Bluescope Steel - Australia Coated and Building Products

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Australia Coated and Building Products

For the Coated and Building Products Australia segment, 2003/04 was a very good year. Our safety performance continued to improve. For every million hours worked, less than 1.8 injuries occurred that resulted in lost work time. During the year, this business segment further developed its position as Australia's leading supplier of metallic coated and pre-painted steel products.

Our main markets - in the building and construction sector - were especially robust. But the segment also achieved strong sales to customers in the automotive, manufacturing and packaging areas, and through our distributors. Coated and Building Products Australia comprises a dynamic group of businesses that produce many well-known brands. A number of these have particularly high recognition in the marketplace - COLORBOND® steel, ZINCALUME® steel and LYSAGHT® are leading brands in Australia.

The business segment also works closely with some prominent architectural firms, and during the year, its products featured in some striking and award-winning examples of contemporary Australian architecture. Our sales and marketing strengths were also evident, with brand extensions such as COLORBOND® fencing, supported by successful advertising campaigns.

Innovative and timely product development - such as our introduction of the new BlueScope Water range - and sharp customer focus continue to make this segment an exciting part of BlueScope Steel.

The major businesses are: Western Port, Victoria (hot rolling, cold rolling, metal coating and painting), Springhill NSW (cold rolling, metal coating and painting), Packaging Products (cold rolling and metallic coating), Port Kembla NSW, Service Centre network (seven sites across Australia) and Lysaght Australia (27 sites across Australia).

WESTERN PORT

Western Port converts steel slab from our Port Kembla Steelworks into hot and cold rolled coil, metallic coated and pre-painted steel products. This business is of considerable importance to the manufacturing, automotive, and building and construction industry supply chains in southern Australia. Western Port exemplifies BlueScope Steel's world-leading coating and painting capabilities.

Outstanding results were achieved in delivery performance - 95 per cent for the year - a record for the business segment. Customer recognition was also a highlight, with the operation receiving the prestigious Toyota President's Award for Excellence in Customer Service.

Western Port achieved excellent production performance during the year. Metal Coating Line number 4 set an annual record of 234,200 tonnes, up from 230,900 in 2001/02. Paint Line number two almost equalled its 1999/00 record with 106,200 tonnes, falling short by just 0.2 per cent.

In 2003/04, Western Port undertook important steps to improve its competitiveness. The implementation of a maintenance alliance with Silcar resulted in greater plant reliability and cost savings, due to uptime initiatives and better maintenance planning. Environmental management was also a priority. Innovative new technologies will decrease gas and electricity consumption, and increase freshwater recycling by up to 80 per cent.

SPRINGHILL

Springhill is adjacent to Port Kembla Steelworks, from which it sources hot rolled coil. Springhill adds value to hot rolled coil through various facilities. A coupled pickling and cold rolling mill increases the strength of steel, reduces thickness and produces a bright, smooth surface. Three metallic coating lines and a paint line produce branded products including COLORBOND® steel and ZINCALUME® steel.

During 2003/04, Springhill achieved excellent performance with a number of production records and process improvements. The operation's Cold Mill increased production to 904,000 tonnes, up 3.7 per cent from 2002/03. This was due to improved cycle times and line speed, with equipment upgrades reducing delays and enabling extra throughput.

Metal Coating production increased to 742,400 tonnes, up 0.7 per cent from last year - the result of a range of process initiatives, despite a delay caused by an equipment upgrade. New equipment is expected to increase capacity by 35,000 tonnes in 2004/05.

And as a result of process improvements, Springhill's Paint Line number 3 increased production to 152,000 tonnes, up 2.0 per cent from the previous year.

Springhill also introduced an important environmental initiative - a water conservation plan that will save half a million litres a day.

PACKAGING PRODUCTS

This facility operates at Port Kembla, converting hot rolled coil to tinplate and blackplate. It sells to both Australian-based packaging manufacturers and export customers. Business conditions remained difficult for the packaging sector during the year. Significant efforts continue to be made to improve throughput, quality and efficiency.

A new six-monthly production record was set on the electrolytic tinning lines, with production of 171,870 tonnes, an increase of 4.7 per cent compared with the previous record set during 2002/03.

SERVICE CENTRE NETWORK

BlueScope Steel maintains a capital city network of Service Centres, through which about 40 per cent of our coated and painted sales are delivered. The Service Centres are hubs for state-based sales activities, and offer custom slitting and shearing services. During the year, we undertook initiatives to refresh and energise this network, in recognition of our expanding customer base and to enable us to better service our customers' needs.

Record annual production of painted products was achieved by the Service Centre paint lines. Production was 162,000 tonnes, up 17 per cent on 2002/03. This result includes production of 90,000 tonnes at Acacia Ridge in Brisbane and 63,000 tonnes at Port Kembla.

BlueScope Steel's Service Centres are innovators. The solid block painting process pioneered at Chullora in Sydney is an example of innovation in action.

New facilities are being developed in Sydney and Western Australia to support increased sales and customer needs. The planning of our proposed COLORBOND® steel Centre in Penrith, western Sydney, is at an advanced stage. This Centre will service the nation's fastest growing population corridor. Land has been acquired, and good progress made with planning approvals and provision of infrastructure.

BLUESCOPE LYSAGHT AUSTRALIA

BlueScope Lysaght Australia operates at the value-added end of our product chain, manufacturing and distributing finished steel products and services for the domestic building and construction industry, under the LYSAGHT® brand. This brand has a strong presence in the Australian building products market, stretching back to the establishment of John Lysaght (Australia) Pty Ltd in 1918.

BlueScope Lysaght's products are primarily manufactured from COLORBOND®, ZINCALUME® GALVASPAN® and DECKFORM® steels. These are purchased from our upstream businesses, then cut and shaped ('rollformed') to make steel roofing, walling, fencing, structural decking, and a range of other steel building products and systems.

Today, many of the products manufactured by BlueScope Lysaght are benchmarks for quality and performance. They include such well-known brands as LYSAGHT TRIMDEK®, LYSAGHT NEETASCREEN® fencing, LYSAGHT BONDEK® and the perennial LYSAGHT CUSTOM ORB®.

High recognition of the LYSAGHT® brand and strong customer relationships, are key elements in the BlueScope Lysaght Australia business, which is an important channel for BlueScope Steel's metallic coated and painted products.

During the year, BlueScope Lysaght Australia further developed this channel to market by opening new sites and acquiring businesses, thereby increasing our geographic presence in metropolitan and regional growth areas, and improving our service offer to the residential sector. The combination of new sites and acquisitions saw an expansion of BlueScope Lysaght's network from 19 to 27 sites, employing 900 people in total.

This expansion will enable existing and new customers to be serviced more effectively. For example, our acquisition of Acelowe Roofing, Coffs Harbour - a traditional alliance partner of BlueScope Lysaght Australia - will assist us to capitalise on strong growth occurring along the New South Wales mid-north coast.

1.86m tonnes of value-added steel sold to the Australian market

WINNING PARTNERSHIP // Ray Borg, Manager Corporate Purchasing Toyota, and Brett Johnson, Manager Regional Sales Victoria/Tasmania are shown, above, at Toyota's new Port Melbourne headquarters. This building incorporates BlueScope Steel products.

Australia Coated and Building Products Sales Revenue and EBIT for 2002, 2003 and 2004

AESTHETIC BALANCE // Architect Bud Brannigan designed Australia's Tweed River Art Gallery above. The building balances the visual impact of its artwork with the beauty of the surrounding landscape. Clad in COLORBOND® metallic steel, the gallery changes its sheen with variations in the sub-tropical light.

AWARD WINNERS // BlueScope Steel's outstanding customer service was recognised with the 2004 Toyota President's Award. Our winning employees are shown above.

CONTEMPORARY ARCHETYPE // Architect Peter Woolard's Virgo Residence near Geelong, Victoria, above, showcases ZINCALUME® steel in LYSAGHT CUSTOM ORB® and LYSAGHT KLIP-LOK® profiles. The house showcases contemporary Australian architecture.