Chairman's Message from Graham Kraehe
COLORBOND® steel roofing creates a striking effect on the new WA Basketball Centre in Perth, one of the finest training facilities in Australia. Designed by Cox Architects.
BlueScope Steel emerged from the tough times of the global economic crisis with a strong balance sheet, strong liquidity and a return to profit in 2010.
Our profit for FY2010 represents a significant turnaround on the previous year's net loss. Importantly, the Company is now well positioned to gain from continued strong Asian growth and a global economic recovery.
The strong business performance improvement came from concentrated effort and hard work by our 18,000 employees worldwide.
Everyone across the Company took effective measures to reduce costs and increase sales volumes. The Company has reduced gearing to a conservative level and BlueScope has a strong liquidity position. As a result, BlueScope now has improved its cost base and balance sheet to enable it to manage through business cycles and look at opportunities as the market improves.
Currently, we are seeing a continued, although patchy, worldwide economic recovery and strength in most of the Asian economies in which we operate.
ASIA POSTS STRONG IMPROVEMENT
The most pleasing result was the turnaround in the Company's Asian businesses.
Today, BlueScope has the best Asian footprint for mid and downstream products of any steel company. We have been operating in China for more than 20 years and in the Asian region for over 40 years. Our presence there gives us exposure to the most populous and fastest growing markets in the world.
The Board will be in Shanghai in October where we are scheduled to hold a Board meeting and customer function in the Australian Pavilion at the Shanghai World Expo. This Pavilion, that showcases Australian architectural vision and our steel to the world, is one of the most popular of the Expo sites. We are very proud of this unique building.
Expo has hosted more than 53 million visitors to date, including hundreds of BlueScope customers in China where we have found it a successful platform for sales and business development opportunities.
Shareholder value
The Board committed to resuming dividend payments as a high priority once economic recovery became more apparent. The Board has therefore declared a 5 cent per share fully franked final ordinary dividend for FY2010. The decision to reinstate the dividend payments reflects the Company's improved financial performance following the global financial crisis, our confidence in the medium to long term outlook for BlueScope Steel and the global steel industry, and the growth in the economies where we operate.
Strategic Direction
During FY2010, the Company undertook a strategy review which builds on the 2007 Blueprint.
The Board has endorsed the renewed strategy which will see us leverage our existing capabilities and capitalise on our market strengths.
Managing Director and CEO Paul O'Malley discusses the strategy further, in his Report to shareholders.
Corporate citizenship
BlueScope is committed to continuously improving the environmental footprint of our operations. The Company is working to improve its systems and performance through its network of environmental reviews and audits.
In April 2010, the then Australian Federal Government deferred consideration of its Carbon Pollution Reduction Scheme until 2012. Also, on 1 July 2010, the New Zealand Government introduced an Emissions Trading Scheme (ETS). BlueScope's New Zealand Steel operation will be affected by this ETS, but the New Zealand government policy recognises the global nature of the steel industry and its trade exposure so the net impact to New Zealand Steel should be minimal.
The Company has developed a set of Greenhouse Policy Principles by which it will assess environmental policies in countries where we operate. In essence, we advocate policy that reduces emissions but minimises any loss of international competitiveness. These Principles can be viewed on BlueScope's corporate website.
Governance
Since BlueScope's inception, the Company has been committed to the highest standards of Corporate Governance and to complying with the Australian Stock Exchange Corporate Governance Principles and Recommendations.
In some cases, we have been at the forefront in key practices such as remuneration. The Board's prime objective in managing remuneration has been to ensure employee remuneration reflects the Company's performance, both in times of excellent results and in downturn years, so that they are aligned with the experience of shareholders. Directors and executives are required to personally build a holding of BlueScope shares and all employees are encouraged to become shareholders.
The Company welcomes recent changes to diversity disclosures introduced by Australia's Corporate Governance Council. BlueScope is committed to building a diverse workforce and considers that diversity, including gender diversity, is a key business issue.
The complementary skills and experience of our individual Board members is the key to its strength and I thank all of our Board members for their contribution through the past year.
On behalf of the Board, I would like to thank our 18,000 employees for the turnaround performance, and Managing Director and CEO Paul O'Malley and his team for sound leadership and guidance.
