for personal use only 9 september 2013sep 09, 2013 · for personal use only 9 september 2013. ......
TRANSCRIPT
2013 Australian Steel ConventionAndrew RobertsManaging Director and CEO
9 September 2013
For
per
sona
l use
onl
y
TITLE TEXT
This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of Arrium and
certain plans and objectives of the management of Arrium. Forward-looking statements can generally be identified by the use of words such as ‘project’,
‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’, ‘may’, ‘should’, ‘will’ or similar expressions. All such forward looking statements
involve known and unknown risks, significant uncertainties, assumptions, contingencies and other factors, many of which are outside the control of
Arrium, which may cause the actual results or performance of Arrium to be materially different from any future results or performance expressed or
implied by such forward looking statements. Such forward-looking statements speak only as of the date of this presentation. Factors that could cause
actual results or performance to differ materially include without limitation the following: risks and uncertainties associated with the Australian and global
economic environment and capital market conditions, the cyclical nature of the steel industry, the level of activity in the construction, manufacturing,
mining, agricultural and automotive industries in Australia and North and South America and, to a lesser extent, the same industries in Asia and New
Zealand, mining activity in the Americas, commodity price fluctuations, fluctuations in foreign currency exchange and interest rates, competition, Arrium's
relationships with, and the financial condition of, its suppliers and customers, legislative changes, regulatory changes or other changes in the laws which
affect Arrium's business, including environmental laws, a carbon tax, mining tax and operational risk. The foregoing list of important factors is not
exhaustive. There can be no assurance that actual outcomes will not differ materially from these statements.
All balance sheet items are based on statutory financial information. Except as otherwise expressed, references in this document to net profit/loss after
tax refer to net profit/loss attributable to equity holders of the parent. Segment results referred to throughout this presentation are those reported in the
2013 Full Financial Report. They are equivalent to segment underlying results.
2
For
per
sona
l use
onl
y
TITLE TEXT
ContentsPage
Arrium overview 4
Steel 6
Market segment conditions 13
Building the future in steel 15
Conclusion 20
3
For
per
sona
l use
onl
y
TITLE TEXT
Arrium overview
Steel is an important part of Arrium’s portfolio
4
For
per
sona
l use
onl
y
TITLE TEXT
Arrium overview
Transformational year
Maintained significant improvement in performance delivered by the Steel business
Completed expansion to double iron ore sales rate and port capacity at Whyalla on-time and budget
Continued strong earnings in Mining
Continued strong earnings and earnings growth in Mining Consumables
Arrium continues to deliver on its commitments
5
For
per
sona
l use
onl
y
TITLE TEXT
Steel
Committed to the steel industry
Delivered positive EBITDA
A single steel business effective 1 July 2013
• Strong customer focus
• Flexible, agile and responsive to market needs
• Confidence in dealing with a committed long-term partner
• Trading as OneSteel
Arrium is committed to the steel industry6
For
per
sona
l use
onl
y
TITLE TEXT
Steel
OneSteel - single steel business
• Integrated value chain and businesses
Steve Hamer - Chief Executive
• Experienced management team
Revenue of $3.5bn (including ATM and Merchandising) in FY13 and 2.6MT of steelmaking capacity
• Directly employing approximately 5,200 people across Australia
Australian Tube Mills and Merchandising businesses held for sale
7
For
per
sona
l use
onl
y
TITLE TEXT
Steel
3 400+ $300m+
Sites People Revenue
The largest processor & distributor of wire products into rural &
construction markets
5 800+ $1.3bn
Sites People Revenue
Flexible and reliable supplier of rebar, rod & mebar into our chosen
distributor channels
2 1100+ $0.95bn+
Sites People Revenue
Reliable supplier of billet in our integrated channel with rail and
structurals into our chosen distributor channels
8
For
per
sona
l use
onl
y
TITLE TEXT
Steel
38
Australia’s largest reinforcing provider focussed on top-tier projects and
helping customers with their construction risks
800+ $600m+ 39 800+ $500m+
The leading provider of reinforcing products to the mid-tier and smaller
project markets
70+ 900+ $700m+
The leading distributor of a broad range of products leveraging scale in
market coverage, product range, operations & supply chain
Sites People RevenueSites People Revenue Sites People Revenue
9
For
per
sona
l use
onl
y
TITLE TEXT
Key market segments
Residential, non-residential and engineering construction (including mining investment) drives demand for reinforcing bar and wire, rod for mesh, hot rolled structurals, merchant bar and rail
Agriculture drives demand for rural wire, rural posts and rural pipe products
Mining production drives demand for grinding bar which is feed for grinding media
FY13 Steel Domestic Sales by Market Segment
10
Approximately 75% of Steel revenue isdriven by construction
Source: Management estimates
For
per
sona
l use
onl
y
TITLE TEXT
QUALITY
• ‘Safety’ is a Core Value
• Meet standards and certification
• In-house engineering to optimise design
• Core metallurgical expertise
PREDICTABLE
• Do what we say we will
• Reliable
• Product consistency
• Scale through integrated supply chain from raw materials
to sales
FLEXIBLE TO MARKET DYNAMICS
• Variety of business models enacted through locally empowered
leaders
• “Sprint” capacity to match market needs
• Extensive national footprint
• Local and ready to listen
UNDERSTAND MARKETS’ NEEDS
• Knowledgeable of products, their applications, end-use
markets and global trends
• Innovative solutions to solve customer problems
• Manufacture or import supply solutions to deliver
meaningful products and services
CUSTOMERS’ RISKS MITIGATED• ‘Customer’ is respected and a Core Value
• Full control of our end-to-end integrated manufacturing processes
and transparent supply chain
• Long-term industry involvement with shared benefit and risk of local
industry success
VALUE FOR MONEY
• “Straight forward” commercial relationships that make
business easy
• Relentless focus on costs
Our value proposition to our customers
11
For
per
sona
l use
onl
y
TITLE TEXT
Australian Tube Mills and Merchandising
Australian Tube Mills and Merchandising are long established and reputable businesses
– Merchandising includes Sheet and Coil, Aluminium and Metpol
Chief Executive – Naomi James
Businesses held for sale - not part of Steel’s integrated value chain
These businesses offer strong value propositions to the Australian industry
Australian Tube Mills has recently been re-branded to
12
For
per
sona
l use
onl
y
TITLE TEXT
Market segment conditions
13
We have a positive mid to long-term view of theAustralian construction segments
Increase in residential commencements
Non-residential commencements to grow over the medium term
Value of engineering construction projects to increase
Source: NIEIR
For
per
sona
l use
onl
y
TITLE TEXT
Market segment conditions
14
Providing improved opportunities for local content
Mining investment has come off its peak but remains stable above historical levels
Mining production is projected to increase
Source: NIEIR
For
per
sona
l use
onl
y
TITLE TEXT
Building the future in steel
OneSteel is committed to building the
future in steel
Local content Growing steel intensity Effective and efficient domestic supply chain
15
For
per
sona
l use
onl
y
TITLE TEXT
This could not have been achieved without an
effective and efficient local supply chain
Local contentEffective and efficient supply chain
Whyalla Port expansion, doubling capacity to 13mtpa, completed on-time and on budget
• ~ $200million• ~ 90% local sourcing• ~ 8,100 tonnes of steel• First sales through Whyalla Port in December 2012, 10 months from
commencement of construction
• Doubling sales rate to 12mtpa - June 2013
16
For
per
sona
l use
onl
y
TITLE TEXT
Local contentEffective and efficient supply chain
Arrium has invested circa $700million in mining capital expansions since Project Magnet commenced in 2005
• Local industry continues to deliver
• Close links between designer and suppliers are critical to execution
• Robust supply chain includes designers, construction contractors, fabricators and specialised engineering firms such as; Leighton Contractors
Kerman Contracting
Manuele Engineering
Gadaleta Steel Fabrication
Link Engineering
RAIL INFRASTRUCTUREDelivering results using local supply17
Rail & materials handling facilities under constructionOctober, 2012
For
per
sona
l use
onl
y
TITLE TEXT
Local content and growing steel intensity
Brookfield PlaceTower 2
2,000 t
An effective and aligned value chain –local industry working together
Brookfield Place Tower 1 was a very successful project, delivered using local supply
Customers:• Builder – Brookfield Multiplex Constructions
• Steel contractor - PIC
Brookfield Place Tower 2 is now underway leveraging the steel industry’s local supply chain
Brookfield PlaceTower 14,300 t
18
A proven model leveraging an effective and efficient local supply chain
For
per
sona
l use
onl
y
TITLE TEXT150 Collins St,
Melbourne.ATO Building, Box Hill,Melbourne.
FCAD Building,Footscray, Vic
VCCC Admin Building, Melbourne.
480 Queen St,Brisbane.
5 Martin Place,Sydney.
VCC Admin Building, Melbourne.
Growing steel intensity
“…Grocon’s experience is that steel solutions help us get the project completed safely, on-time & on-budget…”
Jason O’Hara – Construction Manager VIC & SA
19
Grocon is proving that structural steel is a serious alternative as a framing solutionF
or p
erso
nal u
se o
nly
TITLE TEXT
Conclusion
Steel is an important part of Arrium’s portfolio
OneSteel’s integrated steel businesses, products and brands you know
are here to stay
OneSteel fully supports the ASI’s three strategic themes
OneSteel is committed to building the future in steel with our customers
20
For
per
sona
l use
onl
y
TITLE TEXT
Questions
21
For
per
sona
l use
onl
y