ASIA
Coated and Building Products
WE ARE BUILDING OUR ASIAN BUSINESS ON STRONG, ESTABLISHED FOUNDATIONS AND ARE WELL POSITIONED TO CAPITALISE ON GROWTH IN THIS DYNAMIC REGION. WE HAVE HAD A HISTORY OF GOOD RETURNS AND ARE TAKING STEPS TO IMPROVE PERFORMANCE.
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We have an unrivalled network of manufacturing facilities and proprietary coating and painting technologies in Asia. |
TIANJIN, CHINA |
CREATING OUR FUTURE
Demand for steel, and its use in exciting architecture, continued to grow in Asia in 2005/06. BlueScope Steel is ideally positioned with operations in nine countries - Thailand, Singapore, Indonesia, Brunei, Malaysia, Vietnam, China, India and Sri Lanka - where the Company sells a range of high quality value added products.
The Company has had a strong and growing presence in the region for more than 40 years since opening our first in-country manufacturing facility in Singapore in 1965. Our major capital investment program of more than $650 million over the last three years has expanded our operations significantly in a number of the world's most populous and fastest growing economies. We now have more than 4,000 employees working within our Asian businesses.
We have an unrivalled network of manufacturing facilities and proprietary coating and painting technologies in Asia. BlueScope Steel is pre-eminent in manufacturing pre-engineered buildings (PEBs) and rollformed products for the construction market.
Through our network, we produce and distribute the high quality BUTLER® brand of building products, pre-engineered building systems, and the LYSAGHT® brand of steel rollformed products and accessories using our premium coated ZINCALUME® steel and Clean COLORBOND® steel. With on-the-ground operations, our customers benefit from shorter lead times, better technical support and delivery performance and specific local market knowledge.
Our steel building solutions feature in many of the most noteworthy buildings in Asia including the Petronas Twin Towers in Malaysia, the Tianjin Olympic stadium for the 2008 Beijing Olympics, and the Shanghai World Financial Centre building that is to become the world's tallest building.
During this financial year, the Asian business performance was very disappointing, producing a $1 million loss, $84 million lower than the previous year. The earnings decrease was due to a number of short-term factors including the sharp decline in steel prices in the first quarter which resulted in a margin squeeze. Domestic and export prices were lower while zinc and aluminium coating metal costs were higher. Domestic demand in Malaysia and China was lower. The commissioning of the new Vietnam and Thailand metal coating lines and ramping up of production led to higher unit costs.
We have had a history of good returns from our Asian operations and are taking steps to improve the performance of this business. At the end of the year, we announced the decision to close our unprofitable Taiwan operation. We are undertaking a review of pricing and non-steel materials that go into making our products.
In 2005/06, we completed and commissioned a number of our investment projects. These projects aim to build our position in the value-added markets.
One of this year's highlights was the signing of a 50/50 joint venture with Tata Steel in India and the creation of the joint venture company, Tata BlueScope Steel. This powerful partnership capitalises on our joint strengths in steel production and the marketing of premium quality branded products.
We continue to seek ways to further link and leverage our capabilities across BlueScope Steel. By linking our portfolio of products of COLORBOND® and ZINCALUME® steels to the BUTLER® brand, we intend to create state-of-the-art pre-engineered buildings featuring beautiful and colourful steel solutions.
We are building our Asian business on strong, established foundations and we are well positioned to capitalise on the growth in this dynamic region.
India
India is one of the fastest growing economies in the world. Demand for coated and pre-painted steel, particularly for industrial and commercial buildings, is growing as the benefits of premium products are becoming better known in this market. Coated and pre-painted steel, which is long-lasting, flexible, fast and easy to use and architecturally striking, is an ideal building material for the South Asia region.
The joint venture company, Tata BlueScope Steel, is building a new business platform across India and South Asia that will manufacture zinc/aluminium metallic coated steel, painted steel and rollformed steel products, and deliver PEBs and other building products.
In Pune, the headquarters of Tata BlueScope Steel, a LYSAGHT™ and BUTLER™ design and manufacturing centre was commissioned in April ahead of schedule, with the first product despatched a month later. Two rollforming facilities are under construction at Chennai and New Delhi, with both facilities ahead of schedule and expected to be completed by the end of CY2006.
A new metallic coating and painting facility is to be built at Jamshedpur. Site development work has commenced.
Indonesia
BlueScope Steel is Australia's largest manufacturing investor in Indonesia and the country's only local manufacturer of zinc/aluminium metallic coated and pre-painted steel. Apart from COLORBOND® and ZINCALUME® steels, we produce and market a number of tailor-made brands including PELANGI™ steel, ABADI™ steel, and GEMILANG™ steel. Our products are sold to customers for commercial and residential construction and other manufacturing applications.
The Company has a metallic coating and painting facility at Cilegon and three BlueScope Lysaght rollforming facilities at Cibitung, Medan and Surabaya.
With the world's fourth largest population, Indonesia is experiencing strong growth in the residential and commercial building sectors. Our metallic coating and painting lines are operating at full capacity with a focus on producing thin gauge material used primarily in residential construction.
Demand is also high for quality downstream products such as painted steel roof tiles and steel framing. New products, such as TEXTURA™ steel used in feature panels for walling and a range of blue tinted metal tiles for roofing, have increased our midstream production range. Across BlueScope Steel's Asian operations, our Indonesian operation markets the largest volume of SMARTRUSS® roof trusses.
KOTA DAMANSARA, MALAYSIA
Playing basketball at Sri KDU School, Malaysia. This is the first
purpose-built school in the country and features COLORBOND® steel
in a LYSAGHT KLIP-LOK® profile.
Malaysia
BlueScope Steel Malaysia is the only local manufacturer of both ZINCALUME® and Clean COLORBOND® pre-painted steels, serving customers in Malaysia, Singapore, Brunei and selected export markets. The business is a joint venture with PNB Equity Resource Corporation Sdn Bhd, a large local equity fund.
We operate a metallic coating and painting facility at Kapar, Selangor, and four BlueScope Lysaght rollforming plants in Shah Alam, Kota Kinabalu, Kuching and Bintulu. In addition, BlueScope Lysaght operates in Singapore and Brunei.
The Malaysian business experienced a difficult start to the financial year with lower selling prices, a softer construction market and reduced government spending. A number of initiatives, including a new feed sourcing strategy, new product development and increased export opportunities, were implemented to improve performance and led to a marked improvement in the second half of the year.
Vietnam
BlueScope Steel has been operating in Vietnam for more than a decade. From its rollforming facilities in Hanoi and Ho Chi Minh City, BlueScope Buildings Vietnam provides premium quality LYSAGHT® building solutions including SMARTRUSS®, KLIPLOK® and BONDEK® to the rapidly growing Vietnamese building and construction industries.
The new $136 million metallic coating and painting facility at Phu My, Ba Ria Vung Tau, near Ho Chi Minh City, started operations in November, ahead of schedule and on budget.
It is already exceeding operational ramp-up targets and despatches with medium-term growth expected to remain strong. During the year the business attained its first profit.
Thailand
BlueScope Steel (Thailand) Limited is a joint venture between BlueScope Steel Limited and Loxley Public Company Limited, one of Thailand's leading trading companies. BlueScope Steel (Thailand) Limited, operates a cold rolling, metallic coating and painting facility at Map Ta Phut manufacturing ZINCALUME®, Clean COLORBOND® and TRUZINC® zinc coated steels for local and export markets.
BlueScope Lysaght Thailand operates rollforming facilities at Rangsit, Khon Kaen and Map Ta Phut specialising in the manufacture and supply of coated steel building products such as steel roofing, wall cladding, structural floor decking, high strength purlins and other steel building products.
Despite short-term uncertainty in the Thai market due to political change, higher steel demand and prices are expected in 2007 with stronger growth in the industrial and commercial construction segment.
The second metallic coating line at Map Ta Phut, increasing capacity by 200,000 tonnes, commenced operations in November 2005. Technical difficulties in the commissioning phase early in the financial year have been overcome but delayed our ability to reach full production during the year.
The next stage in our growth strategy will be the completion of a PEB manufacturing facility at Map Ta Phut, adjacent to our metallic coating and painting facility, which will be operational by October 2006.
China
BlueScope Steel continued to expand its unique downstream businesses in China with the completion of a new facility at Guangzhou and the expansion of the Langfang facility during the 2006 financial year. We experienced demand growth in the power station segment and secured signature projects for decking and more landmark building contracts for the 2008 Beijing Olympics.
Our focus is to capitalise on the growing China steel construction industry as urbanisation over the next 20 years fuels growth, and building quality improves with more steel used in commercial and residential construction. BlueScope Steel has developed an important niche in this energised market.
SUZHOU, CHINA
The striking and impressive metallic coating and painting facility in Suzhou - Australia's largest manufacturing investment in China and BlueScope Steel's single largest investment in Asia.
The Company's first combined BUTLER® PEB and LYSAGHT® facility, located in Guangzhou, was completed on schedule and on budget. This will expand the geographic spread of our PEB capability in southern China.
The new metallic coating and painting facility at Suzhou is being commissioned. This striking and impressive facility, 80 kilometres west of Shanghai, is Australia's largest manufacturing investment in China and BlueScope Steel's largest single investment in Asia.
The expansion of our Langfang facility, near Beijing, to manufacture architectural and sandwich panels for premium façade applications, was completed with operations ramping up in 2007.
BlueScope Steel began operations in China in 1995, and now has nearly 2,000 employees, 55 sales offices and eight manufacturing plants across the country. We have the most widely recognised premium coated steel brands in China. Of all our coated steel products, ZINCALUME® steel is our number one brand.
BlueScope Buildings China is the market leader in pre-engineered steel buildings. The market conditions for BlueScope Buildings in 2005/06 were more challenging with delays in project approvals as a result of tighter credit conditions in China.
Notwithstanding this, the business has been awarded contracts for two more 2008 Beijing Olympic projects, following its successful bid for the Tianjin Olympic Centre Stadium which will host the Olympic soccer games. The business will provide roofing products for the Olympic fencing training centre and swimming training centre.
