BlueScope Annual Report 2018/2019

At the time of writing, 1H FY2020 outlook sees weaker commodity steel prices and spreads across our steelmaking businesses in the US, Australia and New Zealand. Accordingly we expect underlying EBIT around 45 per cent lower than 2H FY2019. This is the short term outlook, but we are now a very resilient global Company with a strong balance sheet and high quality assets which provide the capacity to withstand and potentially take advantage of tough cyclical conditions. BlueScope is very focused on generating returns above its cost of capital so we create value for shareholders. Your Company has delivered $1.14 billion in shareholder returns since FY2017 to June this year with up to a further $281 million in dividends and buy-back this half. Long term investment focus The United States is an attractive market for BlueScope, and the North Star BlueScope Steel facility in Delta, Ohio, is recognised as a best-in-class asset. After careful due diligence your Board has approved a US$700 million expansion of this successful business, subject to anticipated receipt of necessary air permits and local and state incentives. The expansion will add around 850,000 metric tonnes per annum of domestic steelmaking capacity in the US taking annual output from about two million tonnes to three million tonnes in a 100 million tonne per annum US domestic market. This project is a perfect fit with our strategy, offering long term sustainable earnings growth from a high-quality asset. It is a significant tribute to the approximately 390 employees who work hard to make it such a strongly performing business. BlueScope delivered another very good financial result in 2019 – our third year with back to back underlying Earnings Before Interest & Tax (EBIT) above $1.1 billion. This occurred despite some softening in commodity steel spreads and volumes in the second half and, of course, rising uncertainty in global markets caused by geopolitical factors and the US-China trade dispute. BLUESCOPE IS VERY FOCUSED ON GENERATING RETURNS ABOVE ITS COST OF CAPITAL SO WE CREATE VALUE FOR SHAREHOLDERS. JOHN BEVAN Chairman CHAIRMAN’S MESSAGE 1

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