analysts site visit malaysia business · malaysia is a multi-racial & multi-cultural nation it...

Analysts Site Visit Malaysia Business

25 June 2007

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.

Welcome to Malaysia

Malaysia is a multi-racial & multi-cultural nationIt has a population of 26 million people comprising Malays, Chinese, Indians, Ibansand Kadazans.The dance performance to welcome you is an example of the rich and diverse culture in MalaysiaMalaysia is celebrating its 50th year of independence this year2007 is also Visit Malaysia YearLet us welcome you by saying

Selamat Datang ke MalaysiaFkdfkhfkl

BlueScope Steel in Malaysian Region

BlueScope Steel is a leading player in the building and construction industryOnly zinc/aluminium alloy-coated steel producer in the countryBroad network of downstream businesses We have been present in the Malaysia region since 1965BlueScope Lysaght Singapore (1965)BlueScope Lysaght Malaysia (1968)BlueScope Lysaght Sabah (1975)BlueScope Lysaght Sarawak (1978)BlueScope Lysaght Brunei (1993)BlueScope Steel (Malaysia) Sdn Bhd(1996)Employs 552 local people

Metallic coating and painting facility, BlueScope SteelBuilding solutions facility, BlueScope Lysaght

Business Context - Midstream

Recovering to former levels, but on a sounder footing

Location: KaparOwnership: 60% BSL

40% PNB EquityCapability :- Metallic Coating Line up to 160,000mt/annum- Paint Line up to 70,000mt/annumCommissioned :- Paint Line 1996- Metal Coating Line 1997Manufactures :

Business Context - Downstream

Extensive Downstream network undertaking transformation

To 2003 – 2007From 1965 - 2002

• 30,000 tpa

• All businesses profitable

• Building components and solutions:• Components• Residential• PEB• Multi-Story• High End roofing solutions

(Singapore)

• 25,000 tpa

• Losses across the portfolio

• Rollforming

• Building components

Malaysian Economy - Stable & Steady Growth

EconomySteady GDP growth of ~6.0%Inflation of ~3%Recovery in Foreign Direct InvestmentWell developed with modern infrastructure

Population26 millionYoung population with 53% under the age of 25 yearsRelative high GDP per capita of US$5,300

PoliticalVery stable governmentRuling party in power at federal level since independence

Steel MarketHigh end quality focused, price sensitiveHigh steel consumption levels

SINDOMALAY Management Team

VP Health, Safety & EnvironmentHanim Abu Bakar

PresidentIndonesia & Malaysia

Rob Crawford

Personal AssistantMurtafiah

PresidentLysaght Indonesia

Willius S. BSI Steel Coated

President

Sulfianda S.

ManagerTechnical Service

Gary Newby

PresidentLysaght Malaysian Region

Chua Soo Keng

Vice PresidentMarketing & Solution

Lucia Karina

PresidentCoated Steel Malaysia

Simon Linge

Vice PresidentFinance

Mike Mulcahy

Vice PresidentInformation System

Yulianto R.

Malaysia - Midstream Management Team

PresidentCoated Steel Malaysia

Simon Linge

VP Strategy & External Affairs

Gan Wee Choong

VP Marketing & Business Development

Edward Choo

Safety Professional

Chan Wai Yip

Administration Manager

Emelyn Low

VP Commercial

Michael Ladd

VP Human Resource

Jasmin Yoong

VP Manufacturing

Bruno Marot

VP Sales

Sim OoiVP Customer Service &

Supply ChainKoh Boon Hong

Malaysia – Downstream Management Team

President(Lysaght Malaysian Region)

Chua Soo Keng

President Lysaght Brunei

Selvarajah Navalingam

President Lysaght Sabah

Roger Tan

President Lysaght MalaysiaDavid Surveyor

President Lysaght Sarawak

Heon Chee Shyong

Vice President Operations Manager

Michael Hua

President Lysaght Singapore

Cheong Ku Wei

Vice President CommercialGoh Kah Im

President Spore Service Centre

Sam Yap

Vice President Marketing-Downstream

Euan Lay

Malaysian Business Performance

FY2003 FY2004 FY2005 FY2006

9544139

$180.2m

$3.3m

$142m

$1.1m

Domestic 58 87 103 58Export 30 44 53 19

Total 88 131 156 77External Sales Revenue (A$m)Total Sales $125.9m $147.1m $177.4m $106.6mEBIT(A$m) $22.3m $21.2m $9.3m $6.3mNet Operating Assets (pre-tax A$m) $109m $131m $155m $133m

Business development and pre-operating costs included in EBIT

- - - $0.5m

1HFY2007External Despatches (tonnes000’s)

Midstream Business

Zero Harm

Achievements• 1374 days since last Lost Time Injury• 275 days since last Medical Treated Injury• 275 days since last Work Injury• 5 years ago, we had 14 Work Injuries p.a.• Today, we have a record 9 continuous months of Work Injury Free

Midstream – Recovery to Former Levels But on A Sounder footing

• The midstream business historically has achieved strong revenue and profit growth

• Only “in country” zinc/aluminium alloy-coated steel producer

• 2005 & 2006 were aberrations due to the ‘Perfect Storm’

• Falling steel prices with high stocks• Paintline fire• Slowdown in construction sector• Market share push by competitors

• The business has recovered, aided by a 3-year Business Plan

• 2006: Turning around the business• 2007: Building a solid foundation• 2008: Building sustainable growth

(e)

Demand Fast Approaching Capacity

• Status• Paint line full on several months this year

with exports• More new products filling up MCL

capacity

• Challenges• More light gauge production at paint line • Paint line capacity constrained• Further improvement in prime first time

MCL performance• Production outside design parameters at

MCL

• Initiatives to improve performance• Increasing line speeds• Reduction of quality losses• Scheduling efficiencies• New products

Midstream VisionOne passionate team taking pride in delivering solutions to our customers and making us

the leading coater in Malaysia

Midstream VisionOne passionate team taking pride in delivering solutions to our customers and making us

the leading coater in Malaysia

MissionBeing our customers 1st choice for delivering great innovative products and service through people who

are safe, engaged and well-rewarded

MissionBeing our customers 1st choice for delivering great innovative products and service through people who

are safe, engaged and well-rewarded

Zero Harm Customers &Markets

Manufacturing Excellence

Supply ChainExcellence

People & Leadership

Commercial & ISManagement

Strategic Themes

KEY FOCUS AREAS

• Zero injuries

• Zero environment incidents

• Grow Domestic market and Sales

• Support & grow core export markets

• Margin management

• Superior customer service

• Operating discipline

• Asset Utilisation

• Uptime

• Yield / PFT

• Increase local & regional sourcing

• Reduce lead time

• High performance teams

• Engagement

• Rewards & recognition

• Value creation

• Working capital reductions

The Value Chain

Regional Regional Produced CRC Produced CRC

ex PT KSex PT KS

Locally Locally Produced CRCProduced CRC Metal Metal

CoatingCoating

Export Export CustomersCustomers((inclincl Lysaght Lysaght

Sing.)Sing.)

PaintingPainting

IndustrialIndustrial& Commercial& Commercial

(Roofing/Walling)(Roofing/Walling)

ResidentialResidential(Doors/Windows, (Doors/Windows,

Trusses & Trusses & Framing)Framing)

ManufacturingManufacturing(shutters, TV (shutters, TV components)components)

Domestic Domestic CustomersCustomers

((inclincl Lysaght)Lysaght)

Hardware Hardware (awnings, thin (awnings, thin

gauge)gauge)

Imported CRCImported CRCexex-- BSL BSL

AustraliaAustralia

http://en.wikipedia.org/wiki/Image:Torres_Petronas_Mayo_2004.jpg



Predominately Foreign Sourced Feed

Current Source1. CRC from:

55% from BSL Australia 35% regionally (e.g. PT KS)10% localPreviously from 11 suppliers

2. Other materialsZinc from Korea Zinc (Korea) Aluminium from Comalco (Australia)Paint from Akzo Nobel

Other InfluencesTariff regime

Currently - 0% CRC, 50% coated steel/roll-formed, 0% coated steel intra-ASEAN

Market OverviewMIDSTREAM COATING PLANT, KAPAR – 160,000 TONNES OF COATED STEEL CAPACITY

DOMESTIC 60%(Malaysian Region – Pen. M’sia,

Sarawak, Sabah, Brunei, Singapore)

Building & Construction 75%(Industrial, Commercial, Residential)

Hardware 15%(roofing sheet, awning,

door/window frame)

Manufacturing (10%)

EXPORT 40%

Roofing & Walling 70%

Trusses, Door/Window

Frame, RWG 30%Shutters, TV Band,

Paneling

Industry Structure

Note: Quantity in ‘000mtSource: Business Times, SEAISI, Metal BulletinNote: Data in Brackets = Nameplate capacity not actual production, thousand tonnes* Based on Domestic capacity and domestic production only

Domestic Sales Growth - New Products & Customer Focus

• Record domestic volume achieved in 2007

• Launched new products;• CoolZal• 0.20mm• TrueCore™• PrimaMaju™• Improved Zincalume® • Chrome free

• To be launched • 4 new products in the next 12 months

• Improved quality & delivery service

• Improved reliability and lead times

Malaysia – Our Products & Mix

Product Mix (Domestic) - indicative YTD FY06/07

Mid Range

Premium Quality Range

EconomyRange

75%

15%

10%

Commercial Projects

Bus Station Jabatan Audit Negara

Sirim Putrajaya

Residential Projects

Bungalow in KuchingKemensah Heights

Bungalow in KuchingBungalow in Kuching

Metal Coating Line: Yields Up and Product Complaints Down

Achievements• Line stop per shift reducing (39 Shifts without

unplanned Line Stop) – 56% from 0.50 to 0.22.

• Yield trending up from 89 to 96%

• Increased line flexibility and to be more responsive to market requirements

• Customer Complaints reduced by 60% in past 12 months

• Capability to run 0.2 light gauge from plant designed of 0.25.

Forward Focus

• ONE BEST WAY culture to produce Zincalume

• Focus on uptime & PFT / Yield performance.

• Statistical Process Control.

• High PFT levels • Minimal line stops per shift (downtime)• Production record: 4 days of 100% PFT• 40% reduction of entry scrap• Customer complaints reduced by 85%• Uptime improved from 70 to 75%

Achievements

Forward Focus• Uptime focus• Support product development• Team development and training

Paint Line: World Class Performance

Justified Complaints (mt) against Target

People & Leadership - Key Part of Our Success

• High Performance Culture

• Clear Business Strategy, Direction & Ownership

• Work Force Engagement

• Rewards and Recognition Systems

Midstream Summary - Recovery to Former Levels but on a Sounder Footing

• Historically sound business

• Turbulent years for 2005 and 2006

• Business has now achieved a solid turn around

• All business metrics are improving

• Strong position to take this business forward

BlueScope Lysaght Singapore

BlueScope Lysaght Brunei

BlueScope Lysaght Sarawak

BlueScope Lysaght Sabah

BlueScope Lysaght Malaysia

Manufacturing Facility Sales Office

Downstream Businesses - BlueScope Lysaght

• 6 rollforming & business solutions manufacturing facilities in Malaysia Region

• 5 sales offices across the Malaysia Region

• 320 employees across the region

• 40 years of history in Asia

Downstream Businesses - BlueScope Lysaght

Building Products Residential Solutions

• Value-added coated, prepainted and roll-formed branded products, solutions and services• Extensive Network of distribution channels• Largest distributor of premium brands• Differentiated by providing solutions for high-end projects• Creates pull through for midstream business (~30% pull through)• Transforming from building material supplier to building solution provider

Structural DeckingPre-Engineered Buildings

Zero Harm

Achievements

• Lysaght Brunei – 13 years Lost Time Injury Free• Lysaght Sabah – 13 years Lost Time Injury Free• Singapore Service Centre – 8 years Lost Time Injury Free• Lysaght Singapore – 8 years Lost Time Injury Free• Lysaght Singapore – Outstanding Safety Award by Singapore government• Lysaght Malaysia – 5 years Lost Time Injury Free• Lysaght Sarawak –3 years Lost Time Injury Free

Volumes Increasing

Downstream Progress Into Business Solutions

Economic growth and increasing affluence has increased demand for high end projects

These projects are largely concentrated in Singapore and in urban areas of Malaysia

Our transformation to provide solutions high end projects in response to demands of the market

Changi Airport Terminal 3

Abbott Plant

Esplanade Theatres by the Bay

Solutions Provider for High End Projects

Solutions Provider for High End Projects

Semi-D Development, Malaysia

Singapore National Library

Ministry of Environment, Malaysia

Singapore Exposition Halls 7-10

Guest House, Malaysia Singapore Management University

Downstream Summary

• Growth vehicle

• Pull through demand

• Ensure BlueScope Steel Brands

• Market Leadership

• Set The Standard

• Provider of Engineered Solutions

Overall Malaysia Summary

• Core Asian market with strong economic growth

• Infrastructure development• High GDP growth• Steel intensity increasing• Increasing Foreign Investment

• BlueScope Steel is growing profitably in Malaysia

• ability to leverage value chain ranging from coated products to building solutions• differentiated products • new markets and products• customer service excellence

analysts site visit malaysia business · malaysia is a multi-racial & multi-cultural nation it...

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