Bluescope Steel Ltd

Good morning and thank you for joining us today. I'm Tania Archibald, Bluescope's Managing Director and Chief Executive Officer. With me is David Fallu, our Chief Financial Officer. We'll take you through the FY26 results, the progress we've made against the agenda we set at the half and how we're positioned for the future. We'll then take your questions. I'd like to begin by acknowledging the traditional custodians of the various lands on which we meet and work today and pay my respects to Elders past and present. I'll begin with safety. There is nothing more important than the health and safety of our employees and contractor partners. BlueScope has a strong safety culture built on a track record of extensive engagement with our workforce and an ongoing commitment to learn and improve. Throughout the year, our global safety refocus program guided our work on critical risks and the effectiveness of the controls that manage them. but our performance is not yet where it needs to be. The tragic loss of a contractor at Port Kembla in November is a stark reminder of the importance of our work in this area. Now that incident remains under investigation by the regulator and we're engaging fully with that process and we are determined to learn from it as we do with every serious incident across the business. Building on the progress we made in the year, We're continuing to drive a more systematic approach to managing critical risks and improving controls. This work is supported by our new functional operating model, which has brought all of our safety professionals into a single global team. This change is designed to bring the full force of the organisation's capabilities to the greatest areas of opportunity and challenge as we seek to strengthen our safety performance. Financial Year 26 has been a defining year for Bluescope in which we've accelerated the delivery of value which has positioned us well to capture the next phase of growth and returns. I'm proud of what the team has achieved and believe we're well placed for the years ahead. In February we committed to accelerate value delivery across four pillars. On growth, PID CapEx is now behind us and two of our major projects have just moved from construction to hot commissioning and ramp-up phase. That's the new state-of-the-art metal coating line in Western Sydney and the new low-emissions electric arc furnace at Glenbrook in New Zealand. On cost, in FY26, we fully delivered the initial $200 million cost-out program, which we commenced just over two years ago. And we've exceeded our targeted additional $150 million cost-out program with the reshaped cost base in place from 1 July this year. delivering a simpler, leaner, blue scope. On property, we've accelerated the delivery of value with a range of project deliverables through the year, highlighting the significant value in the surplus land portfolio. And finally, for shareholders, we've delivered a significant step up in returns whilst maintaining a robust balance sheet. Put simply, we've executed on our commitments. Turning to the headline numbers, FY26 demonstrated the strength of the portfolio as we shift from a heavy investment phase to one of ramping up shareholder returns. Underlying EBIT of $1.27 billion was materially higher than FY25, whilst second half EBIT of $716 million was above the top end of the guidance range, supported by a stronger North American contribution, record Southeast Asian performance, and delivery of cost and productivity targets more than offsetting cyclically low Asian steel spreads. Underlying net profit after tax for the year was just over $800 million and the balance sheet finished the period in a strong position at $600 million net debt. With the major investment program ramping down across the next 12 months, we're continuing to ramp up returns to shareholders. The board today approved an unfranked final dividend of 65 cents per share and an unfranked special dividend of 70 cents per share which when paid in just under a month's time will see us delivering on our calendar year 26 commitment of $3 per share in distributions. Shareholders have been patient through the investment phase and that patience is now being rewarded. Turning to guidance, we've entered the next half with solid momentum. We see continued strength in North America, a solid demand environment in Australia, and early signs of recovery in New Zealand. In China, overcapacity continues to weigh on regional steel spreads. For 1.527, we expect underlying EBIT in the range of $860 million to $960 million, subject to spread, foreign exchange and market conditions. Now, the assumptions that underpin this outlook are set out on the page, and David will take you through the regional detail shortly. Lusco today is a lean, modern manufacturer of high-quality steel products, systems and solutions that our customers know and trust. Our purpose and bond are enduring and grounded in care and respect for our people, our customers, our shareholders and the communities in which we operate. We're guided by three key strategic themes that focus on customer value creation, operational excellence and shareholder value delivery. Our decision-making is supported by our long-standing financial framework which drives a focus on resilience and returns, a disciplined approach to capital allocation and an unwavering commitment to deliver long term shareholder value. We're strategically differentiated by our ability to combine highly competitive manufacturing assets with deep customer relationships, leading product development, extensive channels to market and strong strategic marketing capabilities. With a long-standing presence in deep manufacturing and market expertise across Australia, New Zealand, North America and Asia, we bring decades of know-how to every market we serve. And our in-country, for-country approach keeps us close to customers and end-use markets. Through these elements, we aim to deliver resilient, through-cycle earnings, robust and growing cash flows and higher shareholder returns, all of which we're seeing in these results. Turning to growth. where we've been working hard to deliver our 2030 $500 million EBIT uplift target. In North America, we're continuing to target more than $200 million of improvement anchored by North Star de-bottlenecking and our coated and painted strategy including the BCP turnaround. In Australia, we're targeting more than $125 million supported by continued growth in Colourbond and Trucore Steel backed by the new metal coating line number seven. and the plate mill upgrade which will enable capability, service and quality improvements. In Asia, we're targeting a $75 million uplift through capital light growth of ARAD products and solutions across Southeast Asia and we're pursuing targeted growth segments in China. In New Zealand, continued growth in colour steel and the benefits of the newly commissioned electric arc furnace will enable the $75 million growth target. During the year we've made good progress on the major projects which underpin earnings resilience and growth. At Erskine Park in Western Sydney the new 240,000 tonne metal coating line number 7 achieved the significant milestone of metal on strip on the 4th of August. Production ramp up will continue through this half. Now this is a state of the art metal coating line with high levels of automation, process control and smart technologies. Now the project has taken longer and cost more than initially anticipated largely reflecting the high inflation environment for capital projects as well as the extensive wet weather delays throughout the construction period. Now, critically, this investment underpins our long-term supply of Trucore and substrate for Colourbond, both of which achieved record sales in the year. The new Lower Mixon's electric arc furnace at Glenbrook in New Zealand produced the first heat of steel on 3 August. Similar to the new metal coating line, Ramp up and transition to operations will occur across this half and this marks a key milestone for our New Zealand operations enabling a step change in our emissions profile and most critically a transition to a more flexible demand responsive production model. The North Star de-bottlenecking program is progressing well across all nine components unlocking an additional 300,000 tonnes per annum of capacity at one of the best positioned mini mills in North America. The overall program is running on schedule and in line with budget with three of the project components now complete. The Port Kembla plate mill project remains on track with the processing upgrades already delivered and in operation. With the first phase now complete, the next phase of the project, being the product quality improvements from the new furnace, are on track for delivery mid next coming year. Importantly, the plate mill upgrade delivers new heavy plate capability with broader application to defence, infrastructure and renewables projects. The transition schedule for the number six blast furnace realign project has been pushed back to early two half FY27, reflecting the scale and complexity of the project and similar to metal coating line number seven has experienced inflation in construction costs. Number five blast furnace continues to perform strongly, which gives us flexibility in cutover timing and no impact to our operating risk profile. but importantly the Number 6 Reline project secures Australia's domestic supply of iron for up to the next 20 years whilst we work through our decarbonisation pathway. On climate and sustainability we remain firmly committed to executing our strategies and delivering on our targets. In Australia we're exploring various pathways for decarbonisation. Now one of these is the Neosculpt project that we're leading in joint venture with Rio Tinto, BHP, Woodside and Mitsui Iron Ore Development. Neosmelt is an Australian industry R&D project designed to secure the long-term future of Australia's Pilbara iron ore industry and provides Bluescope a potential decarbonisation pathway. The project is aiming to build a pilot direct reduced iron and electric smelting plant designed to use blast furnace grade Pilbara ores in DRI production, a massive step forward from today's DRI technology. The partners are targeting a final investment decision by the end of this calendar year, subject to government support. In North America, the Milstar and Bluescut recycling teams are ramping up the production of low residual shred and reducing our reliance on pig iron without affecting product quality or mill efficiency. In New Zealand, the new EAF will deliver a step change in our site emissions The EAF, coupled with geothermal power supply, also enables new lower emissions product offerings, which we're delighted to bring to market. None of these investments have been straightforward, but they also underline two critical themes for manufacturing. Firstly, a reminder that capital is mobile and seeks the best risk-adjusted return. Stable, competitive and predictable policy settings attract long-term investment, while uncertainty and structural cost disadvantage discourage it. Secondly, where the manufacturing industry is today in Australia is largely the product of policy choices made over the decades. While other nations have competed intensely for manufacturing investment through a variety of strategies, Australia has largely stayed on the sidelines. Now is the time to change that. Australia's Future Made in Australia agenda is the most significant shift in industrial policy in a generation and it provides a very real opportunity to reshape Australia's future. Public policy settings should help create the conditions that allow globally competitive manufacturers to invest, grow and succeed. In turn, strong financial performance underwrites continued investment in capability and innovation, including lower emissions steelmaking. At Blue Scope, we remain committed to a vibrant and competitive manufacturing back in Australia for the long term. That's why we continue to advocate for structural reform of Australia's energy market. It's why we support a level playing field by an effective trade remedies regime. And it's why we continue to drive Project Neosmelt, which has the potential to lay the foundations for a green iron export industry. Moving to cost and productivity. We fully completed our initial $200 million cost and productivity program in the half which was a great outcome. Earlier this year we went further and established an additional cost reduction target of $150 million on a gross basis. Now we've exceeded delivery of this target so we now expect the full $150 million to flow into FY27 as a net benefit. The team has done a fantastic job executing on this target and resetting our functional operating model. The result is a simpler, leaner, more agile BlueScope. On property, our overarching objective is to accelerate the delivery of value from our 1200 hectare portfolio, which sits in sought-after industrial locations with proximity to port, rail and energy infrastructure. Now, as a reminder, over 60% of the total portfolio is already appropriately zoned and able to be developed. Across the year, we made great progress with activities ranging from planning and zoning to development activities and sales. Moving into FY27, our focus is on progressing the logistics hub at Western Port as we commence the process of shortlisting proposals and the commercial and structuring work that supports value delivery from this initiative. We're also progressing opportunities for Port Kembla that are complementary to our manufacturing operations, including a focus on the development of an energy precinct along with other planning and development activities. On shareholder returns, to quickly recap. In February, we announced a plan to deliver $3 per share in returns in calendar year 26, representing a material step up in distributions to approximately $1.3 billion, which is around 10% of Bluescope's market cap. With today's dividend announcement, this plan is being fully delivered. Given the ramp down in our major capital investment program, and the ramp up in cash generation, we've announced a plan to repeat the $3 share returns in calendar year 27. This plan is supported by a robust balance sheet. Before I hand over to David, let me step back and cover the macro and industry backdrop and the longer term opportunities across our business. In Australia, construction activity remains resilient, supported by housing, infrastructure and non-residential demand, and the medium-term outlook is underpinned by favourable demographics and a sustained housing shortage. Value-add and branded products remain key drivers of volume growth as our products and systems continue to gain traction. As for spreads, regional overcapacity driven by record levels of exports from China continue to pressure spreads and margins in the Australian business. The Australian business has proved to be extraordinarily resilient In the United States, demand remains supportive across our key markets of auto, non-residential construction and manufacturing. The data centre rollout and broader e-commerce infrastructure have underpinned solid non-residential construction demand. More broadly, North America continues to be a great place to make and sell steel. The regulatory and industry environment is favourable and supportive of the demand outlook across steel consuming sectors. And our footprint and quality of assets position us well to capture continued economic growth. We also have a clear runway to grow with the incremental expansion at Northstar, adding low cost capacity into a market that remains structurally short of steel. Across Southeast Asia, we have an outstanding footprint across every major economy. The region is becoming increasingly attuned to the value proposition that BlueScope has spent the best part of six decades embedding. Our positions are well established with latent capacity to capture growth in this fast-growing and dynamic region. In New Zealand, demand conditions have been soft, though we're starting to see signs of recovery. Much like Australia, favourable trends in demographics and demand will drive medium to longer term volume growth for our product suite, including the new low emissions offerings enabled by the EAF. Whilst I set out a constructive picture on demand across most of our regions, cost escalation remains the persistent challenge. It was compounded this year by the Middle East conflict flowing through to fuel, freight and input materials, and it underlines why a relentless focus on cost and productivity sits at the heart of how we run this business. Above all, it's the design of our portfolio that delivers value through the cycle, positioning us to capture our targeted growth while absorbing the headwinds along the way. I'll now hand over to David to take you through our regional performance and the financial framework.

Thanks Tania and good morning everyone. Turning to the regional performance, starting with Australia, which delivered underlying EBIT of $188 million in the financial year. with a second half EBIT of $66 million. Domestic dispatches increased to 1.15 million tonnes in the half, driven by residential and non-residential construction demand, with Colourbond and Trucore Steel hitting a record volume with 654 and 155,000 tonnes in a year respectively. The result reflects sustained low Asian steel spreads, and a non-repeat of one-offs partly offset by cost, productivity and value added volume gains. As an integrated modern manufacturer in Australia our priority is to keep growing domestic and value added volumes while reducing costs to support margins. With performance remaining challenged by soft regional spreads You can see the importance of focusing on shifting more volume to domestic sales and more of those sales toward value added and premium branded products and pleasingly that trend has continued with our record colour bond and true call volumes this year. Cost also remains critical and the operating model reset has helped in this space that our work here needs to be ongoing not only to offset inflation but to enhance our earnings profile in concert with the work on value added growth. Turning to North America, North Star delivered underlying EBIT of just over $800 million in FY26, with a second half EBIT of $484 million, up 50% on the prior half, on materially stronger realised spreads and increased production capacity. We expect to see further benefit of the significant benchmark spread increase flow into FY27 due to the nature of longer pricing lags and other pricing mechanisms cover around a quarter of Northstar's sales book. The business continued to operate at full utilisation and effectively managed its cost base to negate conversion cost increases in the half. Northstar remains an outstanding asset with its continued margin outperformance relative to peers due to operational capability, geographical location and a strong performance culture. We continue to unlock capacity in the mill to grow our volumes and earnings from this great business. Buildings and Coated Products North America delivered an EBIT of $230 million in FY26 with a second half EBIT of $101 million, 20% lower than the prior half. Across the segments, three component businesses Bluescope Buildings performance softened slightly in the half, with some seasonality and slightly lower volumes due to a temporary lull in new project work six to 12 months prior to the period as the market digested a range of trade policies and measures following Liberation Day. BCP performed in line with expectations, delivering a loss for the half, however an improving performance across the period. And Steelscape's performance improved on higher volumes as demand recovered from the Pryperia's tariff-related volatility. Across North America, our priorities are continue to maximise volumes at North Star, expand buildings where returns are clear, selectively grow downstream value and deliver the turnaround of BCP. We are well positioned for growth in the region and the successful execution of these priorities support the longer-term opportunity of bringing our painted steel value proposition to the North American market. Asia delivered underlying EBIT of $177 million in FY26 with a second half EBIT of $81 million, down around 15% on the prior half. The region is delivering strong returns with further upside to be realised from its unrivaled footprint for regional growth. Southeast Asia had a record year with all countries showing improvement from sales and marketing initiatives and operational excellence. The opportunity here is significant, not only from the strong positions our brands have in the market and the demographic tailwinds in the region, but also from the significant latency we have in the region to capture this growth, making it a very capital efficient opportunity. China was lower than the prior year on seasonality and weak domestic conditions. And as we've previously announced, we completed the sale of our 50% interest in Tata Bluescope Steel during the year. Our priority across this business is to strengthen customer propositions and selectively expand higher value downstream solutions as the markets continue to mature. New Zealand and Pacific Islands recorded an underlying EBIT loss of $1 million in FY26 with a second half EBIT of $16 million. The result was thanks to improved product mix as colour steel delivered a record performance despite softer conditions along with an improved cost performance. The EAF installation was largely finished at the end of the financial year which is a fundamental strategic reset of the business. The EAF will reshape the earnings and emissions profile of the business with the benefits starting to flow through and a full run rate following the FY27 transition year. Turning to the drivers of the year-on-year movements in underlying EBIT, looking at FY26 versus FY25, the largest contributor was a material lift in net spreads, driven predominantly by stronger realised pricing at Northstar. Volume and mix contribute positively, reflecting the stronger domestic volumes in Australia and continued growth in premium branded products including Colorbond, Trucore and Colorsteel. Conversion costs and other costs reflected the benefit of our cost and productivity program, offset with inflation and escalation. As a reminder, our cost and productivity program benefits are not just sitting in conversion costs. They're across a range of buckets, most notably raw material costs, which actually more than offset higher conversion costs in the year. Comparing the second half of FY26 to the first, similar dynamics applied. The guidance period across our regions, noting the group first half FY27 guidance range and assumptions Tania mentioned earlier, in North America we expect a result more than one third higher than the second half of FY26, with North Star benefiting from stronger benchmark spreads and improved cost performance. Within BCP&A, improved volumes and ongoing turnaround initiatives support a stronger result. In Australia, we expect a result around two thirds higher than the second half of FY26, driven by higher realised spreads, stronger domestic volumes and continued cost discipline, with impacts from major project transitions reflected in the outlook. In New Zealand and Pacific Islands, earnings are expected to be around one third lower than the second half of FY26, largely reflecting EAF commissioning impacts, partly offset by improved benchmark pricing. In Asia, we expect performance broadly in line with the second half of FY26, with seasonally softer conditions in Southeast Asia offset by stronger seasonality in China. Finally, corporate and group is expected to be approaching three times the second half of FY26 result. This primarily reflects a non-repeat of the $76 million Westapto land sale, profit recognised in the prior period. Turning to our financial framework which remains a critical guiding document and it's central to how we run the company. Framework remained unchanged, however we've evolved the settings within it to reflect a stronger, more resilient earnings base, materially improved cash generations and confidence in the trajectory of capital expenditure within our growth projects now nearing completion. As we've noted in recent years, Royce has been impacted by the once-in-a-generation capital program, adding to our operating asset base, while Asian spreads have held at bottom-of-the-cycle levels. In the year, Royce improved, thanks to improved contributions from North America and continued strength in Asia. On cash flows, in FY26, free cash flow was $140 million, impacted by our peak capex. As a reminder, shareholder returns are paid from operating cash flows less sustaining CapEx, with the commitment to distribute at least 75% of this number. Importantly, with peak CapEx now behind us, the cash flows available to fund distributions will be materially higher going forwards. Turning to our balance sheet, net debt at year end was $600 million, well within our target range thanks to stronger US spreads and specific timings of cash flows. We also have ample liquidity and we've taken the opportunity to enhance this position further in July to ensure a frankly rock solid maturity profile. The combination of the balance sheet position and liquidity gives us a great platform to support our planned returns in calendar year 27. Capital expenditure was $1.5 billion for the year in line with expectations with the second half being our peak capex for the half. The profile steps down from here. FY27 CapEx remains slightly elevated as we complete the remaining $500 million of the program before normalising further. As a reminder, our typical annual capital expenditure is approximately $600 to $700 million with around $450 to $500 million in sustaining CapEx and foundational spend and typically a further $100 to $200 million in organic and incremental growth investments. On shareholder returns, this calendar year saw us accelerate the step up in distributions with a plan to deliver $3 per share in calendar year 26 and $1.65 per share paid during the half. As noted, the board today approved the unfranked final ordinary dividend of $0.65 per share as well as a $0.70 per share unfranked special dividend. as an alternative distribution to the previously flagged $310 million buyback program which we've been unable to execute during the period. This sees us fully deliver our calendar year 26 plan with approximately $1.3 billion in distributions this calendar year. This level is significantly higher than the periods in the decades prior by a significant margin. As we look ahead, we've announced today that we plan to deliver at least a further $3 per share on the year 27 with the rebased ordinary dividend complemented by other methods such as special dividends and buybacks where available. Bluescope has always been a highly cash generative business with the last few years seeing this directed to our major investment program. Clearly we're getting back to more normal cash flow numbers which support the stronger return levels. As such, it's exciting to see that our approach in this space is designed to be sustained, not one-off. And with that, I'll hand back to Tania.

Thank you, David. Before we take your questions, I want to reiterate a number of points. The results today demonstrate the strength of the portfolio and our execution capability. Earlier this year, we committed to accelerating the delivery of value. We've delivered on our commitments over the last half and will continue this work into FY27. With the major investment period ramping down, we're ramping up returns to shareholders with a significant increase in calendar year 26 planned to be repeated in calendar year 27. BlueScope enters this next phase from a position of real strength as a lean, modern manufacturer of high-quality steel products, systems and solutions that our customers know and trust. I want to close by thanking our people for their dedication through a demanding year, our customers and partners for their trust and our shareholders for their continued support. And with that, we'll open the line for questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Ramon Lazar with Jefferies. Please go ahead.

Morning, Ramon.

Hi, Tania. Hi, David. How are you? Hi David, hi Tania. Just a couple of quick ones for me. Maybe if we can dive into the ASP performance a bit more in the half. Look, revenue per ton was a step up across that business. So I'm just trying to break down what were some of the drags in that second half that you saw impacting those results? And then for the first half, if you could maybe just outline Your expectations around the transitional impacts from the BS6 delays and the MCL7 ramp up, that would be helpful in trying to get to a baseline earnings number for this business going forward.

Yeah. Sorry, you go.

Yeah, no, Ramon, look, I guess just in terms of the specific around some of the ASP performance, I mean, there was a component of one-off benefits not being repeated in the second half. You'll recall that first half, We had a one-off tax benefit in the first half period, which wasn't reported. And then, you know, as we're working through the stages of blast furnace six transition, that has an implication for some of the operational costs that we saw in that second half.

Probably what's also worth adding in terms of the performance in the second half We're working with the law of low numbers. There's a lot of moving parts within ASP. It only takes a few things to occur and it looks like it has a significant impact. If I sit back and look at the business, the cost and productivity performance in Australia has been very, very strong. The fact that we're selling record levels of Colourbond and Trucore. Thankfully, we've managed to start up Metal Coating Line No. 7. It's now in the ramp-up phase that's going to underpin that long-term growth in Colourbond and Trucore. We think there's a lot of upside there. What we're dealing with is reasonably solid demand in Australia, but we have a very low spread environment, probably a bit of an impact from FX as well. But we're dealing with probably with the lag impacts, the way the lag spreads work is probably one of the toughest spread environments that we've seen. So the fact that the Australian business is still profitable It's demonstrated enormous resilience and it says to me that we have tremendous upside in the business. In terms of the outlook into the second half, there's a few factors again dealing with the low numbers. There's a few things like we ran a particular trial in the fourth quarter of 26 around using some higher pellets and lump. It was part of a decarbonisation trial and that drove up the cost which then lagged into the second half. There's probably a little bit of disruption I think in terms of how to think about the lags on iron ore and coal because what we're doing is building up a bit of stock in terms of the transition for the blast furnace and so that'll disrupt what you would have as the normal lags for iron ore and coal.

Any sort of quantification of those impacts Tania or David that could help us?

I think what we'll look to do Ramon is probably more an overall review once we've gone through the transition of Blast Furnace 6 to see if we can provide you with additional help around and so on. But you know in terms of the overall sort of impacts from what Tania was referring to specifically that's about you know between 20 to 30 million dollar impact.

Okay well that's helpful. All right and then just the second one just on North America and the pricing lags there My understanding is there's a proportion of those tons that are now contracted on a fixed price basis or on formulas under a fixed price basis. Can you maybe just touch on those, Tania or David, how they're impacting the first half and then when those potentially get reset and I guess is that a tailwind or a headwind into the second half?

Yeah, so the fixed price or fixed spread contracts, they've actually always been there. They've always been part of the mix. It's something that we decided to ramp up a little bit more post the expansion, and it just goes to how we target and partner with customers for the long term. For the longer term perspective, it does reduce volatility, but I appreciate that when you have movements in the index in the short term, it can create a bit of more of the near term volatility. So it's more pronounced when you've got these high movements. I don't think they're necessarily going to go away. I think they will be an important part of the book going forward, not necessarily changing the component, but I think they're going to be there. But I think it's also about how we think about the longer term, how we protect in down cycle conditions as well. So it's really just a bit of longer term thinking. Now they do reset at the end of each calendar year so it's not like they're a permanent structure. There is a renegotiation that occurs every year. Do you want to say anything there, David?

Effectively, it's a bit of a component of how we hedge the sales book. These are typically contracts that are a lot stickier. There's quality and qualification requirements and yet it kind of forms part of how the North American team manage the risk around sales.

Right, and presumably, I mean, if they've said at the end of the calendar year, they'd be well out of the money compared to where spot prices are currently trading.

That's right, yeah.

Okay, all right, I'll leave it there. Thanks.

Thank you, Dan.

Your next question comes from Owen Beryl with RBC. Please go ahead.

Yeah, good morning. Thanks, guys. I just wanted to ask a question around the 150 mil cost reduction program. You provided a Good does split between, I think, 60% headcount reduction for 27 and then 40% external spend. I just wanted to understand, I guess, on the external spend area, are there any key target areas that are obvious to reduce the cost there? And similarly with the headcount reduction, if you can provide a bit of colour around which divisions or which regions you're expecting to see that cost reduction from the headcount.

So I'll start off with the headcount reductions and then David can give you a bit of flavour of the external spend. In terms of the headcount reductions, what we've done is basically put in place a 4% headcount reduction across the global portfolio, slightly less than that in Australia, just because of the ongoing rounds of optimisation that we've been doing over many years now, but broadly it's about 4%. It's primarily centred around corporate functional and administrative roles. Now there is a number of operational roles in parts of the portfolio where we've gone a bit deeper in terms of uplifting the level of performance but by and large what it reflects is a reset of our functional operating model whereby we've taken the functional teams which were previously nested within each business unit and each sub-business unit and we've moved them into global teams and what that does is and a number of others. We've been able to drive greater scale and efficiency, better focusing of effort and it means that we've been able to take out a little bit of duplication that might have occurred over the last couple of years. And yeah, so it's probably the best way to explain it, I think. And external spend?

Yeah, so that's across a range of areas as we talked about through the FY25 to 26 walkthrough. Probably the largest component actually came from raw materials and IT. Within the SG&A functions it's really been the opportunity to drive that in a much more coordinated way through having those functions come in into a central area of practice and then from a raw materials perspective it's primarily around Productivity and Efficiency in Raw Materials Utilisation, which has enabled the teams to drive an improvement in external spend in that space.

And can I ask just a question on the increase in Middle East costs? You know, you called out to the fuel and freight. Are you expecting a reversion in some of those costs if we do CAA settling of the Middle East issues?

Well, I think there'll be some benefit. There has to be... I mean it has settled a little bit. I mean we've seen it in obviously in the fuel, the freight rates, raw materials including paint. The biggest area of heartburn that we've had has been around the aluminium supply. We've now resolved that one. So I think it'll come off and we'll see it principally in those headline numbers around fuel and freight most specifically. But again inflation is an area that we've obviously got to watch very carefully. We're not alone in this. It's probably a bit more pronounced in Australia than elsewhere, but it just goes back to that relentless focus on cost and productivity.

And I know you haven't, unlike many other companies, you haven't called out that cost inflation impact. Do you have a sense of what that has been in FY26 and how much it could revert into FY27?

Look, I think in terms of the overall impact in FY26, the Middle East reversion wouldn't be material. I think as Tania has said that you know we've actually seen it caused a lot of challenge around making sure your supply chain was resilient in that space we had a couple of suppliers who were based in the Middle East that obviously had a with the apex of challenge for us we've resolved those but you know I'm not expecting that that was more insuring supply as opposed to it being something where I think getting improvement in price in year on year.

Do you mind if I ask a second question just on the sales side? Out of ASP and New Zealand we noticed a bit of an uplift in the export volumes in the second half. I'm just wondering where are these volumes going and are these volumes still profitable given some of the trade tensions that we're seeing at the moment?

Yeah, the uplift in the second half is pretty much normal seasonality that you see. We often end up with a bit of a stock build in the first half and then a release in the second half. Yes, given all the trade actions that have been occurring globally, you've obviously got the tariff wall around the US, you've got Europe has put up the tariff wall. So yes, that does dampen overall returns that we earn on the export market. We did deliberately put some slab over into New Zealand. and that was really just backup planning as we start the new electric arc furnace. We go through the transition there. We just wanted to make sure that there was no operational disruptions to our iron and steel making. So there's a little bit of extra slab there. I think though what it does underline is again the incredible importance in Australia of continuing to grow the domestic franchise, continuing to grow the value add components in particular. and again that's why the start-up of Metal Coating Line No. 7 is just so important to us. We still see ongoing growth in Colourbond. We still see ongoing growth in Truecore and continuing to grow that and reduce over time the reliance on the export market as a relief valve or release valve for the production volumes that we have coming out of the blast burners is quite important to us.

Okay, thank you.

Your next question comes from Harry Saunders with E&P. Please go ahead.

Morning, Tania, David. Thanks for taking my questions. Firstly, just a follow-on from Romain's. Just wanted to clarify that $20 million to $30 million quantified about, you know, the first half guidance for Australia. Is that across all the impact from the glass furnace and MTL7? And is that sort of expected to be confined largely to the first half? You know, is this a one-off? So should... Revers, like maybe how much of that is that depreciation transitional charge? Thanks.

No, sorry Harry, I was referring to the impacts of cost in the inventory through various trials that have been utilised within ASP as part of their ongoing decarbonisation work. In terms of transitioning from Blasphemer 6 into full ramp up. We would treat that as FY27 as largely being that transition year.

Okay, so you're not sort of quantifying how much is a sort of one-off across the Blasphemer 7 and MTL7?

No, no, not at this point.

Yeah, maybe just on the working capital outlook given we talked about some potential builds of raw materials ahead of the transition there across the first half of the full year.

So yeah, look, in terms of work, I think the team's done a good job in terms of managing that in the context of those inventory builds. Again, in terms of the release of that, we would see that coming through towards the end of FY27 as a release, but the reality is that there will still be a degree of elevated working capital to support the transition of both Blast Furnace 6 and the EAF through the course of FY27.

Thank you. And maybe just to follow on, you know, if there's any view in sort of North American Steel spreads beyond the first half, I mean, where, I guess, do you eventually see that settling at mid-cycle? And, you know, how long do you think this current strength could be sustained? And what do you think are the key drivers behind this strength?

It is an interesting question around North America. I mean obviously we have a very positive trade and macro environment that we're looking at at the moment. More broadly it's hard to come up with a better place to make and sell steel globally. If you put aside the tariff wall you've got a very large market. It's a very resilient market. We still see healthy demand there. What you have is very strong supply-side discipline. It's obviously dominated by electric arc furnaces, so wonderful supply-side discipline in terms of the ability to pull back in the face of demand swings. And for Northstar, obviously, we have a very high-performing asset, probably the highest-performing asset in North America. In terms of how long it sustains for, we can't really control that. What we're focused on is maintaining the performance of Northstar and continuing to grow that very valuable asset. I would say, Harry, what we see at the moment is auto is quite healthy. I was asked previously around the impact of EVs coming out of China, but what we see is pretty robust demand in the US. The construction part of the market is reasonably strong. There's quite a bit of demand that's been put in there by data centres. and we know that part of the order book in the Blue Scope buildings area is about 20%, part of their backlog that they have into this half, about 20% of that would be made up by data centres. So we know that data centres is driving a degree of strength into the US demand environment as well.

Understood, thanks.

Thanks, Harry.

The next question comes from Lee Power with J.P. Morgan. Please go ahead.

Morning, Tania, David and team. Tania, just on the, I mean there's been a few questions on it, but the $150 million into FY27 just on the cost side, like where do you think the kind of escalation of conversion and other costs kind of tracking, because I think that was $98 million in FY26, so I'm just trying to work out, you obviously have a lot of cost pieces, but it feels like I kind of was probably a little bit overly optimistic into 26. So what are you seeing from an escalation side into 27?

I might give you the escalation question, David.

Yeah, so look, in terms of escalation into 27, outside of escalation that we've seen into sort of delaying costs in major projects, broadly it's been sort of within sort of and more normal usual expectations. So low to mid single digit across most of the areas of the portfolio. Team's been doing a particularly good job around sort of management of energy costs. We've largely reset to market in that space. So it's not the same degree of impacts that we've seen over the last couple of years. Okay.

Thank you. And then your comments just then Tania around The demand and supply outlook in the US, clearly it's like a very strong time at the moment. You're still running a 7.50 spread in your assumptions for Northstar, so that's still down from kind of spot levels. Is it more on the supply side or the demand side that you think drives that reversion?

It's probably a little bit of both, I guess. I mean, we simply take the standard formula. What I would say is that demand is really quite resilient. I think the other factor to note is that the service centres, they don't have a lot of inventories at the moment. They're relatively light on inventories. Is there anything you want to add?

No, look, I think the reality is it's largely a contract market fundamentally at the moment. People have contracted volumes, they're taking it and there's not a lot in the spot and so I think realistically there's an element of lag that's playing into that and ultimately as we go through sort of recontracting you'll see that play into price assuming that the spreads remain where they are.

Now we are also watching the new supply that's coming online. Of course the US continues to be structurally short. We know that West Virginia will come online over the next two years. We're watching that very carefully. but broadly speaking I think it's quite a positive demand environment.

Okay. And then just one final one if I can. Just on BCP, it seems like you've made some decent traction there. How do we think about that in the US going forwards?

Yeah. So the ambition remains absolutely undiminished, Lee. I think we've made no secret of the fact that we're a couple of years behind where we wanted to be originally. but we still see a very large market opportunity for the value proposition and capability that we have. We have a relatively new management team and whilst they might be new to BlueScope, their deep experience in the industry, they're doing a lot of heavy lifting on improving the quality of the assets, the manufacturing performance and the lead times and basically bringing the line up to the standard of BlueScope. and so we're making sure that we're competitive to the tolling alternative. Still very focused on bringing in the single bill option and ultimately the branded offer so we can still see the pathway there. We still think or we still are targeting an appropriate return on the original invested capital but yes we are a couple of years behind but we're making good progress. I spend a lot of time engaging with the BCP team and I'm very confident in that team and I can see the progress that's being made in the business.

Excellent, thanks. Appreciate the call-out today.

Thanks, Lee.

Your next question comes from Peter Stain with Macquarie. Please go ahead.

Hi, Tania. Thanks very much for your time and David. I was going to ask along the same lines as Lee. I was just curious in the What would your broad expectation be, presuming you're still going to make midstream investments?

that exist in the US, which may mean that that's ultimately not required. I think that we can have a highly competitive business without necessarily needing to be fully integrated, but it's a question that we will continue to test. What we're very focused on right now is uplifting the performance of BCP and making sure it is competitive, again, in the tolling market and then ultimately in the single bill and ultimately the branded market. So I think it's an interesting question that sits there, Pete.

Gotcha. Thanks, Tania. And then maybe just on the property side of things, just a perspective on how you're thinking about balance sheet utilisation in the context of that business. Do you generally see it as and so on. So I think it's a good question. I think it's a good question. It's a good question.

How we look to approach that. The most important thing for us is to remove any of the uncertainties that bring a discount to that property value. That's why the overall rezoning at Port Kembla is a huge benefit to us. To the degree that we need to utilise our balance sheet to help support that, we obviously can. but I'd say that there's many ways that we can sort of look to ultimately realise or monetise the opportunity that sits there and it wouldn't be kind of the first port of call to utilise our balance sheet to be the primary supplier into that space where we can leverage off capability elsewhere.

So one could think about specific partnerships, I guess, as we've spoken of.

Yeah, exactly. You've seen us, obviously, where it's already effectively at full value, you know, like our residential property at West Apto. Yeah, that probably just lends itself towards a straight sale. There's not much point, you know, kind of partnering in that space. Where there's still sort of more opportunity for value uplift, that's where we'll consider the partnership opportunities.

Yeah. and if I could just a little bit of an extension on the energy option at PK, could you maybe just colour that in ever so slightly just to understand better what your thought process is?

So we're very mindful that with the land, the surplus land that sits around the manufacturing operations, we're very focused on how we can drive synergy for our existing operations so we've been doing quite a bit of extensive work around energy precincts and that could form a variety of options including for example batteries. We're also very mindful with Port Kembla of the long-term energy infrastructure that would be required for an eventual change in steel making so I'm obviously thinking longer term here so just in terms of the infrastructure that would need to be put in place, the easements that need to be preserved That's all part of our longer term planning around property portfolio.

Perfect. Thanks, Tania. I'll leave it there.

Thanks, Pete.

Your next question comes from Scott Ryle with Rymor Equity Research. Please go ahead.

Hi. Brilliant. Thank you. Just two quick ones, hopefully. MCL7, so you've talked about now being in ramp over the course of the next six months or so. I guess what I'm wondering here is have you felt constrained in true core and colour bond steel volumes over the last 12 months and I guess what I'm really asking there is there a chance of a non-linear ramp up relative to the targets you put out on slide 9?

Yeah, the challenges that we've had have been going on for a while over the last couple of years and it became extremely pronounced during the COVID period. and you actually need to almost break it down to production weeks and we have experienced periodic shortfalls in supply and what it does is create a not great customer experience and so we're very, very focused on making sure that we've got the volumes there as and when our customers need them. So it's more about addressing the periodic shortfalls that do occur that create frustration for our customers but more broadly we see good upside potential, more than potential. We see the upside coming with continued growth in Truecore. Now we know that metal framing has grown across the Australian residential space. It's sitting just below 20%. We would have the lion's share of that. When you think about where it was 10 years ago, it was sub 10%. So we've made good inroads. I see no reason while we can't go significantly higher. I also see the opportunity with Club On and continuing to grow there, not just in the roofing space but walling. One of the things that we didn't actually announce in this pack because it came slightly too late but we've also just commissioned the new digital print capability down at Western Port in Victoria and that's a very exciting addition to the portfolio and we think that's probably going to play an important role part in the residential space including involving applications. So there's a lot of exciting stuff going on in terms of the growth more broadly of the metal coated product.

Okay, great, thank you. And my second one, obviously a few months ago you pulled out of the YALA process in terms of, well, pulled out, obviously you're not still in it. I guess what I'm wondering, you've got you've got that has has gone you're obviously ramping up your your capital management activities whether it's reactive or proactive I'm not really looking for you know view on that so much as could you just make sure just describe how you make sure you don't miss out on valuable medium-term investment opportunities in the context of trying to reward shareholders for, as you say, an extended period of capex?

Yeah, I think there's probably two questions in there. So firstly on Wyala, the reason why we're primarily looking at Wyala is because of the very high-grade magnetite ores that are sitting there and whether or not that provides an opportunity for Port Kembla down the track. We remain interested in it. The consortium remains firm. We did not progress into the current phase, but we're obviously sitting there with our right of last offer. We're watching the process with interest, but I've been very consistent that whatever we do, it would absolutely have to make sense for shareholders. And if we can't get that to work, then we'll continue looking at other options. Now, just in terms of the ramping up in capital management, We've been engaged in a very extensive investment program for quite a number of years now. And so that's obviously puts a degree of constraint in terms of the shareholder returns. What we're seeing now as we've passed through PX, we've now got the benefit of the improved cash flows now and also coming through in the next couple of years. So it's a deliberate design to ramp up the shareholder returns. We're not constraining ongoing growth opportunities. I think David mentioned in a couple of his earlier comments that we generally set aside $1 to $200 million for growth opportunities on an ongoing basis outside of the major projects. There are some ongoing opportunities that we have in North America. We're looking at some potential options around blue-scope buildings. We've got some capital light options sitting up in Asia. and we've got some ongoing opportunities for growth in Australia which is not necessarily CapEx related. It's more around how we continue to grow our market shares. So I don't see that we're in any way compromising our ability to grow. It's really about resetting the balance between investment spend and reallocation of capital to or returns to shareholders.

Great. Thank you. That's all I have.

Thank you.

The next question comes from Keith Chow with MST Marquis. Please go ahead.

Good morning, Tania and David. Tania, maybe a first question for you on capital structure and capital returns. Given no franking credits at the moment, it's not necessarily the most efficient way to return capital via special dividends. So the buyback, I think, has been extended to the end of August 2027 now. Just want to be clear, what are the factors that prevent Blue Scope and buyback shares on market outside of corporate activity potentially going on in the background or a view on internal valuation. Is there something else that we should consider when assessing the prospects of that buyback being active?

Thanks, Keith. The buyback is always an option that's sitting there for us to use. The decision to go with the special dividend has a very simple premise. It is the most straightforward and clear way of delivering value directly to our shareholders. It's highly visible and therefore that's the basis that we've gone with for this particular half. We don't want to be accused of doing anything inappropriate so that obviously the buyback was inactive for a period of time whilst that corporate activity played out in the year. But again, it's also reinforced to us they need to be very clear about the value that we are delivering to shareholders.

Okay, and maybe a follow-up on to that Tania, is there anything at the moment that constrains you from reactivating that buyback?

No, there's nothing that would cause us to stop reactivating the buyback.

Okay, thank you. And then second one, I know there have been quite a few questions being asked on Blast Furnace 6 transition and also MCL7. Maybe just put it simplistically, when is MCL 7 expected to be fully commissioned and producing at capacity, or sorry, producing at a level that you're happy with from an efficiency standpoint? And then the transition from a blast furnace 6, how far into FY28 could that persist?

So MCL7, I think the fastest that we've actually done in terms of ramping up a metal coating line is about three months. It can take a bit longer. It can take three for five months. Having said that, I've been hugely impressed with the commissioning stats that we're seeing. I mean, this really is a state-of-the-art facility, but it is early days. So, you know, across this half, basically, and then we should be hitting our straps into the next half In terms of the Blast Furnace 6 transition, so what will occur there is that in the next half, so in that January to June period, that's when we'll see the cutover from number 5 to number 6. Blast Furnace 5, I think we mentioned Blast Furnace 5, which is the current operational Blast Furnace, is running extremely well for where it is in its campaign life. So we've actually got full flexibility in terms of the timing of the cutover. I would like it to be earlier in the half but basically we just need to do the cutover as and when we're ready. If the cutover was to sort of occur, if it looked like it was occurring at the end of December for example, we would probably push it out into January just because it's important that the teams get a rest. They've obviously been at this project for a number of years now. It's a very large project. We've got around 800 people on site so it's very complex. but I would think some point early-ish in the next half is what we're targeting for the cutover. That cutover, by the way, would generally take about a month in terms of ramping down number five and ramping up number six.

OK, thanks, Tania. And then the last one, maybe for David. There's been a lot of discussions on costs out today, but seemingly the corporate costs guidance for the next half at least is higher than expectations. David, is there anything to call out on corporate costs that have ramped over the last period and should we assume that the run rate for the first half of FY27 is something that builds from the next half onwards? Thank you.

Yeah, no, so primarily the main piece there is the investment in property capability is sitting within that corporate number. So kind of like for like, it's actually a reduction in corporate costs, Keith, but primarily what's sitting in there is effectively the build of property capability to drive the acceleration that you, Tania, was referring to.

There's a little bit of tech spend in there as well, that change in the accounting standards. obviously it means that tech spend now goes from CapEx to OpEx and because of the change in our functional operating model in the first instance we've got a little bit of cost I'm going to call it five to ten million dollars that's sitting in that corporate cost that'll actually end up being reallocated out to the businesses so just that that functional model change has probably had a bit of an impact as well.

OK, thank you. So the go-forward level on a half-yearly basis is whatever the guidance was for first half FY27, less the 5 to 10, going back into the divisions?

That's right. Again, depending on the level of property activity? Yeah. OK, that's great.

And probably just for complete clarity, Keith, we haven't incorporated any sort of property realisations in guidance, right? We'll do that if we're reasonably proximate.

OK, thank you. Thanks, both. Thank you.

Our next question comes from Paul Young with Goldman Sachs. Please go ahead.

Thanks. Morning Tania and David. Hope you're both well. First question just to reflect on I guess the last six months and the approach from Steel Dynamics and also Seven and looking at your response and today with the announcement of $3 planned on capital returns for next year. David, can I just look at you know that the moving parts are around your forecast operating cash flow for next calendar year, you forecast capex and looking at you know effectively what the implied free cash flow is. I mean is basically the $3 implied that you're going to pay out around 100% of free cash flow when you look at your scenarios?

In terms of CapEx for next year, effectively that's just over a billion dollars which largely reflects some of the delay and increase from the major projects flowing into FY27. A bit over 600 million of that is expected in the first half of FY27. Ultimately, as I said, we'll have a minimum of 75% of cash flow going back to shareholders. So ultimately, that kind of sends the base and depending on how we're seeing the outlook more broadly, we'll take a view as to whether we sort of increase that level.

Right and then a question maybe for you Tania just when you look at the portfolio and again your response to you know from that approach and you're doing everything you can on the cost. Our cost out is not easy. I think the $150 million represents you know circa 3% of your $5 billion annual cost base when you exclude raw materials but you know that program is going quite well. You know if you look at the non-core assets you sold, you sold India for a decent price above you know relative to book value. When you look at the portfolio, is there anything in the portfolio that you look at and go, well, there's ongoing opportunities to monetize and maybe calling out, for example, China where the carrying value has and it's sort of underperformed in the period or anything in the US with respect to BlueScope properties and just stepping back, when you look at the portfolio, is there anything that you look at and go, well, we continue to see in addition to cost an opportunity to unlock value for shareholders?

Yeah, it's a good question, Paul. It's something that we engage on in a very regular basis. And obviously the India example is the most prominent one. We have already wound down the properties business in the US. So we've released pretty much now all of the cash flows. There's one project to go, I'm sorry, in the Bluesco properties group in the US. When I look across the portfolio, At the moment I see a strategic rationale for all of the assets in the portfolio. What I've been particularly impressed with, I think the real gem of this year's performance has actually been our South East Asian business. Often we get questions around the value of that business and I think the efforts that we've been putting into that business over the decades are now finally starting to shine through and I think it's got a big role to play in the portfolio going forward. The China business is an interesting one. It's an intensely competitive market. It's a very weak macro environment. There's a lot of very exciting things going on in China. It's extremely innovative. There's a lot of IP sitting in China. We think it's a good business to have. It's obviously impacted in the last half with the cyclical impacts and it is quite extreme in China in terms of the seasonality, I should say. We still think it's a good business. We think there's a lot of upside to be had with that business, so we're very keen to retain that business. I think more broadly when I look at the US, again, the ambition with the BCP business remains absolutely undiminished. Again, we are two years behind where we wanted to be, but we see a very large market. We think that we can adapt to have a value proposition that will look a little bit different to Australia, it'll look a little bit different to New Zealand, it'll look different to what we do in Asia, it'll be adapted for that environment but we see, we believe that there is significant upside opportunity there. So we're very comfortable with the set of assets that we have. I think I'd earlier called out the performance of the pre-engineered buildings business in the US. It's been performing at a very strong level. They've put a lot of time and attention into into how they manage their backlog and their margins. They've got a good, healthy market that they're dealing with. So we're very comfortable with the portfolio as it currently stands.

Yeah, that's clear, Tania. Can I then ask just a quick comment on Australian demand at the moment? I mean, volumes were good in the half. Truecore volumes were good. I'm hearing about a Calabon price increase possibly flying through in the December half. Your ANA volumes and just work on hand across the industry, strong volumes. you know exiting the half and then we've got obviously the uncertainty around the new Australian government policy respect to negative gearing and housing. Your sales team generally have a you know sort of one to three month sort of view of on order books, on colour bond here domestically. What are they seeing on the ground particularly the last couple of months?

Yeah good healthy solid demand. It's been quite resilient probably more than expected. I think the approvals have continued to trend upwards. I think what we do see, Paul, is a bit of a two-speed economy in the sense that Queensland and WA are performing very, very strongly. Melbourne and Sydney are a little bit more challenged, but I think that provides us upside opportunity in terms of the growth that we're going to see there. If I look more broadly, industrial commercial is also quite positive. I think the outlook for infrastructure is also quite positive. There's a bit of strength in demand actually coming from data centres. Now, this one we find it difficult to quantify, but we do know that there's colour bond going in as roofing and walling, part of insulated metal panels. We also know there's wealth of beans going in there. So we see there's reasonable strength in demand. What we also see in the distribution channel is a fair degree of resilience. Don't think customers are sitting on a lot of inventory. I think they're buying very cautiously. but I think we've been impressed with the way that underlying demand has actually held up. In terms of the government changes, I find it an interesting one. I mean, I'm sure it'll have some positive impact but at the end of the day, it doesn't really alleviate the supply problem and what really needs to happen here is we need the land to be freed up, the approvals to occur, we need the infrastructure to be put in place, trades availability is a critical issue and I think until we address what sits at the fundamental heart of supply, I think it's going to be a little bit of a challenge. At the end of the day, we've got a structural shortfall in housing and the more that we can do on the supply side levers, the better we'll be.

Maybe a point to add, Paul, is obviously, you know, we've got a reasonable exposure to ANA and those budget changes really don't have an impact in that space.

Yeah, I notice that line's trending up. OK, thank you. That's all positive.

Thanks, Paul.

Our next question comes from Chen Jiang with Bank of America. Please go ahead.

Good morning, Tania and David. Thank you for taking my question. Some of my questions have been asked. Just a few follow-up, if I can. Firstly, on the Australia business, you mentioned the demand is strong in Australia, but in contrast, the Asia still... and many more. So I'm just wondering for the true core and the color bond volume growth, is that demand or strong demand is across all of your steel products or just for the true core and the color bond like a value added product? I guess I'm just trying to understand the volume growth in the Truecore and the Value Added. Is that driven by the demand, strong demand in Australia or driven by like you are growing the market share like you mentioned over your competitors? I have a few answers. Thank you.

Yeah, it's a good question, Shen. Look, I would say that we have absolutely been growing share in Truecore and Colourbond. But I think we've been, the demand is reasonably strong across all of our steel products. I don't think there's any areas of particular weakness that we would see but certainly some of the added strength that we would see in Truecore and Colourbond would be around that share growth and it goes again to the strategy that we've been driving for many years now which is make sure we grow the domestic market, make sure we grow the value add component of the domestic market, make sure that we have a quality product, a premium branded product that we support through the channel. including pulling through the in-demand by the work that we do in marketing, advertising, etc. So there's a big extensive program that sits behind all of that.

Thanks, Tania. Is that across all your products or just for the true core and the colour bound you have strong demand?

So demand is reasonably solid across all products, all product segments. There's no particular areas of weakness. that we're seeing.

Okay. Right. Got it. That's good to know. Thank you. And then for the blasphemous transition to your newly relined blasphemous six, I know a lot of questions have been asked, but I'm wondering how long is the transition period? I understand you mentioned the cut over next half and then about a month to move to blasphemous six. I'm just wondering, generally speaking, I mean, You haven't done, I mean, BlueScope haven't done plasterness translation for a while, so are you expecting any volume impact and as well as cost? But, you know, are you running two plasterness at the same time until you're newly reliant or are you going to run it smoothly? How should we think about that beyond the first half of FY27? Thank you.

Yeah, that's a good question. So the last time we did a realign was back in 2009 and that was when we had a two blast furnace situation. And so back then what you have to do is go like mad and realign the furnace at pace because you're obviously not producing and you obviously need that volume. Now since that time we've shut down one of the blast furnaces. So blast furnace six has actually been sitting there as a mothballed blast furnace which was sort of kept carefully under wraps and it's that blast furnace and the broader precinct around blast furnace 6 that we've been doing all of the upgrade work on. So this is, to be fair, it's not just relining the blast furnace itself, the furnace proper. There is a huge amount of work that's been going into the whole infrastructure that sits around that facility. We can no longer run dual blast furnaces for any extended period of time. We simply don't have the infrastructure in place to do that. So what we've been doing, will be doing, is building stock head of the transition and so that's some of the disruptions that you'll sort of see being impacted in the numbers right now. So we build stock and then we will basically take down, we'll run down number five glass burners, we'll ramp up number six, that'll occur over the space of about a month all being well and then we'll basically just do the full cut over and number five will then become mothballed.

Right, thanks. And that is going to happen in second half FY27, like how you are going to be running down blast furnace 5, and then ramping up blast furnace 6, and I guess that one month gives you enough time to commission FY26 from an engineering perspective smoothly.

Yes, yes, yes. So they'll do all of the pre-work that they can, and then they'll basically blow in the relined blast furnace. Hopefully it'll occur... early in the half, although there's a lot of moving parts. So what we'll do in November at the AGM is we'll give an update then as to the timetable. We'll have a much clearer view then on the exact timetable for the transition.

Great, that'll be helpful. Can I squeeze in last question about your US business, the BCP? BCP guided one third higher, just on a high level, one third higher than the second half, just on a high level. I'm wondering how much is due to your turnaround strategy? Are you gaining market share and volume? And how much is due to better demand in U.S.? Well, you mentioned a couple of times that the demand is solid in U.S. which probably led to better coating pricing or coating margin. I'm just trying to think how you think about your turnaround strategy to continue or is just overall the industry, the U.S. steel industry is solid. Thank you.

Just to be clear, so the reporting segment and the outlook segment is for BCP&A. It's not just BCP. So there's three businesses that sit within that. And there's a broadly equal uplift across each component of those businesses. So that includes the buildings business, Lutko Building, so Butler, Drago, Pruden. It's the Steelscape business, Steelscape ASC that sits on the West Coast and the BCP business. And the BCP business, that's much more around operational improvements in the business. It's not off the back of growing market share. It's fundamentally improving the performance of the underlying assets.

Great. Good to hear. Thank you so much, Tania. I will pass down.

Thanks, Chin.

Your next question comes from Brooke Campbell, Corfress, with Darren Joey. Please go ahead.

Yeah, good morning. Thanks for taking my questions. Just on the US pricing environment, You know, you talked about fixed cost contracts, which is helpful, but just on the shorter term and almost spot volume, I guess, and things that are on the one month lie, how are you seeing the sort of distance to the benchmarks playing out? Is it tightening up through the course of this year and at the moment? Just even, I guess, service centre, I think it's pretty low and lead times are sort of ticking up a bit. Any commentary on that? That would be good, thank you.

Thanks, Brooke. What I'd say is it's stable. It's in line with longer-term history. I think the discounts elevate during uncertain times, but there's nothing really uncertain around the current strong prices. So I would say relatively stable, Brooke.

Okay, that's a good one. Tania, maybe just a follow-up. You mentioned earlier on some options for growth in the US buildings business. and in Asia's capacity as well. You mentioned that in response to another animal's question. Do you mind just providing a little bit of colour around the two of those? That would be good, thanks.

We just think there's some relatively low couple options to free up a bit more capacity and get some more throughput through our facilities in North America at buildings. So we're actively looking at some options there. When I look at Asia, when I look at the performance of those businesses there, we've actually got one metal coating line that's mothballed, another one that's reasonably inactive. it wouldn't take much effort to restart those metal coating lines we've also got some inline painting capability that we're thinking about doing some modifications to and again that gives us some relatively low capital opportunities to continue to grow that business so again I think that that business where we've got a fantastic position across every major Southeast Asian economy We've been at it for decades. We understand what it takes to be successful there. And all of those items that I mentioned, they're all within that capital envelope that David mentioned.

Thank you very much.

Thanks, Brooke.

There are no further questions at this time. I'll now hand back to Tania Archibald for closing remarks.

Thank you, everyone, for joining us today. I know you've got very busy days and we look forward to catching up with you all individually over the coming week.