Coated and Building


Despite tough conditions in some countries, we improved performance and expanded our regional footprint, building our reputation as a premium steel brand in Asia. Kathryn Fagg - President of BlueScope Steel Asia

With headquarters in Singapore, BlueScope Steel Asia manufactures and markets premium steel products in nine countries across the region - China, India, Indonesia, Malaysia, Thailand, Vietnam, Singapore, Brunei and Sri Lanka. In addition, there are 22 building solutions facilities, producing the high quality BUTLERŪ brand of pre-engineered buildings (PEBs) and the LYSAGHTŪ range of steel building components. There are 106 sales offices across the region providing sales and technical services to customers in the commercial, industrial and residential sectors of the building and construction industry. Business President Kathryn Fagg discusses our journey in Asia.

The spectacular BOH Tea Centre overlooks the Tea Estate in the Cameron Highlands, Malaysia. The 140 metre facade contrasts BlueScope Steel products with natural materials set against the rows of tea trees.

Q. What was the highlight of the year for our Asia businesses?

A. Without question, our most outstanding achievement was our safety record. In the 2006/07 financial year, our Lost Time Injury Frequency Ratio (LTIFR) was zero. This means that across our Asia operations, we accrued around 22 million work hours without losing any time to injury. We're extremely pleased with the work that's been done by our employees to lift safety standards in this region. In addition, our Medically Treated Injury Frequency Ratio (MTIFR) was less than one, which represents a reduction of 20% on the previous year.

We are also creating a safety culture beyond our business - working closely with contractors to help them raise safety standards above those that are typical for the Asia region, and pushing for higher levels of protection for contractors as well as our employees.

Overall, we are building a reputation for BlueScope Steel as a company that cares for its people - we are perceived as a desirable employer, which helps us attract and retain good people.

The curved design for the Malaysian National Audit Department called for flexible building materials. ZINCALUME® and Clean COLORBOND® steels were chosen to detail the slick curves of the walls and roof.

Q. What other achievements were there in Asia FOR 2006/07?

A. There were a number of notable achievements. We saw a major improvement in performance from our established operations, while some exciting new investments have reached start up. Overall, this was a stronger year for our Asia businesses, with revenue increasing by 32 per cent to nearly $1.4 billion, and EBIT up 121 per cent to $42 million.

In Vietnam, our new A$136 million metallic coating and painting facility near Ho Chi Minh City was officially opened by Australian Prime Minister, The Hon. John Howard, in November 2006. This facility showed a significant improvement in operations in the second half of the year and we look forward to building market share in this country.

Another investment that has high growth potential is our joint venture with India's Tata Steel. In January this year, we opened our third plant, a rollforming facility at Chennai in the south of India. This completes our $100 million investment in a network of manufacturing facilities, which includes: Chennai; Tata BlueScope Steel headquarters with a LYSAGHTŪ and BUTLERŪ design and manufacturing centre in Pune; and our New Delhi rollforming operation. All three downstream facilities are operating ahead of schedule, with good PEB (pre-engineered building) sales.

BlueScope Steel supplied tsunami relief housing at Desa Paterik, Banda Aceh, Indonesia.

BlueScope Steel supplied tsunami relief housing at Desa Paterik, Banda Aceh, Indonesia.

Also in India, construction is underway on a fourth facility, a $270 million metallic coating and painting plant, adjacent to Tata Steel's existing steelworks at Jamshedpur, in the east of that country.

Elsewhere in Asia, among our established businesses, our Indonesian plant is operating at capacity, servicing strong domestic demand. We've also committed US$101 million dollars to complete a second metallic coating line, with in-line painting capability, at our Cilegon operation west of Jakarta. This new facility will give us the scale and efficiency we need to meet growing market demand in this country.

In Thailand, we recorded very strong operational performance from our recently completed metallic coating line. Exports from Thailand increased and our new PEB facility is operational.

Our Malaysia business also continued its strong turnaround, with improved yields, good domestic demand and a diversification of its export markets.

In addition, our new China metallic coating and painting facility at Suzhou, near Shanghai, was officially commissioned. It's operationally and technically proven and we are now looking forward to ramping up this facility.

During the year, we implemented our information technology business management systems across our Asia operations, and relocated our Asia headquarters from Sydney to Singapore. This move underlines our commitment to building closer relationships with our customers in Asia.

Asia Coated and Building Products Revenue and EBIT graphs
Q. What challenges did BlueScope Steel face in Asia?

A. Our Asia businesses, which we operate in mid and downstream markets, were affected by high steel and coating metal prices, while in some countries, we also experienced fluctuations in demand for our products. This meant pressure on the production side and from the market, which reduced the spread for our midstream businesses.

In Thailand, demand softened as a result of the country's political coup. However, we were able to offset this by increasing our export sales, delivering high quality products, and through new market offerings. Given the difficult domestic conditions, this business achieved very good results in a market where many competitors were unable to remain profitable.

We also experienced tighter margin spread in China for our metallic coating and painting business. In that country, a shift in government policy relating to exports led to buyer uncertainty, downward pressure on prices, and significant volatility in our Chinese markets.

Another challenge was the number of start-up businesses across the region. In many cases, we are building new markets, which means creating an understanding within each market of the value of our premium steel building brands.

Q. What does the immediate future hold for BlueScope Steel Asia?

A. Across the region, we'll be focusing on operational efficiencies. BlueScope Steel has undertaken rapid growth in Asia. With many of our capital investments now reaching ramp-up stage, we'll be concentrating our energies on creating new markets for our premium steel brands, on continued expansion in solutions such as PEBs, and on new product development.

Asia is one of the great growth centres, encompassing three of the world's most populous nations - India, Indonesia and China. Each Asian country in which we do business presents unique opportunities and challenges. We are helping to shape the built environment in Asia through our contributions to architecture and building and we are very enthusiastic about our prospects in this dynamic part of the world.

Colour and light on the detail of the
National Audit Department building, Malaysia. The building typifies contemporary Asian architecture. BlueScope Steel products have featured in many high profile building projects throughout the region.

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