40-50% of scrap feed is sourced externally; balance, internally sourced scrap

FY2007 FY2008 FY2009CoalCoking 2.9 3.0 2.2PCI 0.7 0.6 0.4Anthracite 0.1 0.1 0.0Total 3.7 3.7 2.6

Iron OreFines 3.9 4.0 2.9Lump 1.7 1.6 1.0Pellets 2.2 2.3 1.6Total 7.8 7.9 5.5

Scrap (1) 1.0 1.0 0.7

Raw Steel Production 5.3 5.3 3.5

Dry Tonnes Consumed

– Coking coal principally sourced from local BHP BillitonIllawarra mines (30 year contract from July 2002)

– Contracts in place with BHP Billiton (5.0mtpa; 10 year contract) and Savage River (Grange Resources)

– Also supplied by IOC (Rio), OneSteel and Vale

Global iron ore fines, coking coal and semi soft coal benchmark prices

269%

$240.00

206%

$300.00

79.9%

$91.14

2009

-64.6%10.2%-26.2%100%29.9%-6.1%-6.7%% change

$85.003$65.00$59.00$80.00$40.00$30.80$32.80$35.15Semi-soft CoalUS$/wmt

-15.5%

$98.00

9.5%

$50.66

2008

-33%19.0%71.5%18.6%9.0%-2.4%4.3%% change

$129.002$116.00$101.00$57.20$46.20$48.10$42.75Hard Coking CoalUS$/wmt

76.6%

$38.88

2006

-4.0%

$19.12

2004

23.8%

$22.68

2005

-57%14.9%12.5%7.5%% change

$61.061$46.27$17.54$17.97Iron Ore FinesUS$/dmt

2010200720032002

Notes:1. Based on Australian iron ore fines settlement with Japan at 62.5% Fe Brazilian fines settlement was -28% at 66% Fe.

Pricing under the new iron ore contact with BHP Billiton (effective from 1/7/2010) will be reviewed quarterly and linked to movements in iron ore prices paid by BHP Billiton’s other customers in Asia.

2. Benchmark price settlement. Does not reflect BlueScope price averaging arrangement for April 2009 through to June 2010.

3. Benchmark price settlement.

Slab and HRC price benchmarks for Asia & Australian sales

• 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).

HRCSteel Business BriefingHRC East Asia Import CFR

SLAB Steel Business Briefing Slab East Asia Import CFR

$0$100$200$300$400$500$600$700$800$900

$1,000$1,100

Jul-09Jan-09Jul-08Jan-05 Jan-08Jul-05 Jan-06 Jul-06 Jan-07 Jul-07

Asian HRC Benchmark PriceSBB HRC East Asia Import CFR

US$/t

Port Kembla Steelworks – No.5 Blast Furnace reline

Page 56

Port Kembla Steelworks …major capital investments in our future

$372M blast furnace No. 5 reline and approximately $140M Sinter Plant upgrade projects delivered safely, on time and largely within budget. Australian Steel Mill Services (an alliance partner) also invested $43M upgrading their slag granulation and handling facilities (adjacent to No. 5). They remove the slag from both blast furnaces and the BOS.

Photos courtesy Illawarra Mercury

Port Kembla Steelworks- No.5 Blast Furnace Reline Project

The carbon hearth, refractories and staves (furnace shell cooling elements) were completely stripped out of the blast furnace and replaced with new ones. Internal platforms enabled work at multiple levels.


Port Kembla Steelworks – Sinter Plant upgrade

Sinter plant upgrade completed June 2009Total capital cost approximately A$140m, with $9m final spend estimated in FY 2010.No.3 Sinter machine at PKSW

is single source of 5.3 mtpa of sinter for No. 5 & No. 6 blast furnacesprior to the upgrade the typical blast furnace burden mix was: 57% sinter (fines based); 25% pellets; 18% lump

Outcome post upgrade and from FY2010 onwards (and after No. 5&6 operating at full capacity)

increased sinter production capacity by 1.1 mtpa to 6.6 mtpa (nameplate capacity is currently 5.5 mtpa)this will require + 1.1 mtpa of fines BUT would displace 1.0 mtpa of pellets.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.

Port Kembla Steelworks …the Sinter Plant underwent a major upgrade and 20% increase in capacity


What is sinter?

6

6486 75

-66

922

-150

-100

-50

0

50

100

150

FY07 FY08-1H FY08-2H FY08 FY09-1H FY09-2H FY09


EBIT

A$ M

illion

s

Note: Smorgon Distribution acquired 3 August 2007.

Underlying EBIT

74

75

1H 09

53

64

2H 08

45

86

FY 08

(8)

22

1H 08

(23)(97)12Reported9(66)6Underlying

FY 092H 09FY 07

Underlying performance – FY 2009 vs FY 2008• EBIT reduction of 90% largely due to

− inventory realisable value provision − lower despatches − higher freight costs

• Distribution − weaker demand conditions

• Lysaght− softer demand across all segments

• Integration of Distribution, Lysaght, Service Centres, Water and Buildings going well.

0

100

200

300

400

500

600

June 08 FY DomesticPrices

Raw MaterialCosts

Volume Conversion &Oth Costs

Other June 09 FY

Australian Distribution & Solutions – underlying EBIT variance (FY 2009 vs FY 2008)

Net Spread Increase A$88M

$86m

$9m($117m)

($41m)

$390m

($302m)Other:NRV Adjs (41)

($7m)

EBIT

A$M


Plate

Tube

Structural Steel

Merchant Bar

Reinforcing Steels

Rural Products

Pipes, Valves & Fittings

Specialty steels

Processing Services

Hot Rolled coil

Cold Rolled strip

Plate

Stainless steel

Aluminium

Processing / Slitting/Shearing

RoofingWallingGutteringRainwater GoodsFencingMobile Roll formingSupply / install

Tanks/Irrigation

High and Low rise Buildings

Facades

Remote Buildings

Pioneer Water

Highline

Slitting

Shearing

Warehousing & Despatch

Contract Services (predominantly for internal customers)

The Distribution and Solutions division brings together BlueScope Steel’s Australian-based downstream businesses

EmergingBusinessSheet & Coil

ProcessingServices

Australian Distribution and Solutions - Overview

Lysaght

Sheet & Coil Processing Services

Sheet Metal Supplies

Bluescope Distribution

KEY

Acacia Ridge

Eagle Farm

DandenongSunshine

Forrestfield

Bluescope Water

KeysboroughSurrey Hills

St MarysTaren Point

StapyltonOrmeau

PadstowChullora

BellevueMalagaMandurahWelshpool

DandenongLyndhurstDevonport

Bega

Bomaderry(Nowra)

Batemans Bay

Acacia RidgeCapalabaEagle FarmKawanaNorthgateOxleyWoodridge

Albany

Albury

ArcherfieldCarole ParkChinderahCoolumRocklea

Armidale

Arndell ParkBelmontCardiffChulloraEmu PlainsHamiltonSmithfield

AuburnCardiffWest GosfordSt Marys

BalcattaKewdale

Ballarat

Bathurst

Bendigo

BraesideSunshine

Burnie

Bunbury

Bundaberg

Cairns

CampbellfieldGeelong

Charters Towers

Coffs Harbour

DandenongGeelongWestall

Darwin

Dubbo

Elizabeth Ottoway

Emerald

Esperance

Forrestfield

Geraldton

GillmanWingfield

Gladstone

Hobart

Horsham

Kalgoorie

Kingaroy

Launceston

Lismore

Mackay

Mareeba

Mildura

Morwell

Motto Farm

Mount Isa

Orange

Port Macquarie

Portland

Queanbeyan

Rockhampton

Roma

Shepparton

Tamworth

Toowoomba

Townsville

Wagga Wagga

Warrnambool

Warwick

Wingfield

Wodonga

Sites 143Employees 3,600Active customers >20,000

Distribution - Market structure in Australia (FY 2009)

Sheet & Coil28%

Merchant Bar10%

Reinforcing8%

Other8%

Structural13%

Tubular15%

Plate18%

Sales by sector (t)

Source : BSD SAP BW (F09 Actual data)

Sales by product group (t)

Building & Construction

40%

Manufacturing42%

Mining3%

Other Distributor8%

Other7%

New Zealand & Pacific New Zealand & Pacific IslandsIslands

New Zealand and Pacific Steel Products

Markets Domestic – softer demand conditions vs. FY 2008Export – increased sales in challenging export market.

Underlying performance – FY 2009 vs 2008EBIT up 2%, largely due to

improved spreadfavourable FX (US$ vs. NZ$)

partly offset by higher unit costs lower vanadium and iron sands despatches lower domestic steel product sales inventory realisable value provision

slab production was down 10% on FY 2008

Taharoa asset sale Continue to investigate sale options At same time seeking to enforce rights under contract with CKI.

90

36

8578

9

87

49

0

25

50

75

100


EBIT

A$ M

illion

s

Underlying EBIT

56

78

1H 09(2)

49

49

2H 08

93

85

FY 08(1)

44

36

1H 08

65990Reported87990Underlying

FY 092H 09FY 07

Notes:(1) 1H FY08 difference of underlying from reported reflects

• Redemption of preference shares by MIL investment (A$11m)• Fiji asset impairment A$3m (A$8M)

(2) 1H FY 09 difference reflects• Growth Feasibility costs A$22m A$22m

New Zealand and Pacific Islands Products – underlying EBIT variance analysis (FY 2009 vs FY 2008)

0

20

40

60

80

100

120

140


Raw MaterialCosts

Volume Mix Conversion &Oth Costs

ExchangeRates

Other June 09 FY

$85m $87m

$42m($17m)

($38m)

($13m)($8m)

Other:NRV Adj's (12)PISE (1)

Costs:Vanadium / Scrap prices (37)Volume (20)Electricity 15Other 4

($4m)

$50m

($10m)

Net spread improvement A$36M

EBIT

A$M

Operations – New Zealand

Glenbrook

Waikato North HeadTaharoa

Auckland

TaurangaWharf

Glenbrook• Iron and Steel production• Hot and Cold Rolling Mills• Dual Pot Metal Coating Line• Paint Line• Plate Line• Hollow sections plant

Waikato North Head Mine• Concentrated iron sand slurry pumped to Glenbrook

Taharoa Mine• Approximately 1mt concentrated iron sand shipped to Asia annually

Auckland• Structural Beam plant

Tauranga Wharf• Deep sea export facilities

New Zealand - unique direct reduction process

Iron Sand Concentrate (Waikato North Head Mine)• Iron sand mined and concentrated on site - 58.5% Fe• 13mt of contained product in probable reserves and 13mt of

contained product in proven reserves• Additional 591mt of inferred resource• Concentrate is slurry pumped 18km underground to Glenbrook

Thermal Coal • Predominantly sourced from Solid Energy in NZ • Approximately 0.8mt transported by rail to Glenbrook each year

Lime (McDonalds Lime - 28% NZS owned)• 34ktpa lime (oxide and chip) quarried and processed at

Otorohanga• Railed and trucked to Glenbrook

New Zealand – raw materials

Export Iron Sand Concentrate (Taharoa Mine)• Iron sand mined and concentrated on site - 57% Fe• Approximately 1mt of concentrate is slurry pumped to a

buoy 2.5km offshore to a dedicated slurry vessel and shipped to China and Japan annually

Export 0.7mt

Domestic 5%NZS Slab 0.54mt

Export 51%

Interco (Export) 44%

HRC 35%

New Zealand Steel – FY2009 product flow

Export 48%

Domestic 52%Plate 11%

Mine SitesIron Sands

2mt

Pipe 3% Domestic 100%

Cold Mill 51% Domestic 9%

Export 6%

Interco (Export) 8%

Coating Lines 77% Domestic Metal Coated 60%

Export Metal Coated 8%

Interco Metal Coated (Export) 10%

Domestic Painted 17%

Export Painted 3%

Interco Painted (Export) 2%

Export Vanadium Slag 11kt

New Zealand– FY2009 product distribution

Indicative Product Mix (t) Indicative Sales by Country (t)

Pipe3%

Cold Rolled11%

Painted9%

Hot Rolled46%

Metal Coated31%

Building & Construction

20%

Distribution14%

Export55%

Indirect Export7%

Manufacturing4%

New Zealand45%

USA/Canada14%

Pacific Islands5%

Asia17%

Japan6%

Australia13%

Indicative Sales by Sector (t)

* External & Internal prime product sales

(Incl. Plate 11%)

Iron Sand • Iron sands exports from Taharoa of 702kt, down

20% on FY2008, largely due to the scheduled dry dock of the MV Taharoa Express.

Scrap• Volumes lower than 2008 due to one-off recovery

project in the prior year. • Volumes: 2009 58kt vs. 2008 93kt.Iron & Steel making Slags• Processed to specification by JV company

Steelserv, and sold into roading and construction markets.

Vanadium Slag• Lower contribution from Vanadium due to reduced

global prices and a 36% reduction in volume.• Volumes down due to lower production: 2009 3.1 M

lbs cont V2O5, vs. 2008 4.8 M lbs cont V2O5.• For this period the International benchmark was:

2009 US$8.55/Ib vs. 2008 US$10.17/Ib.

New Zealand - FY 2009 Non steel revenue streams

• What is vanadium?a form of metal it is extracted in slag form from the liquid iron

• What is it used for?over 90% of world’s vanadium is added to

steel as a strengthening alloy

Asia Asia Coated & Building Products AsiaCoated & Building Products Asia

4426

76

-16-5

-21

50

-40

-20

0

20

40

60

80

100


Coated and Building Products Asia

EBIT

A$ M

illion

s

Underlying EBIT

(75)

(16)

1H 09(2)

50

50

2H 08

(148)

76

FY 08

(198)

26

1H 08(1)

(94)(19)34Reported(21)(5)44Underlying

FY 092H 09(3)FY 07

MarketsGenerally weaker demand conditions in all markets China PEB and Indonesian markets improved in 2H FY 2009.

Underlying performance – FY2009 vs FY 2008EBIT reduction of 128% largely due to

Reduced sales volumes Reduced margins (higher steel feed costs)partly offset by

− favourable FX, apart from China − favourable sales mix (mainly Thailand)

Growth projects:Second metal coating line in Indonesia on hold but domestic market conditions improving Coating project in India delayed completion until 2H CY 2010 but remains within budget. JV arranged project finance to fund remaining commitments.

Notes: (1) 1H FY08 difference reflects China (A$190m) and Vietnam (A$35m) asset impairment(2) 1H FY09 difference reflects China asset impairments (A$36m) and NRV/PISE offset with CIPA (A$23m)(3) 2H FY09 difference reflects internal restructure costs across Asia

Net spread reduction A$36M

-100

-50

0

50

100

150

200

250

$76m

($21m)

$19m

($85m) ($15m)

$4m$19m

Other:Depreciation 13NRV Adj's (5)Asset Sales (4)

Raw Materials:External Steel Feed (85)Internally sourced Steel Feed (141)Coating Metals 36Other 3

Volume:Thailand (32)Indonesia (18)China (15)Vietnam (14)Malaysia ( 6)

$43m

$104m

($187m)

June 09 FY Other Exchange Rates Conversion & Others Costs

Mix Volume Raw Material Costs

Domestic PricesExport Prices June 08 FY

Net Spread Reduction ($40m)

Coated and Building Products Asia – underlying EBIT variance analysis (FY 2009 vs FY 2008)

EBIT

A$M

North America North America Hot Rolled Products Hot Rolled Products

Coated & Building Products Coated & Building Products

155

3669

105

15

-73 -58-100

-50

0

50

100

150

200

FY07 FY08-1H FY08-2H FY08 1H 09 2H 09 FY 09

Hot Rolled Products North America

EBIT

A$ M

illion

s

This segment includes:North Star BlueScope Steel (50% interest)Castrip LLC

Underlying EBIT(1)

Markets (North Star)Despatches decreased 28% on FY 2008.

Underlying performance - FY2009 vs FY 2008North Star BlueScope

155% EBIT(1) reduction to A$58m loss principally due to

− lower despatches (down 28%)− lower spread

higher scrap and pig iron prices and lower HRC prices

− higher electricity costs and alloy prices− inventory net realisable provision

production:− average production capacity utilisation for FY

2009 was 71% (well above U.S.A industry average).

15

15

1H 09

69

69

2H 08

105

105

FY 08

36

36

1H 08

(58)(73)155Reported(58)(73)155Underlying

FY 092H 09FY 07

Note: (1) Reflects BlueScope share of equity accounted net profit after tax

Coated and Building Products North America

37 38

61

99

37

-28

9

-40

-20

0

20

40

60

80

100

120

FY07 FY08-1H FY08-2H FY08 1H 09 2H 09 FY 09

EBIT

A$ M

illion

s

Segment comprises:Building: Butler, VP, HCIIMSA: SteelScape, MetlSpan, ASC Profiles

Notes: (1) All EBIT numbers normalised to exclude Vistawall business earnings. This business was sold in June

2007.(2) IMSA 5 month underlying EBIT contribution in FY08 was $34m. (3) 1H FY09 difference of $92m reflects NRV/PISE offset with CIPA, IMSA plant rationalisation and

integration costs and general insurance and workers compensation provision adjustments(4) 2H FY09 difference represents internal restructure costs and IMSA plant rationalisation and integration

costs

(55)

37

1H 09

37

37

FY 07

47

61

2H 08

90

99

FY 08

43

38

1H 08

(93)(38)Reported9(28)Underlying

FY 092H 09

Underlying EBIT

Underlying performance – FY 2009 vs FY 2008EBIT reduction 91% largely due to

lower sales volumes higher unit costs margin compression, with higher feed costs inventory net realisable value provisionspartly offset by

− full year EBIT contribution from IMSA assets − costs savings initiatives − favourable FX

Buildings − external despatches down 9% on FY 2008− closed 3 facilities

IMSA− synergy results tracking ahead of plan − execution phase for all plant rationalisation

projects commenced.

(2)

(3)

(4)

0

50

100

150

200

250

300

350

400


Raw MaterialCosts

Conversion &Oth Costs

Volume Mix ExchangeRates

Other June 09 FY

Coated and Building Products North America – underlying EBIT variance analysis (FY 2009 vs FY 2008)

Comprises:Butler Buildings North America: Butler, VP, HCI IMSA: SteelScape, MetlSpan, ASC Profiles

EBIT

A$ M

illion

s

Net Margin Reduction A$39M

$99m $1m

$9m

$12m($59m)

($37m)($30m)

$4m

$238m

($219m)

Other:NRV Adj - Steelscape (25)Depreciation / Amort (4)Claims (1)

Buildings (50)IMSA 13

Net Spread Increase A$20M

OtherOther

Production footprint and annual capacities (at at 30 June 2009)

IndonesiaMetal Coating 100kt

Painting 40kt

Western PortHot Rollling 1.43mtCold Rolling 1.0mtMC (3 lines) 830kt

Painting (2 lines) 310kt

SydneyPaint Line (1 line) 120kt

New Zealand/PacificIron Sands Mining 2

Raw Steel 625ktHot Rolling 750ktCold Rolling 360kt

Metal Coating 230kt Painting 65kt

Hollow Sections 45ktRoll forming sites 4

Port Kembla/IllawaraRaw Steel 5.3mt

Hot Rolling 2.9mt Plate 450kt

Cold Rolling 990ktMC (3 lines) 825kt PL (1 line) 200kt

Australia6 Service Centres38 Lysaght Sites

14 BlueScope Water82 Distribution Sites

VietnamMC 125ktPainting 50kt

ChinaMC 250ktPainting 150kt

ThailandCold Rolling 350kt

Metal Coating 375ktPainting 90kt

MalaysiaMetal Coating 160kt

Painting 70kt

BrisbanePainting 90kt

• Coated and Building Products North America

• North Star BlueScope JVHot Rolling 2.0mt (100%)

• Castrip JV w Nucor

Asia26 Lysaght and

PEB Sites

India(2)

Metal Coating 250kt Painting 150kt

(1)

(+165kt)(+120kt)

(1) Indonesia coating expansion project on hold pending improvement in local and global economic / financial conditions. (2) Under Construction

BlueScope Steel China footprint

SUZHOU

GUANGZHOU

BlueScope Steel in China1 Metal Coating/Painting Line Facility4 Lysaght Manufacturing Facilities3 Butler PEB Manufacturing Facilities32BlueScope Steel China Sales Offices

FY 2009

REVENUE: A$ 513M

EBITDA: (A$24M )

EBITDA – Underlying: A$12M

EMPLOYEES: 2,047

NET OPERATING ASSETS (PRE-TAX): A$150M

BlueScope Steel North American footprint

KEY

BlueScope Buildings

BSL Steel Sales Offices

Steelscape

MetlSpan

ASC

NorthStar BlueScope

MI

FL

DEMD

KY

ME

NY

PA

VT

RI

VAWV

OHINIL

NCTN

SC

ALMS

WI

NJ

GA

NM

TX

OK

NE

SD

NDMT

WY

COUT

ID

AZ

NV

WA

CA

OR

AR

LA

MO

IA

MNMACT

NH

KS

MI

FL

DEMD

KY

ME

NY

PA

VT

RI

VAWV

OHIN

IL

NCTN

SCAL

MS

WI

NJ

GA

NM

TX

OK

NE

SD

NDMT

WY

COUT

ID

AZ

NV

WA

CA

OR

AR

LA

MO

IA

MNMACT

NH

KS

Mexico

Alaska

Burlington, Ontario

FY 2009REVENUE: A$ 2,189MEBITDA (reported): (A$92M)EMPLOYEES: 4,003 incl. North Star NET OPERATING ASSETS (PRE-TAX): A$1,102MNB: Revenue excludes BSL’s 50% interest in North Star

BlueScope Steel.

Calendar year earnings

56563414

924792

1,130

9,333

CY2007A$ Millions CY2003 CY2004(3) CY2005 CY2006 CY2008(4)

Revenue(1) 5,328 7,029 7,980 8,693 11,926

EBITDA(2) 857 1,501 1,411 1,052 1,775

EBIT(2)

- reported 581 1,212 1,111 742 1,399- operational - - 1,308 966 1,532

Net profit- reported 436 859 792 413 887- operational - - 943 586 989

EPS (¢) - reported 56 116 110 59 116

(1) Excludes revenue of equity accounted associates, e.g. North Star(2) Includes share of equity accounted associates’ NPAT, e.g. North Star (3) Includes eight months of BlueScope Butler financial results(4) Includes eleven months of Smorgon Distribution financial results and five months of IMSA Steel financial results

Corporate and Group Costs – impacted each half by profit in stock elimination and foreign exchange movements

-106

6

-136

30

-3-9

-150

-100

-50

0

50

1H 2008 2H 2008 FY 2008 1H 2009 2H 2009 FY 2009

A$m

Comprised of:Underlying cost (58) (43) (101) (61) (35) (96)Profit in stock adj (10) (89) (99) 94 32 126FX 5 15 20 (22) (4) (26)Other 93 (19) 74 (5) (2) (7)Total 30 (136) (106) 6 (9) (3)

(1) (2)

Note: (1) Profit from realisation of Smorgon Steel shares ($128m), net of Distribution integration, restructuring and M&A costs(2) IMSA integration costs

FY 2010: Continue momentum on cost saving initiatives

Historical dividend profile since listing in July 2002

Interim Final Special

12 20 22

24 24 26 27

710

20

918 21

1813

0

10

20

30

40

50

60

70

22 / 7¢

30 / 10¢

42 / 20¢

44 / 0¢ 47 / 0¢ 49 / 0¢

55 / 0¢

2009200820072006200520042003FISCAL YEARS

-15-22Write off feasibility costs on capital projects(4)

20-29-Integration of Smorgon Steel’s distribution business(5)

EBIT ($M) NPAT ($M)

FY 2009 FY 2008 FY 2009 FY 2008

Reported 15 1,063 (66) 596

Unusual or non-recurring events:

Asset impairment 36(1) 251(1) 36 248

Profit on sale of Smorgon shares - (128) (2) - (90)

Restructure & redundancy costs(3) 110 32 77 22

Integration of IMSA businesses(6) 4 33 2 23

Other (16) (7) (8) (3)

Underlying Operational Earnings 171 1,273 56 816

Restructure & redundancy costs, together with impairment charges, are the key reconciliating items between underlying and reported profit

(1) Asset Impairments:2009 China - Metal Coating & Painting Line, Suzhou ($25m) and Lysaght Panels, Langfang ($11m) – lower than expected volumes and margins 2008 China – ($190m) – outlook for coated margins remains very tight

Vietnam – ($35m) – no resolution to the tariff status Lysaght Australia ($23m) and Lysaght Figi ($3m) – systems write-off and under performing assets resulting in a reassessment of the future cash flows and requirement to impair the assets.

(2) Profit on sale of 19.9% shareholding in Smorgon Steel associated with the acquisition of Smorgon Distribution(3) Restructure & redundancy costs:

2009 Cold Mill closure at Port Kembla ($20m), IMSA plant rationalisation costs ($15m), and restructure costs in Australia ($52m), Nth America ($9m) and Asia ($14m)2008 Redundancy costs associated with closure Port Kembla No. 1 paint line ($11m) and internal restructuring costs in Australia ($21m).

(4) Feasibility costs associated with optimisation studies on hold ($22m)(5) Integration of SSX Distribution ($10m) and recognised inter-company profit eliminations in inventory ($19m)(6) Integration and accounting entries relating to IMSA Steel Corp ($4m).

Major approved capital projects and investment summary(in addition “Stay in Business” capital is approx. 75% of depreciation)

PROJECTSAll in A$million

Total Est. Capex / Cost

Actual to 30/6/09

FY2010 FY2011 FY2012

Projects completedThailand – Coating expansion 80 80 - - -

Vietnam – Coating / Painting 136 136 - - -China- Coating and Painting Facility- Guangzhou Butler / Lysaght

27433

27433

--

--

--

India - Butler / Lysaght facilities (50% interest) 44 44 - - -AustraliaPort Kembla (PKSW) - HSM expansion

- Sinter Plant EmissionsWA Service Centre

10210021

10210021

---

---

---

Western Sydney Colorbond® 150 150 - - -

Projects to be completed(1)

Indonesia – Coating / Painting(2) 134 86 - (2) - (2) - (2)

PKSW – Blast Furnace No. 5 Reline – Sinter plant upgrade– Steam infrastructure spend

37214093

352132-

20837

--

50

--6

INVESTMENTSIMSA North American businesses Smorgon Steel’s Distribution businessButler Manufacturing(4)

Lysaght and water acquisitions

807700277129

807572 (3)

277129

---

----

----

Total capital spending 3,592 3,295 65 50 6

Note (1): India project funded under project financing within JV. Project remains on budget at approximately A$270M. (2) Indonesian project – work on hold pending improved demand. Will update remaining capital profile when project restarts. (3) Gross cost of $700m less pre-tax profit on SSX shares of $128M leaves $572M. (4) US$190M (A$226M) recovered following the sale of Vistawall in June 2007.

Zinc and Aluminium Usage

Tonnes Zinc Aluminium

FY2009(A) FY2008(A) FY2009(A) FY2008(A)

AUSTRALIA

Springhill 17,911 22,711 9,537 10,595

Western Port 15,827 21,954 8,758 10,590

Sub-total 33,738 44,665 18,295 21,185

NEW ZEALAND 6,679 6,831 3,206 3,619

ASIA 10,744 16,672 11,563 16,571

TOTAL 51,161 68,168 33,064 41,375

Committed Debt Facilities as at 31 July 2009

Maturity DrawnUS$/THBm A$m A$m

Syndicated Loan Note FacilityTranche 1 Jul-11 200 21Tranche 2 Jul-12 1,075 -2004 US Private Placement NotesSeries A Jul-11 US$100 121 121Series B Jul-14 US$200 242 2422008 US Private Placement NotesSeries A Jun-15 US$81 98 98Series B Jun-18 US$204 247 247Series C Jun-20 US$40 48 48Other FacilitiesSale and leaseback (1) Aug-11 170 170Trade payables facility May-10 US$85 103 28Subsidiary loan Nov-10 THB2,000 71 -Subsidiary loan Oct-10 THB1,000 36 -US facilities (2) Various 33 11

2,444 986

(2) Comprises US$20m line of credit and other loans/finance leases of US$7m.

Exchange rates as at 31 July 2009: A$/US$ = 0.8249; A$/THB = 28.084Table above excludes sold receivables. As at 31 July 2009, A$72m was drawn of the A$190m program. The program matures in August 2009.

Committed

(1) In the year ended 30 June 2007, the Company entered into a sale and leaseback transaction which raised approx imately $270m net cash. The relevant assets have been leased back over a five-year period. This transaction has been accounted for as a borrowing. Lease payments over the term of the arrangement are fixed and amortise to a principal amount of A$44m.

Shares on issue – historical movements

1,823Shares on issue 30/06/09

+397Retail (June 09)

Million (rounded)

+515Institutional (May 09)

+36Share Purchase Plan (Feb 09)

+97Institutional share placement (Dec 08)

+34Employee share plan issues to 30/06/09

+67Dividend reinvestment scheme to 30/06/09

(116)Share buy-backs to 31/12/08

793Shares on issue at listing (July 2002)


ASX Code: BSL

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