Half Year Results Presentation Period Ended 31 December 2002 Kirby - - PowerPoint PPT Presentation

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Half Year Results Presentation Period Ended 31 December 2002 Kirby - - PowerPoint PPT Presentation

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LIMITED Half Year Results Presentation Period Ended 31 December 2002 Kirby Adams, Managing Director and Chief Executive Officer Brian Kruger, Chief Financial Officer 27 February, 2003 Originally issued by BHP Steel. On 17 November 2003 BHP

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LIMITED

Half Year Results Presentation Period Ended 31 December 2002

Kirby Adams, Managing Director and Chief Executive Officer Brian Kruger, Chief Financial Officer 27 February, 2003

Originally issued by BHP Steel. On 17 November 2003 BHP Steel became BlueScope Steel Limited.

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BHP Steel Half Year 02/03 Presentation 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 BHP 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, BHP 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, BHP STEEL LIMITED 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.

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BHP Steel Half Year 02/03 Presentation Page 3

BHP Steel Limited

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BHP Steel Half Year 02/03 Presentation Page 4

Creating Shareholder Value in a Difficult Industry

Profitable Through the Cycle Profitable Through the Cycle Geographic and Product Diversity Geographic and Product Diversity Strong Board & Management Team Strong Board & Management Team Growth Opportunities in Asia Growth Opportunities in Asia Recovering Global Steel Market Recovering Global Steel Market Strong Operating Track Record Strong Operating Track Record Value Added Branded Products Value Added Branded Products Low Cost Producer Low Cost Producer Strong and Flexible Capital Structure Strong and Flexible Capital Structure A different kind of steel company Consistently Strong Cash Flows Consistently Strong Cash Flows

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BHP Steel Half Year 02/03 Presentation Page 5

Business Results – 6 Months to 31 December 2002 vs. 2001 Our business is now larger and stronger

6.5% to From 18.2% Gearing $352m to 52% Debt reduced 15.7%

  • ROIC

100% FF to 0/40% Franking Dividend 30.6¢

  • EPS

$343m to +82% Net Cash Flow 13% to From 4% EBIT Margin $332m to +250% EBIT $464m to +110% EBITDA $2,590m to +13% Revenue 3,348mt to +18% Despatches (external)

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BHP Steel Half Year 02/03 Presentation Page 6

Group Financial Overview Group Financial Overview Performance vs. Scheme Booklet forecast

(1) Scheme Booklet forecast

1999A 2000A 2001A 2002A 4,849 4,898 4,941 4,593 525 711 568 412

  • 514

635 520 227 BHP Steel A$ Millions Revenue EBITDA NPAT Cashflow before borrowing and tax 2003F(1) 4,913 611 254 345 257 445 305 160 EBIT 343 2003-1H(A) 2,590 (53%) 464 (76%) 242 (95%) 343 (100%) 332 (97%)

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BHP Steel Half Year 02/03 Presentation Page 7

Global Steel Market

Recovering Global Steel Market Recovering Global Steel Market

BHP Steel well positioned in an improving industry

USA Europe Australia / Asia China

  • Reasonable growth excluding Japan
  • Japan consolidation/reduced production
  • Korea strong growth
  • Construction demand
  • Key supplier to China
  • Surging steel consumption
  • 200mt – 2003
  • Net importer
  • New Capacity
  • Olympics/manufacturing infrastructure
  • “The future”
  • Consolidation
  • Weak demand
  • Section 201
  • Prices trending to world levels
  • Scrap / Venezuela
  • Significant consolidation
  • Reduced production
  • Scrap / CIS
  • Weak demand / higher prices
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BHP Steel Half Year 02/03 Presentation Page 8

Geographic and Product Diversity – First Half 2002/03

Geographic and Product Diversity Geographic and Product Diversity

External despatches in all segments Geographic Breakdown of Domestic/Export Sales (Tonnes) Global Sales by Revenue(1)

(1) Includes North Star BHP Steel

USA (NS BHPS) 13% Total Export 36% NZ 4% Asia 3% Australia 44% Slab 9% Hot Rolled Coil 26% CRC & Plate 9% Coated, Tin, Painted & Roll Formed 56%

Americas 14% Europe/Africa/Other 10% Asia 14%

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BHP Steel Half Year 02/03 Presentation Page 9

Australian Domestic Sales by Market Segment (tonnes)

6 months to 31 December 2002

Packaging 8% Automotive & Transport 13% Manufacturing 22% Mining 8% Rural 3% Construction Infrastructure 2% Construction Dwellings 20% Construction Non-Dwellings 24% Sales - Dec 2001 Half 1,260kt Sales - Dec 2002 Half 1,409kt

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BHP Steel Half Year 02/03 Presentation Page 10

Hot Rolled Coil Cost Curve

$A/tonne

Conventional Production Compact Strip Production USA Integrateds USA Compact Strip Production BHP Steel Port Kembla 1997 - 2001 range

Source:

  • D. Barnett and BHP Steel
  • Is one of the 10 lowest cost Hot Rolled Coil producers in the world

with global scale

  • Improvements continue to retain this position

Low Cost Producer Low Cost Producer

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BHP Steel Half Year 02/03 Presentation Page 11

Business Excellence

Strong Operating Track Record Strong Operating Track Record

  • Productivity improvements across our businesses
  • Improving safety performance

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1999 2000 2001 2002 2003-1H(A)(*) 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400

Employees (Port Kembla Steelworks) Productivity (Tonnes per person per year) 14 33 35 29 16 8 4.8 3.7 4 3.4 2.7 1.4 5 10 15 20 25 30 35 40 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003-1H

Productivity Growth Lost Time Injury Frequency Rate

Includes contractors from 1996 * Productivity has been annualised

Employee Numbers Productivity (Crude Steel Output, Tonnes/Employee/Year) LTI per Million Hours Worked

22 injuries resulting in time lost from work

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BHP Steel Half Year 02/03 Presentation Page 12

North Star BHP Steel

  • 50% joint venture in Delta, Ohio
  • 6 month net profit A$77m improvement
  • Voted No. 1 flat rolled steel supplier in North America in 2002

Jacobsen Survey (second in 2001)

  • Annual production capacity increased from 1.42 to 1.63mtonnes (100% basis)
  • Safety – new milestone, over 2 million work hours (approaching 3 years) without a

single injury resulting in lost time

  • External debt, as at 31 December 2002, reduced US$52m

Strong Operating Track Record Strong Operating Track Record

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BHP Steel Half Year 02/03 Presentation Page 13

Strategy

  • Overriding objective – CREATE SHAREHOLDER VALUE
  • Focused on:

–Flat steel products and solutions –Value-added coated, painted, branded products and services –Being an excellent supplier, manufacturer and a low cost operator –Disciplined capital management while selectively pursuing growth, including M&A

  • By Region

–Australia / NZ / Pacific Islands

  • Vigorously maintain and grow existing value
  • Quality, technology, service leadership
  • Consider niche growth opportunities

–Asia

  • Core growth region – downstream products to building industry

–USA / Rest of World

  • Competitive and valued supplier of slab/HRC
  • Leading EAF producer
  • Technology partnerships, eg. Castrip, ironmaking and coatings
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BHP Steel Half Year 02/03 Presentation Page 14

Strategy – Organic Growth

Thailand Cold Rolling Metal Coating +25kt Painting +15kt Malaysia Metal Coating Painting +30kt Indonesia Metal Coating Painting +25kt Western Port Hot Rolling Cold Rolling MC (3 lines) +20kt / +40kt Painting (2 lines) +23kt Brisbane Painting +15kt Port Kembla / Springhill Raw Steel +100kt Hot Rolling Plate Cold Rolling Tinplate/Blackplate MC (3 lines) +60kt / +30kt PL (2 lines) +5kt / +77kt New Zealand Ironsand Mining Raw Steel Hot Rolling Cold Rolling Metal Coating +20kt Painting

North Star BHP Steel JV Hot Rolling +120kt Castrip JV

Australia 7 Service Centres 17 Roll Forming Sites (WA, Vic, Cairns) Asia / Pacific 21 Roll Forming Sites +2 China

Focus on organic growth implemented and approved

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BHP Steel Half Year 02/03 Presentation Page 15

Strategy - Asia – Core Growth Region

Asian Financial Performance (EBIT)

  • 10

10 30 50 70 1999 2000 2001 2002 2002-1H 2003-1H

A$ Millions

36 47

  • Growing revenue and profits continue
  • Unique Asian footprint with multiple growth opportunities

– Innovative - new products and solutions – Capacity growth

Growth Opportunities in Asia Growth Opportunities in Asia

[Insert Picture]

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BHP Steel Half Year 02/03 Presentation Page 16

Our First Six Months . . .

Strong Board & Management Team Strong Board & Management Team

  • Active and engaged Board of Directors

– Successful demerger and public listing – Strong corporate governance framework – Total shareholder return focus

  • Focused Management

– Continued drive to reduce fixed and conversion costs – Greater focus on growing revenue Organic growth New marketing strategies

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BHP Steel Half Year 02/03 Presentation Page 17

Financials

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BHP Steel Half Year 02/03 Presentation Page 18

Profit and Loss

Profitable Through the Cycle Profitable Through the Cycle

A$ Millions 1999A 2000A 2001A 2002A 2002-1H(A) 2003-1H(A) Revenue 4,849 4,898 4,941 4,593 2,299 2,590 EBITDA(1) 525 711 568 412 221 464 EBIT(1) 257 445 305 160 95 332 Net Profit 242 EPS (¢) 30.6

(1) Includes net profit/loss for North Star BHP Steel (2) 1999A to and including 2002A normalised

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BHP Steel Half Year 02/03 Presentation Page 19

EBIT Variance

December 2001 Half vs. December 2002 Half

50 100 150 200 250 300 350 400 450 500 December 01 Half Export Prices Domestic Prices Volume / Mix NSBHPS Conversion & Other Costs Raw Material Costs Exchange Rates Other December 02 Half

$95m $77m $134m $53m $23m ($21m) ($9m) ($58m) $38m

A$ Millions

$332m

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BHP Steel Half Year 02/03 Presentation Page 20

Balance Sheet

As at 31 December A$ Millions 2002 Pro-Forma 2001 Assets Cash 137 170 Receivables 508 433 Inventory 766 685 Other Assets 268 302 Net Fixed Assets 3,171 3,219 Total Assets 4,850 4,809 Liabilities Creditors 500 479 Interest Bearing Liabilities 352 779 Provisions 904 813 Total Liabilities 1,756 2,071 Net Assets 3,094 2,738

  • Net Debt / (Net Debt + Equity) 6.5% 18.2%

(excluding off balance sheet items)

Strong and Flexible Capital Structure Strong and Flexible Capital Structure

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BHP Steel Half Year 02/03 Presentation Page 21

Capital Management

Strong and Flexible Capital Structure Strong and Flexible Capital Structure

  • Tax effective returns to shareholders
  • Share buyback

– Up to 10% of ordinary shares (79.3m) – On market – During the next 12 months, but limited to 10 million up to first anniversary of public listing, subject to market conditions

  • Dividend

– Interim – declared – 9¢ fully franked – Final – intended – 11¢ fully franked

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BHP Steel Half Year 02/03 Presentation Page 22

Cash Flow

Consistently Strong Cash Flows Consistently Strong Cash Flows

A$ millions 1999A 2000A 2001A 2002A 2002-1H(A) 2003-1H(A) Net operating cash flow before borrowing costs and income tax 725 715 631 381 244 386 Net investing cash flows

  • Capital expenditure
  • Other

(191) (20) (90) 10 (105) (6) (162) 8 (57) 1 (76) 33 (1) Net cash flow before financing and tax 514 635 520 227 188 343 Net financing cash flow (298) (2) Payment of income tax (8) Net increase in cash held 37

(1)

Includes impact of NS BHP Steel loan repayment of A$36m. (2) Repaid A$379m of debt. (3) 1999A to end including 2002A normalised

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BHP Steel Half Year 02/03 Presentation Page 23

A Great Start For . . .

  • SHAREHOLDERS
  • EMPLOYEES
  • CUSTOMERS
  • COMMUNITIES
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BHP Steel Half Year 02/03 Presentation Page 24

BHP Steel … You have made the right choice BHP Steel … You have made the right choice

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LIMITED

Half Year Results Presentation Period Ended 31 December 2002

Kirby Adams, Managing Director and Chief Executive Officer Brian Kruger, Chief Financial Officer 27 February, 2003

Originally issued by BHP Steel. On 17 November 2003 BHP Steel became BlueScope Steel Limited.