#1BLUESCOPE STEEL Half Year Results Presentation Period Ended 31 December 2003 Kirby Adams, Managing Director and Chief Executive Officer Brian Kruger, Chief Financial Officer 19 February, 2004 ASX Code: BSL#2Important 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 BSL 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, BSL 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, BSL AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS. Page 2#3Name Change BLUESCOPE STEEL BLUESCOPE STEEL BLUESCOPE T BlueScope Steel Limited STEEL BLUESCOPE. STEEL BLUES-OPE STEEL#4Group Headlines . . • · Safety Continued improvement in Lost Time Injury Frequency Rate Continued improvement in Medical Treatment Injury Frequency Rate Strong net profit of $227m continues momentum 6% down on corresponding half (December 2002) 8% up on previous half (June 2003) Why 6% down? Strengthened by: - • higher product prices and continued strong demand Offset by: - stronger A$ - - lower North Star Joint Venture earnings (-$61m for our 50% interest) other, including higher planned R&M costs at PKSW (timing) EPS stable 29.8¢ vs. 30.6¢ Page 4#5. . . Group Headlines (cont.) Interim dividend increased by 33% From 9¢ to 12¢ Fully franked Share buyback status as at 18/2/04 60.7m shares purchased 76.5% of total program Gearing (net debt) 9.1% vs. 2.4% (30/6/03) Significant growth initiatives, principally: ΑΛ Vietnam - new coating / painting facility Thailand - second coating line Acquisition - Butler Manufacturing Company China - new coating / painting facility Page 5#6Group Headlines (cont.) Outlook for second half FY2004 Strong International Market. - Strong US$ steel pricing environment. - Improving margins at North Star Joint Venture. - Volatile raw materials and freight market. Page 6#7A$ Millions Strong Financial Performance Across All Segments 500 400 . PKSW . • - Slab - . HRC Plate NS JV (50%) Castrip 300 265 63 206 200 179 100 0 Hot Rolled Products Return on Net Assets (Pre-Tax Annualised) 19% FY03-1H FY03-2H FY04-1H 21 • Western Port ⚫ Springhill •Packaging Products • Service Centres • Thailand . • Malaysia • Indonesia . • Vietnam • ⚫ Lysaght • ⚫ China 102 64 55 47 45 23 37 23 20 20 New Zealand Steel Coated Products Australia Coated Products Asia 10% 17% 21% Page 7#8BlueScope Steel's Markets – Strong Demand • Long term customer relationships. External sales mix largely unchanged from 2002/03 by: Geographic region; and Australian market segments. Increased South East Asian despatches, largely driven by: Internal initiatives, eg: broadened product range, eg. PEBs and trusses; market development into Vietnam and China. Stronger economic growth. Increasing steel demand. Page 8#9. BlueScope Steel's Markets - Strong Demand (cont.) Apparent Steel Consumption - South East Asian Countries 12000 10000 8000 6000 4000 2000 0 1992 1993 1994 1995 Source: SEASI, IISI 1996 1997 1998 1999 2000 2001 2002 2003E THAILAND MALAYSIA VIETNAM INDONESIA PHILIPPINES SINGAPORE Page 9#10Dynamic Global Steel Market North America Consolidation continues Scrap and coke prices / availability • Scrap surcharges Economic recovery underway • Section 201 lifted • Weak US$ Europe • • • Strong Euro Consolidation benefits evident Weak demand, apart from Russia Restricted scrap exports from CIS China • Demand is strong Imports increased Quotas relaxed New capacity Reduced coke & coal exports Global • Record high US$ steel prices J J J J Inflating raw material costs Freight costs Asia/Australasia Japan at capacity Korean shipyards full Key market remains China ⚫ South East Asian economies improving Global exchange rate volatility#11• . . BlueScope Steel Raw Materials and Freight Iron Ore and Coking Coal ➤ Announced price increases effective 1 July 2004. Scrap ➤ Port Kembla - less than 1.0 mtpa (50% external). North Star Joint Venture - approximately 1.8 mtpa. Freight Largely insulated from record rates in FY2004. Contract renewal dates staggered. Will increase from FY2005. Page 11#12Strategy - Downstream, Value Added, Branded Products CURRENT PEB/Solutions Roll- forming Painted Metallic Coated Cold Rolled Hot Rolled Coil, Plate Slab Illustrative FUTURE Butler PEB/Solutions Roll- ✓ forming Vietnam China Indonesia' Painted Australia & NZ Brownfields Vietnam China Metallic Australia & NZ Brownfields Thailand Coated www Cold Rolled Hot Rolled Coil, Plate Slab Page 12#13Implementing BlueScope Steel's Strategy BUTLER BLUESCOPE STEEL Acquisition of Butler Manufacturing Company - @ Pre-eminent global designer/supplier of Pre-Engineered Buildings (PEBS) Number One positions in North America and China - Worldwide brand recognition An Attractive Opportunity at the Right Time Page 13#14Strategy - China Business Integration . . . • . . Located at Suzhou, 80kms west of Shanghai. Excellent transport links. Metallic Coating Line - 250,000tpa Paint Line - 150,000tpa Slitter Recoil Facility - 20,000tpa Capital cost A$280m. Start construction April 2004. Start production mid-CY2006. Import replacement. . Risk management. Artist's Impression Page 14#15Strategy - Reducing Market Risk of Coating Line Target Market: Premium-High ZINCALUMEⓇ Clean COLORBOND® 250,000t Target Market: Middle Total OPAL™M Loading Galvanised TRUZINCⓇ 100% ZINCALUMEⓇ Sales Including Butler Bare ZINCALUME® External 44% Clean |COLORBOND® Feed OPALTM Feed Internal 56% Galvanised Page 15#16Strategy - Strong Production and Sales Network BlueScope Steel 1 Metal Coating & Painting facility Chengdu Lysaght 4 Lysaght manufacturing facilities * 2 PEB manufacturing facilities Over 50 sales offices Langfang ⚫ Lysaght Tianjin Butler PEBS Suzhou Coating and Painting Facility Shanghai Lysaght Butler PEB Guangzhou ⚫ Lysaght Page 16#17Strategy - Growth Staircase BLUESCOPE STEEL THAILAND VIETNAM CHINA Metallic +250,000t Painted +150,000t Metallic +150,000t and Painted +50,000t/a Metallic +200,000t/a BUTLER MANUFACTURING COMPANY INDONESIA NEW ZEALAND Metallic +24,000t/a and Painted +7,000t/a Painted +25,000t/a FY2004 Illustrative FY2005 FY2006 FY2007 Page 17#18Value-adding % Strategy - BlueScope Steel - a global leader in adding value to hot rolled coil 50 40 40 30 20 10 VALUE-ADDING FOCUS (Proportion of Hot-Dipped Metal Coating to Hot Rolled Coil Capacity; Largest 40 Flat Global Steelmakers) 0 BlueScope Steel Source: IISI 'World Steel in Figures 2003', CRU 'Capacity Database April 2003' Page 18#19Summary . . · • Another strong result from BlueScope Steel. Strong demand / pricing. Interim dividend 9¢ to 12¢ per share. Downstream growth initiatives (more than $550m capex over 3 years). Announced strategy being implemented and portfolio reshaped. • Geographic and product diversification decreasing risk. Page 19#20Financials#21Profitable Through the Cycle ● Continued Strong Net Profit Performance A$ Millions 2000(1) 2001(1) 2002(1) 2003 ! 2003-1H 2003-2H 2004-1H I Revenue 4,898 4,941 4,593 5,302 2,590 2,712 2,619 EBITDA(2) 711 568 412 881 464 417 440 EBIT(2) 445 305 160 611 332 279 302 Net Profit 452 242 210 227 EPS (¢) 57.1(3) 30.6(3) 26.5(3) 29.8(3) (1) 2000 to and including 2002 normalised. (2) Includes net profit/loss for North Star Joint Venture. (3) Weighted average shares on issue 793.0m (FY03-1H); 790.1m (FY03-2H) and 761.7m (FY04-1H). Page 21#22A$millions EBIT Variance - First Half FY2003 vs. First Half FY2004 500 450 50 400 350 $332m 300 300 250 200 20 150 150 100 100 $50m $11m $59m Higher R&M (30) Employment costs (25) Cost Improvements 19 Dec '02 Superannuation contribution 20 Lower restructuring costs 26 ($61m) ($56m) ($53m) ($38m) $58m $302m 50 50 0 Dec 02 Half Export Prices Domestic Prices Volume / Mix NS JV Exchange Rates Conversion & Raw Material Other Dec 03 Half Other Costs Costs#23EBIT Variance - Second Half FY2003 vs. First Half FY2004 380 360 440 340 A$millions 20 320 300 280 20 260 4400 220 $279m 200 20 $7m $33m $24m ($5m) ($14m) ($5m) $302m ($11m) ($6m) June 03 Half Export Prices Domestic Prices Volume / Mix NS JV Exchange Rates Conversion & Raw Material Other Dec 03 Half Other Costs Costs#24Balance Sheet - Strength and Flexibility As at A$ Millions 31 Dec 02 30 June 03 31 Dec 03 Assets Cash Receivables 137 91 92 508 650 581 Inventory 766 698 759 Other Assets 268 216 224 Net Fixed Assets 3,171 3,086 2,997 Total Assets 4,850 4,741 4,653 Liabilities Creditors 499 493 412 Interest Bearing 352 168 381 Liabilities Provisions 905 989 973 Total Liabilities 1,756 1,650 1,766 Net Assets 3,094 3,091 2,887 • Net Debt / (Net Debt + Equity) 6.5% 2.4% 9.1% (excluding off balance sheet items) Page 24#25Recent major Growth Initiatives underway and Indicative Capex Profile Total Est - FY2004 FY2005 FY2006 Capex/Cost Balance Vietnam A$160m $40m $100m $10m - New coating facilities Thailand A$80m $25m $55m - Metallic coating expansion China A$280m $20m $220m $40m - New coating/painting facilities Butler A$260m $260m - Acquisition cost Total A$780m $345m $375m $50m Page 25#26Cents Per Share Continued Focus on Tax Effective Returns to Shareholders Share Buyback - - Plan - up to 10% (79.3m) by March 2004 Purchased/cancelled to ➤18 February 2004 - 60.7m shares (76.5%) ⚫ Dividends - All Fully Franked Total return to shareholders since listing: Buyback • Dividends A$285m A$225m • + Interim A$ 88m A$598m 25 20 15 10 5 0 7¢ 9¢ 13¢ 12¢ 1H 2H 1H Special Ordinary Page 26#27Consistently Strong Cash Flows A$ millions Net operating cash flow before borrowing costs and income tax Net investing cash flows 2000 (1) 2001 (1) 2002 (1) 2003 2003-1H 2003-2H 2004-1H 715 631 381 763 386 377 357 - Capital expenditure (90) (105) (162) (183) (76) (107) (99) - Other 10 (6) 8 18 33 (15) (3) Net cash flow before financing 635 520 227 598 343 255 255 & tax Net financing cash flow (493) (295) (198) (8) Payment of income tax (29) (8) (21) (84) Net dividends (75) (3) (72) (155) Net increase in cash held 1 37 (36) 8 (1) 2000 to and including 2002 normalised. Page 27#28BlueScope Steel Outlook A$: US$ Exchange rate Key Industry Drivers Hot Rolled Coil Prices 1997 1998 1999 2000 2001 2002 2003 2004 1997 1998 1999 2000 2001 2002 2003 2004 Shipping Rates 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Iron Ore Prices Fines 1995 1996 1997 1998 1999 2000 2001 2002 2003 P2004#29Creating Shareholder Value Strong Board & Management Team Growth Opportunities in Asia Strong and Flexible Capital Structure Profitable Through the Cycle Dynamic Global Steel Market Value Added Branded Products A DIFFERENT KIND OF STEEL COMPANY Strong Operating Track Record Consistently Strong Cash Flows Geographic and Product Diversity Low Cost Producer Page 29#30BLUESCOPE STEEL Half Year Results Presentation Period Ended 31 December 2003 Kirby Adams, Managing Director and Chief Executive Officer Brian Kruger, Chief Financial Officer 19 February, 2004 ASX Code: BSL