BlueScope Steel (ASX:BSL)

Mark Vassella
Market Cap (AUD): 6.32B
Sector: Materials
Last Trade (AUD): 12.15 -0.11 (-0.9%)
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1. About

BlueScope is a global leader in premium branded coated and painted steel products - the third largest manufacturer of painted and coated steel products globally; Group has great strengths in engineered steel buildings in key markets and is number one in building and construction markets. Group’s global networks is another great BlueScope strength, with more than 100 facilities in 17 countries, employing over 14,000 people serving thousands of customers.

2. Business model


The Company operates the following divisions:[1]



Revenue ($M)

% of Revenue

% of Profit (before Int & Tax)

Profit Drivers[2]

Australian Steel Products




The 9% increase in total revenue was principally due to higher steel
prices in all regions; increased sales volumes in the ASP segment; and
unfavourable translation impacts from a stronger Australian dollar
exchange rate (AUD:USD)

North Star BlueScope Steel




Building Products Asia & North America




Buildings North America




New Zealand & Pacific Steel




Discontinued operations




3. Strategy


Key strategies include:[3]


  • Grown premium branded steel businesses with strong channels to market
  • Maximise value from “Best in Class” assets
  • Deliver competitive commodity steel supply in our local markets
  • Ensure ongoing financial strength

4. Markets


The Group operates in markets including:[4]


Industry (Australia)

Industry Revenue (2018)

Annual Growth (13-18)

Iron Smelting and Steel Manufacturing

$10 billion


Metal Roof and Guttering Manufacturing

$1 billion


Structural Steel


$6 billion


5. Competition


Major competitors include:[5]


  • Steel Dynamics, Inc. (NASDAQ : STLD)
  • JSW Steel Ltd (JSW STEEL : NSE)
  • Olympic Steel, Inc. (NASDAQ: ZEUS)
  • JFE Holdings, Inc. (TYO: 5411)

6. History



BHP formed to mine silver, lead, and zinc



BHP commenced steelmaking in Newcastle



John Lysaght (Australia) founded to serve building and construction market with galvanised sheets



Australian Iron & Steel Limited (AIS) formed to operate Port Kembla Steelworks



BHP acquired AIS



BHP established Australian and downstream operations; rollforming in Asia



Further expansion in Asia,entered into mid and downstream US Market



BlueScope became an independent company; further investment



BHP Steel listed on the ASX



Name changed to BlueScope Steel



Acquired Butler Manufacturing, leading designer and producer of pre-engineered buildings in North America and China



Vietnam metal coating/coated painting line commissioned; Tata BlueScope Steel JV announced



Metallic coating and painting facility opened in Suzhou, China, Blue Scope's largest investment in Asia. Second Thai metal coating line commissioned



Smorgon Steel Distribution acquired



Western Sydney Service Centre opened



BlueScope Australia and New Zealand business unit established



Divestment of Metl-Span, reconfiguration of Asia and US businesses under Global Buildings Solutions and Building Products, NS BlueScope Coated Products JV announced



BlueScope ANZ announced the acquisition of Orrcon Steel, Fielders and OneSteel Sheet and Coil assets and expansion of Taharoa iron sands export operations

Launched next generation of COLORBOND steel and ZINCALUME steel



Acquired Fletcher Building's Pacific Steel Group coil and wire manufacturing business in New Zealand



BlueScope moved to full ownership of north star BlueScope Steel



Sold Taharoa export iron sands business



Reached an agreement to sell 100% of the shares in its Taharoa export iron sands business to Taharoa Mining Investments Limited (TMIL), a majority-owned subsidiary of Taharoa C Block Incorporation (Taharoa C).



Australia's BlueScope is looking at opportunities in Asia and North America.

7. Team


Board of Directors[7]


John Bevan – Chairman (Independent)

Mark Vassella – Managing Director and Chief Executive Officer

Daniel Grollo – Non-Executive Director (Independent)

Penny Bingham-Hall – Non-Executive Director  (Independent)

Ken Dean – Non-Executive Director  (Independent)

Ewen Crouch AM – Non-Executive Director (Independent)

Lloyd Jones – Non-Executive Director (Independent)

Rebecca Dee-Bradbury – Non-Executive Director (Independent)

Jennifer Lambert – Non-Executive Director (Independent)

Mark Hutchinson – Non-Executive Director


Management Team


Mark Vassella – Managing Director and Chief Executive Officer

Charlie Elias – Chief Executive NS BlueScope

Pat Finan – Chief Executive BlueScope Buildings

John Nowlan – Chief Executive Australian Steel Products

Tania Archibald – Chief Financial Officer

Debra Counsel – Chief Legal Officer and Company Secretary

Alec Highnam – Executive General Manager, People

Gretta Stephens – Chief Executive New Zealand & Pacific Islands

Andrew Garey – Chief Strategy & Transformation Officer

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8. Financials


2018 Full Year Results Presentation


Financial Year 2017/18 (ended 30 June):[8]



Revenue ($M)

% Change

Profit (before Int & Tax) ($M)

% Change

Australian Steel Products





North Star BlueScope Steel





Building Products Asia & North America





BlueScope Buildings





New Zealand & Pacific Steel





Discontinued operations










9. Risk


Economic downturn or weaker economic conditions.[9]

An economic downturn in developed economies or significantly slower growth in emerging economies, particularly China, could have a material adverse effect on the global steel industry which may affect demand for the Group’s products and financial prospects.


A significant cyclical or permanent downturn in the industries in which the Group supplies its products.

The Group’s financial prospects are sensitive to the level of activity in a number of industries, but principally the building, construction and manufacturing industries. These industries are cyclical in nature, with the timing, extent and duration of these economic cycles unpredictable. As many of the Group’s costs are fixed, it may not readily be able to reduce its costs in proportion to an economic downturn and therefore any significant, extended or permanent downturn could negatively affect the Group’s financial prospects.


Declines in the price of steel, or any significant and sustained increase in the price of raw materials in the absence of corresponding steel price increases.

The Group’s financial prospects are sensitive to the long-term price trajectory of international steel products and key raw material prices. A significant and sustained increase in the price of raw materials, in particular iron ore and coking coal, with no corresponding increase in steel prices, would have an adverse impact on the Group’s financial prospects. A decline in the price of steel with no corresponding decrease in the price of raw materials would have the same effect.


The Group is exposed to the effects of exchange rate fluctuations.

The Group’s financial prospects are sensitive to foreign exchange rate movements, in particular the Australian dollar relative to the U.S. dollar. A stronger Australian dollar relative to the U.S. dollar
has adverse effects on the Group. This is because in the Australian market a strong Australian dollar makes imported steel products less expensive to Australian customers, potentially resulting in more imports of steel products and/or lower domestic prices. These are offset in part by a significant amount of raw material purchases being denominated in U.S. dollars. In addition, earnings from BlueScope’s international businesses must be translated into Australian dollars for financial reporting purposes.


Competition from other materials and from other steel producers could significantly reduce market prices and demand for the Group’s products.

In many applications, steel competes with other materials such as aluminium, concrete, composites, plastic and wood. Improvements in the technology, production, pricing or acceptance of these competitive materials relative to steel could result in a loss of market share or margins. The global steel industry is also currently characterised by significant excess capacity and the Group faces competition from imports into most of the countries in which it operates. Increases in steel imports could negatively impact demand for or pricing of the Group’s products.


Foreign exchange risk

Foreign currency payables and receivables (primarily USD) and net investments in foreign currency.


Interest rate risk

Floating interest rate bearing liabilities (2018: $349.2M, 2017: $203.4M) and investments in cash and cash equivalents (2018: $944.4M, 2017: $753.0M).


Commodity price risk

International steel prices (primarily hot rolled coil and slab), and commodity prices including iron ore, coal, scrap, zinc, aluminium and electricity.


Liquidity risk

Difficulty in meeting obligations associated with financial liabilities.


Credit risk (Counterparties/ Geographical)

Possibility that counterparties to the Group's financial assets, including cash, receivables and derivative financial instruments, will fail to settle their obligations under their contracts.

  • Large number of customers internationally dispersed with trades in several major geographical regions.
  • Regions in which the Group has a significant credit exposure are Australia, USA, China, Southeast Asia and New Zealand
  • Significant transactions with major customers, being Arrium Limited and Fletcher Buildings Group within the Australian Operations