Bluescope Steel Ltd

Good morning and welcome to the Bluescope first half FY24 financial results presentation. I'm Mark Vassella and I'm joined this morning by David Fallew for his first results presentation as Bluescope CFO. Welcome, David. In a moment, we'll take you through the results before we take your questions. David and I are joining you today from Melbourne, part of the Eastern Kulin Nation, and I'd like to acknowledge the traditional custodians of this land, the Wiradjuri peoples. We pay our respects to Elders past, present and emerging, and to all First Nations peoples joining us today. Before we get into the details, I'd like to take a step back and put the first half FY24 result into the context of BlueScope's business model. The last decade has seen us take action to drive resilience in our business model. Resilience that allows us to deliver results through all points of the cycle. As we know, recent years have been marked by cyclically high demand levels and spreads resulting in very strong results. Current volatility is showing softer conditions. However, it is also helping prove the resilience that we know exists in the business. That resilience is underpinned by our diversification. With quality steelmaking businesses and a suite of margin enhancing premium branded products in the United States, Australia, New Zealand and throughout Asia. Our footprint of quality assets and the strength of our balance sheet are the key enablers for our through cycle performance, all supported by our 16,500 strong dedicated team. On bench strength in the organisation, recent changes at the ELT are setting us up well to continue to deliver on our strategy, with high quality executives such as David and Sam Shaman joining us. Our next generation leaders in Tanya, Christy and Peter are relishing their new roles. And Mark Cicluna, who you met at the last half, has joined Christy as CFO in America. I'm very fortunate to be surrounded by such management talent and depth. What is exciting and quite unique is the scale of the growth opportunities available to BlueScope within its core business. We're progressing a range of projects in this space to improve margins, volumes and resilience. all leveraging our core capabilities. And we're securing our longer-term future with our comprehensive decarbonisation program and broader approach to sustainability, all in pursuit of our purpose and our bond. Getting into the detail, BlueScope again performed well in the first half of FY24 against what was a volatile backdrop. As I just noted, the result demonstrates the through-cycle resilience of our diversified business model. which also saw us retain a strong balance sheet and continue to deliver returns to shareholders. Aligned with our strategy of transform, grow and deliver, first half FY24 saw key projects executed across the footprint that secure our long-term sustainable earnings and growth. These include the North Star ramp up and de-bottlenecking, integration of the new US recycling and coil painting businesses, the Port Kembla Reline and Western Sydney Metal Coating Line, all of which underpin our future resilience and success. Our strategy to shift volumes towards premium branded products continues to enhance through cycle margins, enabled by our experience in producing high quality, premium branded steel building products for over half a century. Leveraging this capability, we're exploring the opportunity to further integrate our US value chain, building a platform for future growth in coated and painted products in that large and growing market. And lastly, we're progressing a body of work aimed at unlocking our significant portfolio of land in Australia and New Zealand, an exciting multi-decade opportunity. The commitment we made to decarbonisation several years ago is allowing us to explore a pathway that positions the business for a low-carbon future, Two significant highlights in the half were the recently announced partnership, BHP and Rio Tinto, which builds on a body of work we've been undertaking for a couple of years now. Work that's critical to the development of low emissions iron making technologies, utilising hematite ores. And in New Zealand, the landmark EAF project to almost halve our emissions has commenced and is progressing well. This is an exciting time for BlueScope as we reap the rewards of the hard work done in years gone by and continue to lay the foundations for the future. First to safety. Our integrated health, safety and environment strategy continued in the half, especially as we progressed the rollout of our culture and approach to our recently acquired businesses in the United States. We were proud to be recognised by World Steel for our integrated strategy, And we played a key role as the founding sponsor of the Global Safety Innovation Summit held in Wollongong just last week, which brought leading companies and experts together to further our collective efforts to keep our people safe. To the lead indicators, we identified 271 risk control projects for completion in FY24, all of which will improve our management of material risks and reduce the likelihood of life-changing events. At the end of the half, over 1,800 of our leaders had participated in global HSE risk management programs, and 374 of our people were involved in business-led learning programs. On our lagging metrics, with the inclusion of the recent scrap and coil painting acquisitions, TRIFA increased marginally to 7.6, above the top end of the long-term range of 5 to 7, and potential severity saw an increase. with seven injuries having the potential to be a fatal incident. We continue to work hard to improve our safety performance. To our financial highlights, underlying EBIT in first half FY24 came in slightly ahead of our guidance range at $718 million and broadly in line with the second half of FY23, despite some wild swings in steel spreads and macroeconomic drivers. Again, demonstrating the benefit of our diversified model. The business delivered a return on capital of 13.4% and the balance sheet remains strong with net cash of $614 million. The strength of our balance sheet and cash generation underpins our confidence to continue to pursue key investments through the steel industry cycle. And the board today has approved a fully franked interim dividend of 25 cents per share and an increase in the buyback to $400 million to be brought back over the coming 12 months. Now, this result has been made possible by the dedication of our 16,500 strong team, who I'd like to thank for their ongoing dedication and support. David will take you through the detailed business performance, but you can again see the significant contribution from North America. As I look across these regional results, I'm encouraged by the earnings power of the business and excited by the opportunities for growth within our core business. The business continues to pursue our purpose and deliver on our bond as we embed sustainability in all that we do. On climate, highlights include the progress on our DRI options study, deepening of our technology collaborations with leading global steelmakers, and progress on our optimisation projects in pursuit of our medium-term goals. Femart representation continues to be a key focus as we progress initiatives to better reflect the communities in which we operate. We've seen solid improvement over the last few years, and the total percentage of women in Bluescape's workforce remained stable at 24% in the first half. On sustainable supply chain, just under 150 assessments were completed during the half, with four on-site audits conducted. And as previously flagged, Bluescape has appealed the findings made by the Federal Court in relation to the civil proceeding bought by the ACCC. The payment of the penalty has been made and is reflected in our accounts. As I mentioned earlier, just a week or so ago, we signed an agreement with Rio Tinto and BHP to collaborate on a project that aims to accelerate the decarbonisation of steelmaking. We've agreed to work together to develop a pilot facility focused on direct reduced iron and electric smelting technology, leveraging the natural advantages of Australia, namely our hematite iron ore resources, and the potential for abundant renewable energy. Those of you who are familiar with our climate and sustainability reporting will know that a hydrogen DRI process has the potential to reduce emissions intensity by over 80%. However, this requires a number of enablers to be in place. Given the current limitations of using Pilbara ores in the DRI process, this project is key to unlocking one of those enablers. by cracking the code for Pilbara ores in low emission intensity ironmaking. We're excited to contribute our unique experience of operating the only electric smelting furnace processing DRI in the world at our operations in New Zealand, which we've been doing for nearly 60 years. I'm also pleased to report work on the EAF at New Zealand Steel is underway. Co-funded by the New Zealand Government, This project will almost halve the business's emissions and contribute meaningfully to New Zealand's emissions reduction. Construction equipment supply contracts have commenced and importantly, a domestic scraps supply chain is in place. Rio Tinto BHP agreement and the New Zealand EAF project are just two examples of how we're pursuing our purpose and our strategy. We're also transforming our business through the increased use of digital technology. We're only just starting to see the benefits of the growth investments that we've made in recent years, and they're adding to our earnings profile. And we remain focused on delivering a safe workplace and an adaptable organisation with strong returns. To update the key projects in North America, the North Star expansion is progressing well, with 320,000 extra tonnes produced during the half, and we're now looking to the de-bottlenecking opportunities. The recycling business has exceeded our expectations, delivering significant value to the Northstar business. Through sophisticated value-in-use assessments, BRM and Northstar can optimise the quality and mix of scrap. We continue to work towards a greater level of self-sufficiency through a range of equipment and digital opportunities. At Blue Scope Coated Products, the acquisition of seven underutilised paint lines for below replacement costs It accelerated the execution of and provided options for our US coated and painted strategy. A program of work is underway to address near-term underutilization in the business and to progress the single bill offer and color bond market strategy. Now, whilst the business we acquired is not performing as we'd hoped, we remain confident of the medium to longer-term growth opportunity these assets give us. Expanding on this medium to longer-term opportunity, we've commenced a feasibility study into the further integration of our US value chain. As our US footprint covers each end of the value chain, with hot rolled at North Star and painted coil at BCP's paint lines, the opportunity exists for cold rolling and metal coating. Our study is focused on a cold rolling and metal coating facility in the Midwest, providing a reliable supply of high quality metal coated feed, which will be critical in delivering our US growth ambitions as we take our core DNA in coating and painting into the large and growing US market. We're initially looking at the addition of 550,000 tonnes of pickling, cold rolling and a two-stage metal coating capacity add to be delivered through 2030. This approach allows us the ability to grow in a modular fashion and maintain optionality. A high level capital estimate for the total project is up to US $1.2 billion, which would be spread over the next six years should the project be fully executed. To the key projects in Australia and New Zealand. Having moved to execution last August, the number six blast furnace realign and upgrade project to secure iron making at Port Kembla is progressing to plan with early works commenced and long lead time items advanced. Project timing and capital estimates remain on budget, noting the recent award of $104 million from the Australian Government to provide some offset to the total cost. And the new metal coating line in Western Sydney is progressing to plan. We're expecting commissioning by the end of 2025, which supports the ongoing shift towards premium branded products in Australia. An enduring initiative in Australia has been the continued shift in production towards premium branded products like Colourbond and value adding solutions like Truecore. This growth delivers enhanced margins for the ASP business, reducing our exposure to export markets and domestic commodity pricing and remains a key through cycle growth opportunity. The shift towards these premium products has grown at levels in excess of the broader market, which has been achieved through meeting customer demand preferences, leveraging the inherent attributes and advantages of our products, continued efforts to innovate and increase the applicability of our products across building applications such as cladding, facades and light gauge framing, and investment in customer-centric initiatives that have driven demand through the steel value chain. What's most exciting is that the strong growth seen in this space is expected to continue with the success of our ongoing efforts enhanced by a range of supportive macro trends. At our AGM in November last year, we shared with you an update on the master planning work for roughly 200 hectares of land adjacent to the Port Kembla steelworks. In addition to this land, Bluescap has three other plots of adjacent land holdings, totalling 1,200 hectares. This includes around 450 hectares of land adjacent to our Western Port facility in Victoria, approximately 400 hectares adjacent to our Glenbrook site in New Zealand, and a 200 hectare parcel of land not far from Port Kembla in West Apto. This represents a significant opportunity for BlueScope. We're reviewing this opportunity to position the land for maximum strategic value. This includes running master planning processes with due consideration to our existing operations and looking at potential uses and related planning requirements. noting a broad range of opportunities existing across each parcel. And we're progressing a body of work focused on developing our execution model, which will be centrally coordinated in the corporate function. I'll now hand over to David, who'll take you through the more detailed financial data.

Thanks, Mark. Good morning, everyone. And it's been great working with the teams across the business over the last half. So let's turn to the results on slide 20. The Australian business delivered a similar result to the second half of FY23, with underlying EBIT of $258 million. Underlying demand remains robust, including for Calabond. However, softer volumes were observed towards the end of the half. Pleasingly, January and February daily sales remained stable at consistent levels to a year ago. Higher spreads were largely offset by higher costs on timing of maintenance and escalation pressures. with a similar export coke performance to that of the prior half. Looking at specific end-use segments for ASP, across the board we saw slightly softer dispatches in the first half of FY24 relative to the prior half, which was observed broadly towards the end of the half. Sales into the residential construction sector remained supported by a solid pipeline of work during the half. Non-residential construction, manufacturing, agriculture and mining were the sectors that drove a slightly lower result, which was experienced towards the end of the half. Given current Asian steel spread levels are at a historically low level, I thought it was important that we take a step back to look at the cost and margin position the business is in, given we're now eight years on from the major restructure through FY15 to 16. After resetting the steelmaking cost base to be cash break even, including sustaining capex at the bottom of the cycle, the business has done an excellent job at maintaining this position despite a high inflationary environment. I do note that the shift towards premium branded products has increased costs. However, we need to keep in mind this has been more than offset by increased revenue and therefore enhancing margins. The combination of both these dynamics is that the margin reset has been maintained at the higher level, which materially improves the downside risks, even at points below the historic bottom of the cycle. You can see this clearly on the analysis set out on the chart on the right-hand side of slide 22. We're confident that we'll be able to have ASP continue to position itself in the upper band of this chart And it's this performance that enables us to invest through the cycle within the ASP business and drives us to replicate its downstream success in the US. Turning to the US, our North American businesses saw a moderately softer performance in the first half of 24 with an underlying EBIT of $417 million. This was driven by softer results at both North Star and Building and Coding Products North America. At Northstar, we saw softer spreads for the majority of the half on the back of the UAW strike. Pleasingly, there was a noted rebound at the end of the half following the strike's resolution. And the period softness was also partially offset by higher volumes from the ongoing expansion ramp up, which is progressing well. And at Buildings and Coated Products North America, the softer performance at the BlueScope Coated Products business, as Mark has mentioned earlier, combined with slightly lower margins in the buildings and West Coast businesses. Looking at activity levels across our North American end-use segments, the key takeaway here is the economy in North America continues to perform at a better level than what was expected in the half, with non-residential activity setting new records and automotive sales and manufacturing activity remaining resilient. Our Asian businesses continued their upward trajectory with an underlying EBIT of $96 million. A solid performance out of Southeast Asia on stronger margins, combined with the benefit of a favourable seasonality in China, along with continued strong performance in Thailand, more than offsetting softer India results as the Indian business integrates volumes from the recently signed supply agreement with Tata Steel. On slide 26, the New Zealand and Pacific Islands business delivered an underlying EBIT of $26 million. This result was impacted by elevated conversion costs, a softer vanadium contribution and softer steel prices, in addition to softer volumes, particularly towards the end of the half. Turning to the group underlying EBIT movements. The first half to first half movement shows the volatility seen in both steel pricing and raw materials, which largely offset to see a step down in performance. Costs remained under pressure across the group, whilst volumes remained broadly stable. The second half to first half walk forward tells a broadly similar story, albeit with less volatility and a greater level of offset in the steel price and raw material costs. Turning now to the financial framework and key financial indicators and settings. The financial framework remains unchanged and is integral to BlueScope's success in managing the business through the cycle. You'll all be familiar with this guiding document, but I would like to reiterate that we are holding a level of balance sheet capacity to de-risk the large pipeline of capital investment for growth and major projects in the short to medium term. The group delivered a return on invested capital of 13.4% over the past 12 months with robust contributions from North America and Asia. Importantly, this return was delivered on an increased invested capital level as we see earnings being delivered from the historical investments. Cash flows remained robust in the first half of 24, however, were impacted by a slight working capital build and higher tax expenses. Turning to our capital structure, the balance sheet remains strong with $614 million of net cash at the end of the half. We have ample liquidity of over $3 billion and have maintained our investment grade ratings from both Moody's and S&P. This clearly puts us in a position to invest appropriately in the business during periods of volatility and set the business up for long-term growth. On capital expenditure, In the first half of FY24, we continue to progress a range of foundation and growth initiatives, including the MCL7 project, the New Zealand EAF project and the Realign project, which you can see called out separately on the chart. In the second half of 24, we're expecting a slightly higher sustaining spend of around $240 million, with a step up in spend on the range of projects Mark mentioned at the outset of the presentation. Turning to shareholder returns, aligned to the target annual dividend level of 50 cents per share, the Board today approved a 25 cent per share fully franked interim dividend. In addition, the Board has approved an increase in the scale of the buyback program to allow up to $400 million to be bought over the next 12 months. Given the number of shares bought back and cancelled over the last seven years, we will review the annual ordinary dividend target level in 2024. This will also consider the growth and resilience of BlueScope's business over recent years and the medium term macroeconomic and industry outlook. Finally, I'll run through the outlook across the regions before handing back to Mark to cover the group outlook. In Australia, we're expecting a result less than half that of first half 24 on weaker benchmark spreads and unfavourable pricing with similar levels of domestic demand. We're guiding to a significantly higher result in North America. North Star is expected to deliver a result approaching double that of the first half of 24 on stronger spreads, increased volume and lower conversion costs. And Building and Coded Products North America is set to deliver a result slightly below that of the first half of 24 as elevated margins continue to unwind, partly offset by expected BPG project sales. From our Asian businesses, we expect a result around three quarters of the first half of 24, driven by typical seasonality in China and stability in Southeast Asia and India. For the New Zealand and Pacific Islands, we expect a result approaching double that of the first half of 24 on the non-repeat of one-off higher conversion costs and higher domestic volumes. And finally, a non-repeat of profit in stock benefit from the first half of 24 is expected to lead to unfavourable intersegment corporate and group costs. With that, I'll hand back to Mark.

Thanks, David. Turning to the group outlook. Underlying EBIT for the second half of FY24 is expected to be in the range of $620 to $690 million, slightly down on the first half of FY24. In the context of the spreads you can see on the slide, this outlook again demonstrates the benefit of Bluescope's diversified business model, with weakness in ASP offset by strength in the US. Of course, our expectations are subject to spread, foreign exchange and market conditions. So in summary, Bluescope remains a resilient business that's well positioned to grow and deliver through the cycle. As I noted at the outset and throughout the presentation today, Our diversified business model delivers quality through cycle earnings enabled by our leading steelmaking businesses and a broad suite of margin enhancing premium branded products. These quality earnings are underpinned by a footprint of quality assets, a strong balance sheet, a disciplined approach to managing capital and our outstanding people. And it's only going to get better for Bluescope with a range of attractive growth opportunities within our core business. with a particular focus on continuing our shift towards premium branded products in Australia and New Zealand and leveraging our new growth platform in the US. And we remain steadfast in our work to secure a sustainable future for our business and the communities in which we operate in pursuit of our purpose. So thanks for your time this morning. And with that, I'll turn it over to Q&A.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Simon Thackeray from Jefferies. Please go ahead.

Thanks. Good morning, Mark. Good morning, Dave. Just a quick one for you, Mark, actually. Way back when, we talked about 1 to 1.1 billion of EBITs recycle. Now, excluding Midstream USA, and other future projects, MCL7 and all the rest of it. What's the company's view of sustainable through-cycle EBIT now, given we've done North Star expansion, coil coatings and recycling, M&A, and obviously had pretty impressive share gains in value add. How do you guys think about through-cycle EBIT at a level now?

Yeah. Thank you, Simon. Good morning. And, yeah, look, good question, mate. I mean, from our perspective, part of the review we're going to go through with the dividend that we've signalled is there's no doubt the mix in the business is changing and we're seeing more earnings, obviously, coming out of the investments we're making in North America. We've signalled further potential expansion there and you should think about that in terms of the same internal hurdles that we've talked about, a sort of 15% return on our invested capital. But there's no doubt the mix is changing. Ironically, so is bottom of the cycle. Who would have called the spreads that we're seeing in the last six months a decade ago either? I thought it was as bad as it could ever get at about 180 bucks. And here we are seeing numbers that are crazy. So, you know, one of the nice things about the work that's been done over the last 10 years is that we've still got Australia printing profits, notwithstanding those extraordinary spread levels. So look, I don't want to give you a number. I'm sorry, because we're, you know, we've got some views obviously internally, but we're doing a bunch of work on that now in terms of what is the new bottom of the cycle? What's our mix look like as you, as you, as, as we accumulate the earnings from we're making in the U S for the investments we're making in the U S at those higher spread levels, it's having a positive impact on what the through cycle EBIT is for the business.

sure that's that's still helpful um and then one for the for the pair of you just net cash is 614 um another 200 million loaded into the buyback which will probably all be first half 25 and you but also with your capex profile you've got a pretty significant ramp up coming over the next 12 months um all other things being equal which they never seem to be in steel uh is it reasonable to think that the end of first half 25 sees a pause in the buyback is capital's deployed more significantly for the projects, the MCL7, NZEAF, brass furnace, et cetera?

Well, I mean, that's the process we go through every six months, mate. I mean, we've given ourselves another 12 months on this. We're doing the review of the dividend. We'll assess it at the next period and determine whether we do anything more about it. And as we've said in the past, I think one of the nice things about the buyback is it gives us the flexibility if the world changes for us to take the foot off the pedal. So that's why we like the optionality that the buyback provides us.

Yeah, no, fair enough. I'm going to sneak one quick one in, Mark. A lot of people have asked me, what was the rationale for the Australian government giving a $140 million grant for the blast furnace relay?

Well, that's part of the safeguard mechanism, mate. So as it was designed, that's part of the safeguard mechanism. The government, I believe, felt that they needed to make a contribution to the future of steelmaking in Australia. So it's not just Port Kemblor. and that was the component that was allocated to us. So, you know, we're very thankful for it. We think it's a healthy contribution from the federal government. As you well know, it's $140 million on a $1.15 billion investment. But, yes, certainly it was part of the safeguard mechanism as it was designed and put out by the Energy Minister.

Excellent. All right, if I let somebody else go, I'll join the queue again. Thanks.

Thanks, Simon.

Thank you. Your next question comes from Lee Power from UBS. Please go ahead.

Morning, team. Mark, maybe just on the domestic volume outlook for Australia, can you give us a little colour on that flat outlook? Like, is that end market? Is it share gain? Are there any kind of meaningful changes in what you're seeing from the contribution from either of those two?

Yeah, Lee, good morning. It's a bit of a combination of all of the above, right? I mean, we've seen obviously some of those volumes come off as we've worked through the residential pipeline. Starts are at the bottom end of that historical range that we've talked about for years now, sort of 90 to 130. We've seen some softness in some of the other segments. But then if you, you know, quite frankly, it was always going to come. We were never going to have starts at the levels that they're at that we've worked through. So it fully expected from our perspective I think if you think about the underlying housing shortages in Australia the growth of population and migration any stall or slowdown in housing starts we think is temporary and we'll see that bounce back but you know clearly share growth pushing us into that higher margin product is compensating for some of that softening that we're seeing in volume but I still feel okay about the Aussie economy. David, do you want to make a comment?

Yeah, well, I think, you know, as I mentioned pleasingly, that we're still sort of seeing it as a position of stability. You know, as we sit here today, daily sales are at a consistent level to what they were last year. And I think that's right. It's reflecting both the, you know, the volume that's continuing, but also improvements in mix within the business.

Mm-hmm. Thanks for that, Kyle. I appreciate it. And then the coded products business in North America, the production and quality challenges, like when... How long do you think you get that kind of business back to probably where it's required to be?

Yeah, so there's a few moving parts here, Liam. The transition handover from the prior owners was not great. It was late and... not our fault, but it was late. So that took us probably an extra six months to get our hands on the tools inside the business. The foundation customer, who was the former owner of the business, has been underperforming in the market. So that supply agreement that we had with them, we've seen softer volumes from them in the market. They've lost some share. I mean, coincidentally, or ironically, that's gone to some of our share growth in BB&A. So there's a bit of a a bit of an offset there, but look, it's just been a bit clunkier than we would have liked. As I said, right from the start, this needed a bit more TLC than we expected. We've built the team. There's, there's a lot of capacity that's been added to the team from a, from a people perspective. And we've got now people in the operating at the assets that we've got confidence in. In fact, we've just announced that Jeff Joldrickson who has run Northstar for, 20 years and been a senior operational person, the senior operational person there, many of you guys have met Jeff. He's moving across to take on the operational role within BCP. So that's a fantastic add to the team as well. So we're working on it. It's just a bit slower than we would have expected. And there was some more surprises there than we, than we had had anticipated, but you know, quite frankly, as we said, right from the start, this is, this is a medium to long-term play. We're working right now on further trials of color bonds, on the production facilities to test the product, which we'll have the results of in the next week or so. So in tandem with managing the day-to-day business, we're continuing to work on that market entry, Calabon, single bill strategy. So a bit softer from a day-to-day operational point of view, but no change in our confidence around the medium and longer term strategy with those assets.

Yep. Yeah, that makes perfect sense. Thanks. And then maybe just a final one for David, the, the working cap, like we've kind of swung from tailwinds to headwinds, like how can you just maybe talk about the drivers and what we should be thinking in the, in the second half?

Yeah. So look, I think the, um, I'm bearing in mind, we're coming off a pretty good working capital, um, release the prior half. Um, I just think with the elevation in raw material costs, the unwinds was a bit slower within this half. And then again, the performance of some of the more value added products means that we're continuing to hold a higher level to support that. But I would be, if we're starting to see relief in raw material costs, that'll be a material benefit, not just to spread, but also to the working capital levels that we're holding in inventory.

Okay, excellent. Thank you. Thanks, Lloyd.

Thank you. Your next question comes from Rowan Gallagher from Jarden Group. Please go ahead.

Mark, David, good morning. Good morning, everybody. Mark, North Star, could you, you deliberately slowed the CapEx expansion playing the longer game appropriately. Can you just talk about the profile of that, where that's headed? And then also, In relation to North Star, where the conversion costs, you saw a step change, part structural, part cyclical. How's the progress going associated with those conversion costs, please? Sure.

Morning, Rowan. I'll let David talk to the cost. We're still really comfortable with that ramp up, the extra 320,000 tonnes. I was there just a couple of weeks ago. Team are doing a fantastic job with the ramp up, and I think the pause that we put in place was appropriate. So I'm... I'm encouraged by what we've seen there and they're learning every single day of the week around how to schedule, how to run the asset, what the complications are, what the issues are when you're running the two casters. What's interesting from a de-bottlenecking point of view is that's already started to highlight where the opportunities are for further capacity expansion and they're doing some pretty cool stuff around around some heating options as the slabs exit the caster that improves the reliability and the shape of the bar going through the mill. So it's pretty interesting that how even in the ramp up, they've now started to push into some of the deep bottlenecking tons. But yes, we made the right decision. It's just given the team those couple of extra months, two to three months, just to step up at the, again, the quality of the assets, the reliability of the assets, the capability of the assets, quite frankly, are all beyond our expectations, which augurs well for that continued ramp up. So really comfortable with where they are from an operational point of view, from a cost perspective.

And just from a conversion cost, look, there has been some general inflationary impacts on things like gas, you know, consumables, but really probably the main call out there, Rowan, would be just some of the complexities that emerged in some of the disrupted raw material supply, particularly pig iron. And then I guess just as a final point, the increase is probably not a surprise in the CapEx, but if you look at the CapEx versus production benefit, it's an incredibly attractive incremental spend.

Fantastic. And to follow on to that, if I may, Obviously, leveraging the expanded North Star facility, which was industry leading from a cost perspective, gives you that opportunity to value add and almost replicate the Australian strategy. What are the milestones that you're looking for as part of that potential $1.2 billion, $180 million EBIT opportunity over the next five to six years?

Yeah, good question, Rowan. I mean, obviously, the financial hurdle is the first one we've got to get our heads around. So just understanding... And what you're seeing is a pre-feasibility CapEx estimate. We've now moved into fees. So getting our heads around the return on that investment, it's a little different this one because it's a bit of a modular investment. You get a lump of the capital up front because you're putting down pickling and cold rolling and one metal coating line and then thinking about whether you expand to a second metal coating line or what the timing of that. So there's a bit of front-ending of the CapEx. So it makes the spend profile a little different. But from our perspective, obviously, it's getting over the hurdle of can we make the appropriate return on the sort of investment that we need to make? And then from a strategy point of view, as you rightly point out, I mean, we've got a fabulous asset at North Star. If we were to push that to 3.5 or 3.6 million tonnes with the de-bottlenecking, what's the relative value of taking some of that and converting it through cold rolling metal coating, putting it into BCP as opposed to finding a market for another five or 600,000 tonnes of hot band in that region. So that's the interplay that we're going through. We see from other parts of our portfolio, Rowan, that there's additional value captured by stepping into that midstream component and processing and producing metal coated as part of the process. But that's what we've got to test up and prove up in North America, remembering that, again, a part of this is that broader strategy that we're putting in place around BCP, entering the market with a packaged and branded offer. So they're the sort of, I guess, finance hurdle, obviously capturing the margin and market entry from BCP with branded and packaged offer are the key things that we're thinking about in terms of that integration.

Thank you, Mark. Thank you, David. Have a good morning.

Thank you. Your next question comes from Peter Stein from Macquarie. Please go ahead.

Hi, Mark and David. Thanks very much for your time. Mark, just a quick one, perhaps it's for David, but in terms of your expectations for the US steel market over the next couple of months, It does look like your spread assumptions for the second half would factor in a reasonable amount of further degradation in the spot steel prices. Could you comment on that and sort of perhaps broadly give us your sense of what the lay of the land is? You commented on economic conditions obviously being a little bit better. but we've seen a very rapid sudden adjustment in steel prices. So curious how you think the industry reacts.

Yeah, look, I think just in terms of, you know, your commentary, incorporated within that view, obviously, is the lagged impact on outlook. And so, you know, at the start of the half, you know, we're obviously incorporating a view that, you know, we continue to receive the benefit of that. And then, you know, as we move further out, we're incorporating that view of lower spreads, albeit, you know, we're still seeing that settling, you know, above the, you know, historic, you know, middle of the cycle level that we've seen there. Probably the main comment I'd make in terms of observation would be that, you know, that the The consolidation in the industry has meant we've seen continued discipline on the supply side. I think probably what has changed is, you know, particularly the impact through the, you know, the distributor networks where, you know, they've been faced with a lot of volatility. And as a result, you know, you see them sort of stepping out of the market at higher levels and rebuilding inventory at lower levels. And that's a dynamic that we're continuing to see, Peter. So I suspect that that volatility is something that we'll continue to see through the course of the second half.

Thanks, David. That's useful additional colour. Sorry, there's been a lot made of the coded product strategy, but I'm just curious on the commercial side, Mark, what you're seeing from customers in terms of acceptance of single bill and your intentions with colour bond, some of your test marketing. Could you give us just a little bit of commercial insight there?

Yeah, we're seeing it take hold Pete so some of the other players in the market have pushed into particularly steel dynamics are pushing into the single bill offer and we're seeing that volume grow of course the single bill offer is what we run on the west coast anyway with Steelscape so we have our own controlled experiment if you like on the west coast and that's been successful for that for many years for us and as we start and think about some of the commercial issues that that we're seeing And encouragingly, Pete, we think there's growth in residential roofing, particularly in the premium end, which is interesting for us. It's very hard for us to compete at the low cost end against the asphalt shingle dominant product. But we're seeing certainly from our market work an opportunity for us to push into the more premium end from a residential perspective. And of course, that's... That's right in our sweet spot if you think about what we do with Colourbond here in Australia. So that is one of the commercial indicators that makes us interested. And, of course, you know, the scale of the market, one of the statistics that came out of the market research is that, you know, a 1% improvement in market share for residential housing in North America is 100,000 tonnes. So as you look at that little checkbox of capacity add that we're talking about, you know, a 1% movement can use 50% of the capacity of a line. So it's a bit extraordinary from that point of view. It's a different approach for us from where we are in Australia. And that's what's giving us the confidence to think about, you know, can we push into this market and can we grow and add products like Colourbond to the market, particularly in that premium end and get the same sort of benefits that we find in other markets. So that's the way we're thinking about it commercially, Pete.

Perfect. If I may just sneak one last one. Just in terms of your property portfolio, you've used a few spotlights today. What's sort of the next steps we could expect out of your property development or property value unlock strategy? And what's the approximate timing of those?

Yeah, look, this is, as we've said, this is a multi-decade approach because what we're cognisant of here is this needs to be completely aligned with the operating assets. It's not like we're leaving any of these facilities and we can sell it off and move away, apart from the West Apto facility, quite frankly. I mean, that was a piece of land that was bought a long time ago by BHP for potential expansion of the steelworks and further addition of capacity. So that's That's a standalone piece of land that's got its own opportunities. The pieces of land that surround our facilities, we're going to be very cognisant of ensuring that we think about value, value opportunities that are aligned with what we do. And that's also, I think, quite interesting and very prospective for us. But this is going to be a multi-decade process. We're thinking about how we structure it. You'll see us put in place a structure where it'll be managed from the centre probably an ELT position, someone to look at this. We need to bring some capability in-house, Pete. This is not our expertise. We recognise that. So we need to bring some capability in-house to help us manage this because it's a large parcel of land and a large opportunity. I don't want the businesses distracted by it on a day-to-day basis. So we'll pull it out of the businesses and run it centrally and give it to someone who's got expertise in this pace or a a small group of people have got expertise in this space. So we'll keep you informed, but it's not something that's going to happen in next month or the month after this, as I say, multi-decade, but a significant value opportunity, I think, for BlueScope to think about potentially having a property division as part of the BlueScope portfolio.

Yeah, gotcha. We haven't seen that before.

Peter, it probably gives you a pretty good idea of what the next steps are then.

Thanks, Mark. Thanks, David. Appreciate it. Thanks, Pete.

Thank you. Your next question comes from Paul Young from Goldman Sachs. Please go ahead.

Yeah, morning, Mark. Morning, David. Mark, thanks for providing the CapEx question. for the potential sort of midstream and downstream investment in the US. But that US $1.2 billion is probably a little higher than I thought it might be. And also the timing over the seven years is quite a long duration. Just curious around your thoughts around the timing of that investment. Would it be time to coincide with the CapEx rolling off from Port Kemblau and also, you know, time with respect to, you know, fully getting on top of core codings before you made the investment? Or is it also that timeframe you put out of seven years sort of coincide with potentially looking at, you know, acquisitions in the US?

Yeah, Paul. So, I mean, I just, you think about these assets, I mean, they're not easy to get on top of in terms of planning and approvals and the work we need to go through to make sure that we get it right. So, I wish I could claim that it was as well coordinated as finishing the blast furnace and starting this, but that's probably how it's going to run just because the planning work that we need to do with this. So, you know, it takes us a year or 18 months to get to a point where we're confident to start and spend money on an asset like this. Then it's a couple of years, two to three years for the assets to be manufactured and installed and commissioned. So, even if you think about MCL7 in Western Sydney, you know, that's a multi-year project. So just by dint of the sorts of projects that they are and the complexity that they have, they take several years to roll out. And this would be incremental in terms of Pickle Line, Coal Rolling Mill, First Metal Coating Line. I didn't want to take on the risk or didn't think it was necessary for us to take on the risk of trying to do both metal coating lines at once. That's a big ask. And as you point out, I mean, given some of the moves that are going on in North America, some of the options that we have there that we don't necessarily have in Australia, who knows? I mean, stage two of this process might not necessarily be a build. It might be the potential for us to pick up an asset from somewhere else if someone has an asset that they think is surplus to their needs. So this staged approach allows us to... get on top of BCP, get the market entry strategy for single bill and colour bond rights, start and grow the capacity, build into it with the first line, but keep the options open as we go down the track. So that is how we're thinking about it. Paul?

Thanks, Mark. And then, listen, I have to dig into call codings a little bit, to be honest, because you just said that, you know, that took you six months long to get the keys, if I heard that correctly. And we're seeing... you know, pre-code, you know, sell everything they're producing and actually deleveraging and actually printing good margins and steel dynamics about to commission, you know, over 400,000 tonnes of painted steel and to your point, under a single bill offering. So with cool coatings, I know you bought it below replacement value, but it hasn't, and I know you've only had it for 18 months, but it's not really delivering. So I'm just curious around you know, how many years do you think it will take to turn around and when can you actually tell us, you know, sort of a fixed plan, Mark, about how you actually lift utilisation and improve returns of this business?

Well, I mean, I think there's the two pieces that you've combined there. You know, Steel Dynamics are about to, you know, put a 400,000 tonne line on. We've got 500,000 tonnes of capacity and another 500,000 tonnes of capacity sitting there ready to go. So, That's the very work we're doing right now in terms of how we improve the performance of that business. It's slower than we would have liked, which we've acknowledged. And I'm not happy to call out, but I wanted to call out because we tend to tell you guys when we don't do things as well as we would have liked, that's just the way we roll. So from our perspective, it's not performing to where it needs to be. But I'm really confident the plan that's in place now and we're starting to see the business grow outside of our foundation customer. As I touched on, our foundation customer hasn't been performing at the levels that we expected, but we're seeing growth outside of that. So we're already starting to see that happen, Paul, and I'm very confident that we'll continue to see that grow. And then we've got installed capacity there right now, which we've got the ability to take advantage of. So It's not going to be years for us to get this asset up and running. It's really a matter of just getting on top of the issues that we've had to deal with over the last 12 months or so, and I'm confident now that we've got control of it and we can start and get on top of that. Okay, great. That's good news.

Maybe just to emphasise, I know we spent a lot of the time on the call focusing on the, you know, material opportunity of, you know, the support for, you know, a Colourbond launch in North America. But, you know, kind of make no mistake, there is an absolute priority on addressing the underlying performance within the coded business as it currently exists today.

Yep. Thank you. Look forward to tracking its progress. Cheers. Thanks, Paul.

Thank you. Your next question comes from Lyndon Fagan from JP Morgan. Please go ahead.

Thanks very much. Good morning, everyone. First one's just on Northstar. Mark, wondering if you can give us a sense of roughly when you think this thing could be at 3.5 million tonnes, just trying to get a better idea on the speed at which you can de-bottleneck and get that extra 500 tonnes.

Yeah, well, we're madly getting towards 3 million tonnes right now. And as you saw there, Lyndon, we've got 320,000 tonnes in the first half of extra product. And we expect that's obviously going to build in the second half as well. The work I saw from the team when I was there just a couple of weeks ago on the de-bottlenecking, as we've said right from the get-go, this is not a one-step capital project. There's incremental components involved. We're looking at induction heating off the casters, which we think will give us a step up in capacity. We've already ordered new cranes for the ladle aisle because the dear old cranes that are there were 60 years old and now become a bottleneck for us in terms of heat treating in the ladle aisle. So they're the long lead time items that we've already ordered. The engineering work has started for a third down coiler. That's not a simple process because we're effectively cutting into the into the mill structure itself and adding a third downcoiler. You guys remember from being there, there's currently two. So we're talking about adding a third one. So this is incremental CapEx and, uh, project work that will happen over the next, look, I would say to you, the next year to two years is we'll build up, uh, as we do each of those individual projects and, and for each project, there'll be an incremental bump in volume that will come from that. So we'll build to that 500,000 tonnes, Lyndon. So I think, uh, We've said June for full run rate of the Aristotle or the expansion volume, and I'm comfortable with that. We've already got some assets ordered and started thinking about technology and engineering and design for the next step, particularly probably around induction heating will be the next cab off the rank. And then the team will think about what is the next best alternative for volume and capex and business interruption. So That's the process we go through, but it's probably sort of one to three years, I guess, would be the timeframe as we incrementally do one of those projects. You don't want to be, you know, as you guys know from Northstar, downtime is precious and it's about scheduling the work that we need to do to make sure that we get them done without disrupting the mill or the ongoing business model as well.

So it sounds like an FY27, 28 type timeframe.

I think, yeah, sort of one to three years, what are we now, 2024, yeah, so that's kind of the right timeframe, the way I'd be thinking about it, yes. Great. Thanks. To David's earlier point, you know, the capital efficiency of this expansion is such that we're going to be doing it as fast as we possibly can, Lyndon. We're not sitting back waiting for this stuff to happen. It's all about how quickly can we do it, how much risk do we take on. We don't want to muck up the business model. But the capital efficiency of this expansion is such that we want to do it as quickly as we possibly can.

Got it. Yeah, no, that's good, Carla. Thanks very much. The other question I had was just to push a little further on the property value unlock. How should we think about the potential proceeds and the materiality, the blue scope? It obviously looks like a lot of land there. I mean, should we be... attributing some sort of dollar value to the excess. I'm just wondering if you can help us quantify the potential benefit.

So look, there's clearly a value of that land as it sits there today, right, for 1,200 hectares. And the work we're going through is what we can do you know, what are the barriers to increasing the value of that land and what can we do that doesn't cause, you know, sort of interruptions to our site. So you can imagine, you know, any progressive rehabilitation requirements, you know, rezoning or planning that we need to do, that's the work that we'll be doing in parallel. But, you know, quite clearly it's a substantial asset that's of value and should only increase from here.

And I think, Linda, you know, we're early stages on this, but from our perspective, it's not a matter, as I said earlier, of just apart from probably West Apto, which is standalone, so it comes with its own opportunities and issues that we've got to work through. But this is not just necessarily about flogging off pieces of land. This is about what's the highest and best use for us in terms of our ongoing business operations, adjacencies, Do we lease? Do we develop? Do we sell some? The answer is yet to be determined, but it's all of those things. I mean, we've signed the MOU with the TAFE in New South Wales. I think that's a fantastic opportunity for us to bring a foundation tenant onto our site. So there'll be a range of opportunities here, everything from sale through to development and lease that I think will emerge as we go. That's the work we've got to get after.

Great, thanks, guys. Thank you.

Thank you. Your next question comes from Daniel Kang from ELSA Australia. Please go ahead.

You there, Dan? Hello, you on mute, Dan?

Pardon me, Daniel, your line is now live.

Oh, thank you, guys. Sorry about that. That's all right. Mark, I just wanted to discuss, I guess, a little bit more on US HRC spreads, which, you know, we've seen a bit of a pullback. Sentiment is a little bit soft. Just interested in what you're seeing at your own customer inventory levels. Any signs as yet of when the market may start to settle?

Yeah, so look, I think what you've seen, as I said, is, you know, there's a through that, you know, there was a bit of forced buying at some fairly challenging spread levels for customers. They've been working through that inventory as they've seen weakness in pricing moving forward and we're seeing them re-enter the market at current levels to rebuild that inventory. As I said, I think that will be a feature as we work through that volatile pricing. But the pleasing thing for me is we are seeing that settling at higher than previous mid-cycle spread levels. So I think that the market itself remains attractive. Northstar itself is not having trouble placing those tons. So from a sales perspective, you know, they're still able to, you know, fully allocate their production as we continue to, you know, steadily increase volumes.

Thanks, David. Just swinging over to Asia, HRC spreads are still looking very weak. and not enough science, as I can see, of much improvement in the near term. Slide 22 suggests that Australian steelmaking is now in cash losses. I guess my question is strategically, can you talk us through how management is viewing this position? Potential cost levers that you may have, particularly if these levels are sustained for a while.

Yeah, so look, Dan, I think what's encouraging is, as we've demonstrated on whatever slide it is, you know, steelmaking's relative cost position has been really quite stable through what's been a pretty inflationary period. So the team at Port Canberra have done a fabulous job to maintain the focus from that point of view. We've seen cost increases, but we've added a whole bunch of value-add products in that, as David talked about as we went through the presentation today. we've said to you guys before, I mean, we see the value shift inside the integrated chain go from the front end to the downstream end. And our strategy over the last 10 years or so of having that still making business as low cost as it can be, but pushing and growing our premium branded products and increasing our margins is for exactly this point in time, you know, Tanya and her team are working very hard on costs and day in, day out. It's what that business does. That's why it's survived. It's why it's continued to prosper. But there are some challenges, there's no doubt about it. And inflationary pressures, electricity, gas costs, there are some pressures. But that's the work the team do. I'm still, you know, really pleased to see the outlook for that business, notwithstanding these spread levels. And, you know, I Historically, we haven't seen spread levels like this last very long. They've lasted longer than we would have expected. People are coming back from China's new year. It'll be interesting to see if anything emerges out of China over the next little bit, whether it's a supply side adjustment or a price side adjustment. But certainly we need something to happen out of China for them to improve. But we certainly can, we can deal with what we're dealing with. It's not where we want to be, but we can deal with what we're dealing with and we We know how to pull the levers we need to. We've done it in the past and we'll do it again. So from that point of view, I'm really confident of where Port Kembla is and what the team are doing there to make sure that we're doing all the right things.

Mark, thanks for the call. Thanks, Dan.

Thank you. Your next question comes from Paul McTaggart from Citigroup. Please go ahead.

Good morning, good morning. So look, it's hard to imagine that you wouldn't do the, you know, the hot metal expansion, or sorry, the rolling expansion at North Star, given you've got hot metal capacity. And then likewise, you don't want to be a tall painter. So it makes sense to have cold rolled and tally cutting feed, keep painting operations. So kind of seems to me inevitable that you'll do the $1.2 billion spend, you know, plus the incremental hot metal. What sense is it now to talk about a debt target of $400 million, given that, I mean, for a while, it feels like we're going to be running a conservative balance sheet for multiple years just because there's so much on your plate. And that's not a bad thing, but I'm just wondering, you know, the relevance of the $400 million.

Yeah, look, I think it still remains relevant, right? Bearing in mind that probably means that we'll be working towards, you know, maintaining our flexibility through this period. I think both because of, you know, the volatility in the environment and the significant progress projects we want to work through. But the reality is that, you know, we still feel that target remains a sensible target, given the, you know, operating leverage we have. We want to make sure that, you know, we're not overlaying too much financial leverage. And just for clarity, you know, that incorporates a leases number as well. So from a net debt perspective, you know, sort of thinking about that as effectively a neutral balance sheet.

And maybe one last question. So, you know, we touched earlier on about the kind of colour bond kind of push into the US but you know have you thought about kind of an initial marketing kind of effort what markets and segments of the market you're going to target just to try and give a sense of how that might evolve over time?

Oh yeah Paul there's a bunch of work being done on that I mean we already export some colour bond into the US I mean you'd be aware of that that we've got a couple of customers there that have been promoting the product for some time as an export product what we're trying to do obviously is build that local capacity and grow that market but yes we've We've been thinking about, you know, where do we target it? Is it more regional top tier versus second or third tier? Roleformers, again, as I touched on earlier, I think a really interesting emerging residential opportunity for us. So that's the market entry work that's well underway. So, yeah, we have a market entry strategy. that has been pulled together. And that, that is what we'll implement. I mean, I don't have much more detail for you than that, but they're the, they're certainly the opportunities and the segments of the areas that we think we can penetrate with a, with a branded packaged and a branded product.

And maybe if I can really be cheeky and chuck a last one in, did you not have a offtake agreement with your founder customer or key customer for, you know, when you're sold or when you're bought into the, coding business, was there not kind of a requirement for that customer or for that vendor to take minimum tonnage? And do you have any comeback? That's my question, really. What remedies do you have?

Yeah, no, we had an offtake agreement, but it wasn't a guaranteed minimum. It was an offtake of their volume and they've been losing some volume in the marketplace, which is why it's been a bit softer for us. So it wasn't a take or pay, but it was an agreement around continued support for the business. and we've seen them cycle off a bit, Paul. So that's what's happened. It wasn't a take or pay. Okay. All right. Thanks, guys. Thanks, Paul.

Thank you. Your next question comes from Chen Zhang from Bank of America. Please go ahead.

Good morning, Mark and David. Thank you for taking my questions. A few follow-up from me, please. So firstly, ASP, I'm just wondering for the raw materials used in Australia, with the premium hard-cooking price remain above US$300 and probably will remain elevated in the next few years, Does your blast furnace have the capability or do you have any plan to blend different quality of coal such as PCI or lower quality of hard cooking coal to reduce your raw material cost? Thank you.

So, Jen, we use PCI now, so that's part of the process. We've got a very sophisticated value and use model that we operate through the blast furnace where we look at what the right mix is for the furnace. The coal we get out of the Illawarra, I would say to you is very high quality from a structural point of view. It works for us from an operational perspective. So, you know, that sort of value and use model is something that we put in place and manage through the business. But we do use other raw materials from time to time, but that's a, That's a discussion and a conversation that goes on in the business on a daily basis. It's hard to run a high-quality blast furnace with really crappy raw materials, right? So that's a bit of a slippery slope. So from our point of view, we manage that quite tightly.

Sure, sure. Thanks for that. Just to clarify, so at the moment you are using the PCI code from Illawarra with, roughly speaking, raw material costs for code such as the PCI benchmark, not the premium high-quality code price?

Yeah, yeah. Yeah, we use PCI code, correct.

Okay. All right. Thanks. Thanks for that. And then another follow-up just on the realized price on the Australia steel products. In the presentation, you mentioned unfavorable real-life price. I'm just wondering, I guess color bound remain at a robust level for volume and the pricing. What is that real-life pricing, unfavorable? Is that for cultured products? And then what are the reasons for that? Thank you.

Yeah, so that's when we're looking at it's, The opportunity to gain premium pricing, you know, during periods of supply chain constraint is obviously less opportunity for that moving forward in the current half. So as we've seen sort of the improvements in the balance of supply chains around the region. So it's more a reflection probably across the non-premium branded aspects of the portfolio rather than the premium branded areas of the portfolio.

Right, so less premium product sales versus non-premium.

The value out of the domestic supply chain is a little bit less when the supply chain is not constrained.

Right, thanks. Thanks for that. And then maybe last question on your North America coaching business. You mentioned in the poll various reasons left from the previous owners that you have to fix after you acquire the business. And also in the presentation, you mentioned the quality challenges and the impacts of production. I'm just wondering what kind of plans or strategy you have put in place to fix that so the quality challenges and the production impact that won't repeat again in this half or in the next few years. Thank you.

Yeah, Chen, so we've thrown a whole bunch of resources at this. I mentioned earlier, we've now got Jeff heading up operations. We took one of our senior guys out of North Star to run one of the big facilities. One of Tanya's team in Australia, Simon Took, who many of you will have met on tours of Port Kembla. Simon's working on the colour bond strategy in North America and The local marketing team here have been working with the marketing, adding to the marketing resources where we've just recruited a senior market, or not just, but recently recruited a senior marketing resource. So, Cham, we're doing a whole bunch of work around not only capital investments and operational improvement within the businesses, within the operations, but also adding to the capability from a management perspective as well. So, Christy and her team have populated that team. It was well underdone, everything from sales resources right through to senior leadership roles. So we've been populating that team over the last little while. So there's a range of efforts and strategies going into turning that business around, obviously.

Sure, sure. Thanks for that, Matt. Do you have a timeline, like a targeted timeline for the full integration and then, you know, margin expansion we are going to say? Is that like a more like FY25 or FY26 story? Thank you.

How does tomorrow sound? And the business keeps telling me they're working as hard as they can, but I kept telling them tomorrow, Chen. So that's my timeline. And that's what we're working to get this done as quickly as we can.

All right. Thank you, Mark. Thanks, David. I'll pass it on. Thank you.

Thank you.

Thank you. There are no further questions at this time. I'll now hand back to Mr. Pazella for closing remarks.

Great. Thank you. Look, thanks, guys. I know it's a busy time and lots of announcements today, so thank you for carving out some of your time to talk to us, and we look forward to talking to you over the next week or so. Take care. Thank you.