BlueScope Steel Limited (BSL) Earnings Call Transcript & Summary

Good morning, and welcome to the BlueScope FY '23 Financial Results Presentation. I'm Mark Vassella, and here with me today is Mark Scicluna, our acting CFO. This morning, I'll take you through the highlights of the financial year just gone, and then Mark will address operating and balance sheet performance. As usual, we'll have plenty of time for questions following the presentation. We're joining you today from Melbourne, part of the Eastern Kulin Nation, and I'd like to acknowledge the traditional custodians of this land, the Wurundjeri peoples. We pay our respects to elders, past, present, and emerging and to all First Nations people joining us today. FY '23 was another excellent year for BlueScope. Our financial results clearly demonstrate the resilience of the group's diversified business model with our third highest full year underlying EBIT, all while maintaining a robust balance sheet and delivering returns to shareholders. And we're looking to the future with confidence, positioning BlueScope for long-term sustainable growth. In Australia, the medium to longer-term growth in residential housing, driven by strong net migration and existing housing shortages, will support continued demand for our value-added products. To that end, we saw record sales of COLORBOND Steel in FY '23 and have just commenced construction in Western Sydney of our seventh metal coating line to support that growth in COLORBOND and TRUECORE. We're securing the longer-term future of the Port Kembla Steelworks with the approval of the #6 blast furnace reline and upgrade, which I'll touch on further in a moment. In the U.S., our growth platform is in place. We're underway on realizing the opportunities we have in front of us across the steel value chain in this large and growing market. This growth is supported by strong nonresidential demand, massive infrastructure and green energy funding, reshoring, and very recently, further potential industry consolidation. And we continue to work hard on our decarbonization efforts. This year saw the announcement of the accelerated feasibility study into an EAF in New Zealand, and we delivered a solid reduction in group steelmaking emissions intensity. All in all, a terrific year for the company. As always, I'll start with safety. Our integrated health, safety, and environment strategy has been in place for a few years now, which has built a culture of learning in how we manage risk. Risk control projects are core to our approach. And in the year, the team completed 249 of those projects out of the 250 we had identified, along with an additional 48 environmental improvement projects, all of which have developed smart solutions to better manage risk. We're also making solid progress in increasing the capability of our people. At the end of FY '23, over 1,600 of our leaders had participated in the global HSE risk management program, and over 1,500 of our people were involved in business-led learning programs. On our lagging safety metrics, TRIFR stepped up to 7.5 in FY '23, above the top end of the long-term range of 5 to 7, with the inclusion of the recent scrap recycling asset acquisitions. Severity was stable on FY '22 with 8 injuries having the potential to be a fatal incident. Now whilst we've taken great strides in having evolved our approach and delivering our risk control projects and capability developments, we continue to work hard on managing risk and improving our safety performance. To our financial highlights. Underlying EBIT in FY '23 was $1.6 billion and reported NPAT just over $1 billion. This robust performance demonstrates BlueScope's resilient business model, delivering a fantastic result despite industry and macro conditions cycling off the record levels we saw in FY '22. Second half FY underlying EBIT came in at $757 million, within the updated guidance range we provided in April. Return on capital over the past 12 months was a healthy 14.6%. And free cash flow after CapEx was $1.3 billion. The balance sheet remains strong with net cash of $703 million. This is a great result for BlueScope and has come on the back of the ongoing dedication of the entire 16,500 strong BlueScope team. I'd like to thank all of the team for their contribution to our success. You'll note today that we've simplified the way we're talking about the performance of the business following the segmentation we completed last month. Mark will take you through the business performance in detail in a moment, but you can clearly see the significant contribution from our large and growing North American footprint. Whilst the steel price and spread cycle will continue to be a driver of earnings, we're excited by the further earnings growth still to come from our recently expanded U.S. footprint. For Climate, through the year, we continue to work hard in pursuit of our 2030 targets and our 2050 net zero goal. A key highlight of the year was the commencement of an accelerated feasibility study into a new electric arc furnace at New Zealand Steel, which I'll touch on more shortly. The team in Australia have made significant progress in their collaboration with Rio Tinto, completing a concept study into DRI and melter technology. We've broadened our review of the most likely decarbonization project options for iron making in Australia, including a focus on the necessary enablers. We've also expanded our technology collaborations with global steelmakers such as thyssenkrupp, Tata Steel and POSCO. And lastly, as you can see on the charts, we're making good progress towards our 2030 emissions intensity reduction targets. While we've always flagged that our rate of improvement will vary from year to year, it's pleasing to see a 4.9% steelmaking intensity reduction this year as we ramped up the North Star expansion and saw benefits from other initiatives at New Zealand Steel and Port Kembla. In May, I was delighted to join our New Zealand team and members of the New Zealand government to announce the accelerated feasibility study into the new EAF at New Zealand Steel, an important project for BlueScope and for New Zealand. Subject to final approval in the coming months, we're targeting having this new EAF operational by 2026, which following ramp-up, we'll see a significant step down in New Zealand Steel Scope 1 and 2 greenhouse gas emissions in the order of a 45% reduction. The project will be co-funded by the New Zealand government who, through their decarbonizing industry fund, will contribute up to New Zealand $140 million to the total capital cost of approximately $300 million. This project has been enabled by the reliable and affordable supply of both firmed renewable energy and domestic scrap steel in New Zealand and supported by the right public policy settings. On broader sustainability initiatives, female representation continues to be a key focus as we progress a range of programs that will see our employee mix better reflect the communities in which we operate. Whilst we've seen solid improvement over the last few years, the total percentage of women in the BlueScope workforce remain stable at 24% in FY '23. On sustainable supply chains, more than 200 assessments were completed during the year with 12 onsite audits conducted. Our teams are working with the audited suppliers on the improvement opportunities identified through this process. And finally, as we previously flagged, on 9 December 2022, the Federal Court found against BlueScope and a former employee in a proceeding initiated by the ACCC, alleging contraventions of the Australian competition law cartel provisions. A remedies hearing was held on 12 April '23, and BlueScope is awaiting the outcome of that hearing, and no decision has been made about any appeal. Our purpose and strategy continue to focus and guide us. FY '23 marked 4 years of BlueScope's Transform, Grow, Deliver strategy, under which the company has made significant progress. In that time, we've transformed through our increased use of digital technology, having embedded capability across our businesses and implemented numerous exciting projects. Major strides have been made in growing our business, most notably in the U.S. BlueScope's U.S. presence has grown materially since FY '19, with $2.5 billion invested to build a platform for quality earnings growth. And we remain focused on delivering a safe workplace and an adaptable organization with strong returns. We're proud that over the last 4 years, BlueScope has demonstrated the financial strength of its business model with an average return on invested capital of 22%, continued investment in future growth opportunities, an average net cash position of around $500 million and a total of $1.8 billion returned to shareholders. Following the completion of a comprehensive feasibility study, the Board has today approved the reline and upgrade of the #6 blast furnace of Port Kembla Steelworks, providing our Australian business a critical bridge to the future adoption of low emissions steelmaking. Our confidence to embark on this project has been underpinned by supportive government policy, including the reforms made to the safeguard mechanism, which appropriately recognized the challenges facing hard to abate sectors such as steelmaking. The final reforms also acknowledged the essential contribution BlueScope makes to Australia's sovereign capability, the national and regional economies of Australia, the importance of the products we manufacture for key sectors of the economy, including renewable energy, building construction, and defense. I'd like to thank the Australian federal government for the constructive way they've worked with us during the Safeguard reform process. Implementing the reline and upgrade project allows us the necessary time to develop, test, and pilot alternative viable lower emissions iron-making technologies. It also recognizes the practical reality of the timeframes required for the establishment of the enablers of lower emissions steelmaking. I note, the reline does not lock us into a full 20-year blast furnace campaign. In contrast, it secures the immediate future of our valuable Australian business while enabling a transition to lower emission steelmaking as soon as it's commercially feasible. In this sense, the reline project is our bridge to the future and critical to maintaining the sovereign capability of flat steelmaking in Australia. The reline blast furnace is expected to be commissioned in mid to late 2026. The total cost for the project is $1.15 billion, which is up from pre-feasibility estimates given the inflationary pressures observed across the broader economy, particularly as it relates to labor and material costs. The expected capital spend profile is included on this page with the project activity and spend expected to peak in FY '25. As we've communicated previously, this project is not just about relining the #6 blast furnace, but progressing a range of important upgrades to ensure it operates as efficiently as possible in terms of cost, reliability, and environmental performance. As the chart shows, this upgrade is not just to the #6 furnace, but the full facility that supports the critical iron-making processes at Port Kembla. The orange colored boxes highlight the activities undertaken during a typical reline, focused primarily on the furnace itself. In blue, you can see the work across the supporting infrastructure to enhance the overall efficiency of the facility as well as improving the way we handle raw materials and byproducts, such as a new slag granulator facility. Lastly, in green, you can see the examples of the technology we're investing over $100 million in to enable improved environmental and emissions performance, including waste gas recovery, energy generation, and water treatment. Similar to the existing and current #5 furnace, once it's operational, we expect the #6 furnace to be in the top 15% of emissions efficient blast furnaces in the world as reported by the World Steel Association. The reline and upgrade project enables our exciting longer-term vision for BlueScope in Port Kembla, moving us toward a low-carbon modern manufacturing future. We're unlocking the next wave of customer growth and productivity improvements through digital technologies as we embed those capabilities within the business. We're progressing a range of exciting initiatives that will have a meaningful impact on the business' performance going forward. Including our asset intelligence and predictive maintenance programs, digital twin models and production and supply chain optimization. I've talked about the work underway to understand and develop our Australian decarbonization pathway, including the Rio Tinto agreement, the broader decarbonization study and the technology collaborations with leading global steelmakers. This work is a driving force in our vision. And we're nearing the completion of the master plan for the excess land holdings adjacent to the Port Kembla Steelworks. The concept is now taking shape with broader themes focused on attracting industries such as modern manufacturing, including clean energy, education and training and community, which will all take advantage of the industrial foundations and capabilities of the Illawarra Region. And more broadly about our Australian aspirations. We've recently announced the commencement of construction of our new metal coating line in Western Sydney, co-located beside our existing COLORBOND line in Erskine Park and costing $415 million. The new 240,000 tonnes per annum line should commence operating by the end of calendar 2025. Importantly, this will better enable us to meet growing demand for our steel building products in Australia, in particular, TRUECORE light gauge steel framing and feed for COLORBOND. I'm now going to hand over to Mark, who will take you through the more detailed financial data.

Thanks, Mark. Before I get into the detail, as Mark mentioned earlier, we've simplified how we talk about the business following the resegmentation last month, which aligns our reporting to the regions in which we operate. Whilst we talk to the performance across the 4 main regions, the detailed segmental performance is included in the broader materials available on our website. Turning to the business results. The Australian business delivered underlying EBIT of $537 million in full year '23 and a return on invested capital of 14.4%. Second half underlying EBIT was $263 million, broadly flat on the first half. Volumes improved in the second half of '23 as weather conditions improved, labor constraints eased, and we saw a non-repeat of distributor destocking observed during the first half of the year. End-use demand for our products remained strong as construction activity continued at a solid pace given the extended pipeline of work on hand. Despite total full year '23 domestic volumes being around 10% lower than that of the prior year, it was pleasing to see sales of COLORBOND steel products set a new record this year, supported by ongoing end-use activity levels and sales and marketing initiatives. Realized spreads softened in the half, reflecting benchmark spread movements, part offset by lower conversion costs. Looking at the specific end-use segments for ASP. Across the board, we saw higher dispatches in 2 half '23 relative to the first half, which, as mentioned, was largely due to improved weather conditions and easing of labor constraints as well as some restocking in the distribution channel. The broader Australian building and construction industry remains supported by a solid pipeline of work, which has been progressively worked through during the half. Sales into the nonresidential construction segment also remained resilient, supported by commercial and industrial and social and institutional activity. Looking at the macro indicators of the Australian building and construction industry, we're seeing the pullback in activity levels across detached housing approvals. However, demand in the alterations and additions in non-resi segments remain robust. Whilst detached house approvals have pulled back from recent record hires, they have remained within the historical band of 90,000 to 130,000 units per annum. We're continuing to see strength in demand in regional areas and for lower density living, which are traditionally areas where our flat steel products are particularly popular. And A&A activity has remained stable, which all supported COLORBOND sales. More broadly, with strong employment levels and inbound migration, the backdrop for medium-term housing demand remains robust. In the nonresidential space, approvals remained strong with the commercial and industrial subsector strengthening further in the half. A solid pipeline of projects across the broader sector is likely to underpin demand in the medium term. Our North American businesses delivered a total FY '23 underlying EBIT of just under $1 billion and a return on invested capital of 18%. Performance at North Star improved in the second half, delivering underlying EBIT of $242 million, with the uplift primarily due to the additional volume from the expansion ramp-up with approximately 180,000 tonnes produced from the expansion in the second half. Realized spreads were slightly lower through the period, noting the effect of typical pricing lags. The Buildings and Coated Products North America segment delivered an outstanding result in the half, predominantly driven by our downstream businesses. Based upon a similar trend in prior halves, the Engineered Buildings business saw continued strong margin performance, albeit slightly lower than first half. The West Coast U.S. businesses, which form part of the JV with Nippon Steel and now included in this segment also saw strong performance, particularly from the downstream ASC profiles business. The BlueScope Coated Products business delivered a small contribution in the half as the integration progressed post the acquisition in June '22. And finally, as flagged previously, the properties group delivered a negligible contribution in the second half on the deferral of the project sale. Now to take a quick look at activity levels across our North American end use segments. Nonresidential construction remains supported by government stimulus programs such as the Infrastructure Investment and Jobs Act. Whilst the Architecture Billing Index softened in recent months, reflecting softer demand for new projects, the medium-term demand outlook remain positive, supported by ongoing stimulus, reshoring, and the continuing e-commerce infrastructure build-out. In auto, a solid backlog of demand for vehicles has supported activity levels despite rising interest rates and declining affordability. Sales improved during the half as supply chain constraints continue to ease and inventory levels improved. There are, however, some growing concerns on possible United Auto Workers industrial action, potentially impacting production at a number of the major auto producers. We'll be watching this closely, including potential impacts on near-term demand. Finally, demand in the manufacturing sector continued to soften through the half as the economy adjusts to a high interest rate environment impacting consumer confidence. Across Asia, our businesses delivered an underlying EBIT of $142 million and a return on invested capital of 12.4% in full year '23. Performance improved in second half with an underlying EBIT of $80 million, an increase of around 30% on the first half. The China business delivered a record full year result of $91 million, driven by the strong first half with the second half impacted by typical seasonality. The Southeast Asian businesses delivered a turnaround in the second half with an EBITDA of $57 million, recovering from the loss position in first half. The improvement was driven by lower steel fee costs and benefits from pricing and cost initiatives delivered during the half. Pleasingly, the Thailand business delivered a record half year result. And finally, the India business continued to perform well, supported by ongoing growth in end-use segment demand. Notably, in April, Tata BlueScope signed a supply agreement with Tata Steel for the supply of product from their plants previously part of the former Bhushan Steel Group. This supply agreement provides an exciting growth opportunity for the business, which has been operating at full capacity utilization for the last few years. Under the new agreement, an additional 68,000 tonnes of coated and painted product was sourced from these facilities throughout FY '23. The New Zealand and Pacific Islands business delivered an underlying EBIT of $129 million in full year '23 with a return on invested capital of 18%. The business delivered underlying EBIT of $43 million during the second half, down from $86 million in half 1. This was primarily due to softer realized domestic pricing, combined with higher coal costs, both in line with movements in global benchmarks. The business saw similar domestic dispatch volumes in 2 half despite the softer economic environment and supply chain and cost challenges being experienced across the construction sector. Turning to the group underlying EBIT movements. The clear driver of the decrease in full year '23 earnings was the significant reduction in realized steel spreads in both Asia and the U.S., predominantly due to lower global steel prices. Conversion costs were also higher across the group in full year '23 on lower volumes and inflationary pressures. However, these impacts were primarily realized during the first half, with cost pressures easing into 2 half. And finally, higher volumes at North Star more than offset lower dispatch volumes at ASP and New Zealand compared to full year '22. When comparing 1 half to 2 half, the movements were far more modest with lower spreads, part offset by higher volumes at both North Star and ASP. Turning now to the financial framework and key financial indicators and settings. The financial framework remains unchanged and is integral to our success in managing the business through the peaks and troughs of the cycle. By way of recap, we have 3 key focus areas: Firstly, in delivering returns greater than our cost of capital and maximizing free cash flow. Secondly, maintaining a strong balance sheet and credit metrics, providing the ability to weather cycles and capacity to deliver on value-accretive opportunities. And finally, remaining disciplined in our capital allocation, balancing shareholder returns with investing for long-term sustainable growth. The group delivered a return on invested capital of just over 14.5% over the past 12 months with robust contributions from North America, Australia and New Zealand and Pacific Islands. The company continued to deliver strong cash flows in 2 half '23. Although we saw an easing in cash profits as the macro environment eased, net cash flow was assisted by a continued release of working capital. Turning to our capital structure. The balance sheet remains strong with $703 million of net cash at 30 June. We have ample liquidity of over $3 billion and have maintained our investment-grade credit ratings from both Moody's and S&P. As we have flagged previously, in the short to medium term, we are retaining balance sheet capacity to fund our key investment priorities, but we'll continue to target around $400 million of net debt in the longer term. On capital expenditure. In 2 half '23, sustaining spend was slightly higher than the previous long-run averages as we invest to enhance operational security across our sites and maintain a larger asset base following recent acquisitions and investments. We continue to progress a range of foundation and growth initiatives, including the tail end of the North Star expansion, and the #6 blast furnace reline and upgrade project feasibility spend as that stepped up as expected. In 1 half '24, we're expecting similar sustaining spend of around $200 million. Outside of this, the balance of the expected one half '24 spend of approximately $260 million relates to the reline and a range of growth initiatives across the group, which I'll touch on now. As we've previously flagged, we have an exciting pipeline of investment projects underway. Work has commenced on the pipe and tube mill project at Port Kembla, the new metal coating line in Western Sydney and the blast furnace reline and upgrade. The debottlenecking at North Star will follow the ramp-up of the current expansion. And we'll continue to invest in line with our capital allocation framework and stated climate programs across the coming years, including in the electric arc furnace at New Zealand Steel. Turning to shareholder returns. BlueScope seeks to distribute at least 50% of free cash flow to shareholders. In FY '23, total returns were $580 million, including $233 million in dividends and $285 million via the buyback program. Aligned to the approach established 2 years ago to target an annual dividend level of $0.50 per share, the Board today approved a $0.25 per share fully franked final dividend. The balance sheet strength and robust cash generation has also supported board approval for an increase in the scale of the buyback program to allow up to $400 million to be bought over the next 12 months. Finally, I'll run through the outlook across the individual businesses before handing back to Mark to cover the group outlook. In Australia, we expect a similar result to 2 half '23, with stronger benchmark spreads in part offset by weaker realized export prices and unfavorable impact of raw materials mix. Domestic volumes are expected to be similar, but costs are expected to rise, driven by escalation and timing of some maintenance and project spend. For North America, overall, we expect the results slightly below 2 half '23. For North Star, we expect to result approaching that of 2 half '23 with lower benchmark spreads are expected to be largely offset by favorable realized pricing and an increasing contribution expected from expansion volumes as the ramp-up continues. For Buildings and Coated Products North America, a result of around 3/4 of 2 half '23 is expected, with margins easing after a period of particular strength. I'd also note that this includes an expected project sale at the Properties Group later in the half. From our Asian businesses, we expect a slightly better result than 2 half '23. China is expected to benefit from typical favorable seasonality. Southeast Asia is expected to deliver a slightly weaker result following the strong 2 half '23 performance in Thailand. And India is expected to deliver a slightly lower result compared to 2 half '23. For New Zealand and Pacific Islands, we're expecting a similar result on similar domestic volumes. And finally, intersegment corporate and group costs are expected to be more favorable, mainly driven by an expected profit and stock benefit. With that, I'll hand back to Mark.

Thanks, Mark. Turning to the group outlook. Underlying EBIT in the first half of FY '24 is expected to be in the range of $700 million to $770 million. The same is the range of our performance for the second half of FY '23. Of course, our expectations are subject to spread, foreign exchange, and market conditions. In summary, BlueScope is a very different type of steel company, one that's uniquely positioned to grow and deliver across our major markets. With the ongoing dedication of our 16,500 strong BlueScope team and our robust balance sheet and financial disciplines. We're totally focused on investing for long-term sustainable earnings and growth, carbon proofing our business, and delivering solid returns for our shareholders. We have a high-quality asset portfolio, positioned to capitalize on favorable industry and end-use trends such as structural changes in the U.S. and China, trends towards lower density and regional housing and the need for e-commerce, logistics, and green energy infrastructure. We're particularly excited by the growth platform we've built, particularly in the U.S., and we're working hard to transform our business in this age of steel. And before I hand over to Q&A, as we announced on Friday, our Chairman, John Bevan will retire at this year's AGM and will be succeeded by current Non-Executive Director, Jane McAloon. John has been an outstanding Chairman for the last 8 years, and we're delighted that Jane is assuming the role at this exciting time for the company. So thanks for your time this morning. And with that, I'll turn it over to Q&A.

[Operator Instructions] Your first question comes from Megan Kirby-Lewis from Barrenjoey.

Just a couple from me. Firstly, on ASP. Just note that the business is pretty resilient despite what we're seeing on some of those housing indicators. So just came to some more commentary around the demand outlook. And I just note that you continue to reference that strong pipeline of work. So how far do you see that extending and how are you thinking about the volume outlook more so for the COLORBOND and coated products would be great.

Thanks, Megan, and good morning. Yes. Look, it is resilient. And the way we're thinking about it, of course, we're guiding for first half. So what our customers are telling us, Megan what the building network seems to continue to do -- to have in the pipeline is at least the 6 months of work. So we're confident and have line of sight through to the end of this calendar year. What happens in the New Year with some of the lead indicators, I mean, I suspect it might soften a little bit in the New Year. But if you think about fundamentally Megan, the shortage of housing in Australia, the net migration position, we continue to grow share in COLORBOND relative to roof tile, relative to siding products and also, of course, in our residential steel framing. So that's given us the confidence to invest in MCL7. So the outlook from our -- from my perspective is still quite positive, hence, the investment in further capacity. There will be cycles, of course, but if you look at the lead indicators, yes, it's fallen to the bottom of that range, but it remained in that detached range that it has for decades now. So I don't see any sort of fundamental cliff or concern that we might see some sort of dramatic long-term change in the underlying demand for the ASP business and the team, they continue to do a fantastic job in positioning the product relative to its competitive products.

Then just on North Star and just looking at the costs in second half '23. And just excluding the impact of raw material costs as we can track that pretty well from the benchmark -- but it just seems that those other costs that did increase again year-on-year. Is it just keen to understand what's driving that? How much is the recent recycling businesses? And should we be expecting that sort of stabilized on a per ton basis from here looking into FY '24? Or is this further sort of inflationary pressures to come?

Look, I'll hand it over to Mark, he can give you a bit more detail, but just a couple of questions, and you saw it when you were there. I mean we're operating in a suboptimal way. So it's flat out one day. It's back to next. It's less efficient use of energy. Yes, we've seen some inflationary pressures as the rest of the steel industry has in North America part of the reason, I suspect, for the pricing discipline in North America. But look, it will take North Star a little while to just settle down and get the run rates right just given the start-stop nature of commissioning an asset like that. So I just set that context and then Mark can give you a bit more detail on the numbers.

Yes. Thanks, Megan. And I think we've spoken in the past about some of that escalation or inflation we've seen in the price, in the cost base at North Star, particularly around some of those consumables, electrodes, refractories and alloys and additives that are added into the steelmaking process. That's certainly -- we're certainly experiencing that. We certainly experienced that in 2 half '23. How long that will sustain? I guess that's an interesting question. We're still expecting some of that to be the case in 1 half '24. And as Mark mentioned, we suspect that's why spreads are and price are spreads and spreads are staying at a relatively elevated level compared to longer-term history. I guess just the other thing to note, when we look at 2 half '23, the other element there will be around some of the pricing elements. The prices dipped away a bit quicker perhaps than we'd expected back in April, which did impact the North Star business. So that's also part of that. I guess that reconciliation as you look to try to unpack what the cost outcomes were in second half '23.

Your next question comes from Peter Steyn from Macquarie.

Mark Vassella, you mentioned briefly the changing structure of the U.S. steel industry and certainly some more on foot. Could you give us a sort of a bit of a sense of how you think this potentially throws opportunity your way? Are there even assets that may present an opportunity for you as a consequence of further consolidation?

Yes. Thanks, Pete. Look, a very interesting move. Cliffs and of course, as Mark as well coming in with a bid and U.S. Steel now effectively, I suspect, putting themselves in play under a strategic review. So we've talked for some years now about the consolidation that we've seen in North America and how that's creating a better environment. So the latest move will only enhance that, I suspect, hard to forecast where this ends up, but you guys have more experience at this than me, typically when a process like this starts, there's always an event or an outcome. And I suspect there will be in this situation as well. And then, of course, you raised a very interesting point. I mean who knows from a HSR antitrust perspective, what's feasible, -- what's not feasible. I don't have in-depth knowledge of the processes in the U.S., but it seems like there's -- the consolidation is reasonably material. So it may well be, Pete, that there are opportunities that emerge out of this. Certainly, a combined Cliffs and U.S. steel would be a very strong automotive producer and business. So, there might well be assets, for example, in the building construction space that are more suitable to a company like ours. So we're -- we don't have anything particular in mind. It's very early days in the process, but it's fair to say that we're watching with great interest as this unfolds.

And then just changing gears completely, looking at the safeguard mechanism on some of the developments that we've seen in the second half, some commentary last week about carbon border adjustment mechanisms. How do you see the importance of CBAM, what happens into leading period while we wait for CBAM implementation in your view, Mark?

Yes. It's an important piece of the puzzle isn't it, Peter. So from our perspective, if costs are going to be incurred by local industry to decarbonize, then it's completely inappropriate that other countries that don't have the same costs can import their products into this country at some disadvantage. So much like we've seen in Europe with the emergence of CBAM, I think it's an entirely appropriate part of the broader public policy position or strategy in terms of decarbonization of industry. So we're interested in that process. Obviously, we'll make our submissions and have expressed our interest in that to the federal government. What I would say, given our experience with safeguard mechanism as we found the federal government willing to listen to industry in terms of understanding the challenges, particularly that the hard-to-abate industries like the steel industry face. So I would imagine that, that will continue. We've got a really strong sense from the federal government that they're keen to ensure that manufacturing continues to prosper and develop in Australia. So there's a way to go on this, Pete. This will take some time. They're really complex issues to tell with as we've seen in Europe, all sorts of implications, particularly for a nation that trades as much as we do. So I don't expect that this will happen quickly, but we're pleased to see that Minister Bowen setup the structure that he has and will be a willing participant in that process.

Your next question comes from Paul Young from Goldman Sachs.

My first question is on the ramp-up of North Star. I appreciate that ramp-ups are never smooth and linear, but a little bit surprised that by the slight delay considering that when we were on site in May, a little bit ahead of plan. And we didn't really talk about the dual construct, so it was more ladle furnace and tunnel furnace and hot strip mill sort of debottlenecking opportunities. Can you maybe just step through what's actually happening at the moment and with the dual caster integration or just optimization? And yes, just to step through that, please?

Sure. Sure, Paul. And you know that this is a really complex process. As we've said all along, we got accused early on of the 18-month ramp up. We've been a bit conservative. These things are just by their very nature, incredibly complex. I'm not concerned about this. We are just in the fullness of disclosure, wanted to alert you guys to this. It's not a massive variation from our program. In fact, we had a record month in July. So they produced more tonnes in July than they've ever produced to give you some sense of the continued ramp up. It's just taking a little bit longer than we expected around particularly that complication of the dual casting. So it's not just a production issue, it's also about getting the right sales mix, making sure we've got the right slab with. So this is -- this scheduling component of it, both in terms of the scheduling that occurs as you saw when you were there with the bars cutting into the existing line, but also the scheduling in terms of what products we need to make and what products are being asked for by our customers is just taking us a little bit longer than we expected. I don't want the team to break anything and I'm cutting them a little bit of slack here to ensure that, that ramp-up continues in a very measured and a very structured way. I suspect if we were probably a different steel company or we wouldn't even be talking about this or telling you guys. But as I said, in the fullness of disclosure, it's a 40,000 or 50,000 or 60,000 tonne potential implication at worst. So I'm not terribly concerned about it and just want the team to make sure they continue to focus on doing this in a very structured and proper way so that when we get to the level of production we need to, we can stay there, and we're not having outages or breakages that cause us to fall back in the schedule. So that's all it is. Paul, we're really just letting you guys know it's not something that's particularly concerning to me. It's just going to take a little bit more time, a few months more than we expected it to from our initial planning.

Very conservative. And then switching to Port Kembla. Great to see the approval of #6 reline. And also the $1.15 billion is -- that's a good outcome considering we're seeing a lot of higher inflation certainly across the mining industry at the moment. Can you just step through -- it's a complicated project, a lot of work packages, which you mentioned in the past. How are you mitigating and offsetting FX impact escalation? What contingency you have seen? Just want to step through the outcomes that we're seeing effectively 15% inflation on the papers?

Yes, and thank you for recognizing that because I reckon the team have done a pretty good job as well. I mean what it comes down to, Paul, is just literally the hard work of letting the packages, locking them in, doing the scope work, getting the engineering right so that we're actually putting in place contractual arrangements, not just estimates and then needing to carry a contingency on top of that. We have a contingency in the project. We have a contingency for capital, but we also have a contingency that we've built in around further inflation. That's in that 1.15 number. So as you would expect from us, this is one area where we do have an incredibly thorough and structured process and moving from pre fees to fees to now execution. That's all about just whittling away the various work packages and the various pieces of work in ensuring that they go into fixed cost positions, some of which we will cover from an FX perspective, particularly some of the big offshore equipment pieces that we're purchasing. So we lock those in. But it's really about just going through that progress and taking things out of an area where there's still contingency and locking them into areas where we're confident around the pricing, and we can put the final numbers in. So yes, look, it's moved a little bit. I'd rather it didn't, but we're going through that process and getting to a point where we're increasingly confident with that number, Paul.

Your next question comes from Simon Thackray from Jefferies.

Big swing in Asia. I know we talked about the seasonality in China, but the country swings were pretty, pretty wild, which is, sounds to me, I might be wrong. It sounds like a tricky way to run a business. How are you thinking about Asia? And what was the big driver in Thailand and Indonesia half-on-half?

Yes. So a couple of things -- I've got some feedback there. I think I'm right. I'm sorry about that. You were getting Mark and Mark and Mark and Mark there with the feedback. So a couple of things. We had a record in China, so a great result, notwithstanding the broader economic challenges in China. So still that focus that we have around the segments where we think we can make money. And again, recognizing we're a very small business in relative terms in China, but a great result from the China team who remained very focused on the areas they can make money. A good result in Thailand. We've got a very good country manager in Thailand. He's been at it for a few years now and continue to improve. So again, really understanding where we make money in the project segments in the more premium segments. So a great result from the Tire business. Indonesia has been on a bit of a turnaround journey for a couple of years. And again, country manager there, who we put in a couple of years -- a couple or 3 years ago, he started to have an impact. We've concentrated back our production around one of the metal coating lines, the more current and modern metal coating lines. So he's taken advantage of the benefits of that. And also an improved result out of Malaysia, still not where we want it to be, but it was in a loss position. We've changed out the management in Malaysia. And the team there have now started to improve that business. We found some challenges with some stock that we had some issues with. So the team have got an improvement plan there in Malaysia. And then more broadly, Connell and the team have really focused back on again, a bit like the Thai example where we think we can make money. So we know how to do this. It's what we do in China. It's what we do in India. It's what we've done in Asia in the past, but a much more laser focus on what are the segments we can make money in. It's in that prime product, premium products. It's in the project space and the business is focusing more on that from a specification point of view. So look, there's always volatility in these businesses, particularly when you don't control the whole value chain as we do in Australia and New Zealand, for example. But as we've seen with our downstream businesses in this part of the cycle as prices swing, some of that value moves downstream and our downstream businesses are really quite valuable for us.

So if you do make an attribution, Mark, between what management have done in that half versus what the market has done? I mean, if we're going to -- presumably, from your comments on management, we'll see momentum from those management decisions into the first half '24 and beyond?

Yes, exactly. Yes, I'm confident that the changes that Connell and the team have put in place are sustainable. So we'll continue to see improvement out of Indonesia. Malaysia is on the improved. Thailand's had a record year, so I wouldn't necessarily expect it to go from record to record to record. But certainly, the underlying business and the strategy that the team have put in place, I'm more comfortable that that's sustainable and it probably has been for a little while.

And one for the other Mark, just a small one. Just on the maturity profile for the debt stack, the expiry of the joint venture debt through '24 and into '25. I'm just expecting -- just trying to understand what you're expecting for the reset or the refi of the joint venture there? And what sort of the costs will be and what the rate is expected to be?

Yes. Thanks, Simon. So I think that we're reasonably comfortable, I guess, in our ability to roll those facilities. And I guess the nature of some of that background, we have a lot of good relationships through the Nippon JV and their connection with the Asian Banks. So typically, what we've seen is a pretty good rate outcomes on those various facilities. So we're there'll likely be a step-up as we work in the higher rates environment but not those typically Japanese and other Asian facilities tend to run at a lower rate than the other facilities we have. So I think, like I said, Simon, pretty confident we'll roll those and perhaps at a slightly higher rate outcome.

Your next question comes from Lyndon Fagan from JPMorgan.

First question I've got is on Port Kembla. So now that you've got the reline approved, there's obviously a lot of packages here to improve efficiency, recover waste, et cetera. Is it possible to quantify any cost benefit that comes with making this a more efficient site that we can think about?

I mean, Lyndon, there's a couple of ways to think about that. I mean there will be obvious benefits for, I mean the slate granulation plant is an interesting example. That's currently contracted to an external firm. The slag granulation plant that we will build for the #6 blast furnace will allow us to further process that product. It's actually -- it goes then into concrete and cement manufacturer. It's a greener solution for the cement industry. So that's a product that we'll be able to sell and get some premium on. Of course, waste gas treatment and the heat capture goes to reduction in energy costs because it's all about us capturing that and reusing it rather than bringing in natural gas or electricity from external providers. So look, we haven't split that information out, Lyndon. But what I'd say to you is, as we go forward, we'll be able to give you some more detail on some of that information. We've called out about $100 million of additional capital expenditure that's gone into this space to ensure that the blast furnace is as efficient and cost-effective as it can be. We're building capacity for things like hydrogen injection with the additional injection equipment that we're building on to the furnace. So there's a range of these initiatives. We haven't broken them out in infinite detail. But I mean, as we progress, I'm sure we'll be in a position probably more at the sustainability event that we have in September to actually talk in some more detail about that. But there's a lot of effort that's gone into just understanding what's the cost position, what do we need to think about. And that's before you even contemplate something like a carbon tax. So this will be one of the most efficient blast furnaces in the world. It's all -- #5 is already in the top 15% as measured by World Steel. Interestingly, that doesn't include the Chinese blast furnaces who don't submit their data for comparison. So #5 is already one of the most efficient blast furnaces in the world, and we would expect #6 will be better again.

And sorry, are you measuring that efficiency as greenhouse gas emissions per tonne of steel production? Or is there…

Yes.

And look, just a follow-up on North Star. So it was called out about the realized pricing difference in first half '24. Is it possible to be any more specific about what benefit that is providing there? And then the follow-on was with the delay to the expansion, should we be thinking about a follow-on delay to the debottlenecking as well?

Let me handle the bottlenecking and then Mark can talk to you about realized pricing. No, the bottleneck working is going on. I mean there naturally be some delay as we move those couple of 3 months out. But the work is continuing and is underway on identifying those bottlenecking issues or debottlenecking opportunities. So yes, there's likely to be some delay. But again, it's not material from my perspective, Lyndon, the works underway on that. The team are already identifying the areas that we will start to work on. And as we've called out in the past, this is very much an iterative process. It won't be a one-off debottlenecking project. There will be a range of projects that we'll go through that will add incremental volume to get to that 500-odd tonnes. Mark, do you want to realize process?

Yes, thanks. Lyndon, I think on the pricing space, Lyndon, I guess, we've spoken in the past about the benchmarks we report are quite simplistic and we've got the 1-month lag there on the index pricing. Obviously, our sales book is more nuanced than that and more complex than that. And we called out in May, roughly 3/4 of our book being tied to roughly that 1-month lag. But the balance, the remaining 25%, we have some longer-term pricing arrangements could be bimonthly, quarterly or a little bit or some other where they're longer. So basically, what that means is we're guiding to a $50 a tonne spread reduction. When you model that through with some of that book on a slightly longer lag, we'll get a part offset to that. I think from a guidance perspective, we've probably been quite specific about what our earnings expectations are for North Star. That's basically approaching the second half '23 outcomes. So that, I guess, provides a bit of an anchor to kind of get you back. But I think it's really like -- that pricing benefit is just effectively the nature of our pricing, what we talked to previously.

Your next question comes from Daniel Kang from CLSA.

The first one is really on market share for your premium products; COLORBOND, TRUECORE and TRU-SPEC. I realized that destocking was a feature in the latest period, but just wondering if other alternatives face a similar destocking period? And whether you managed to hold or gain share, I guess, is a key question there. A follow-up to that is whether you are seeing any impact on customers or builders potentially downtrading as a higher rate spike?

Thanks, Daniel. So I mean, I've said for a little while now, and we don't look at this through rose color glasses. We do the work on this. I actually think we are continuing to grow share in COLORBOND and some of those trends that we've talked about, regional housing, et cetera. [ I&I ] lend themselves to our products. That's something that we think is a tailwind for us, and we're happy about that. I think the team are also doing just a fabulous job from a sales and marketing perspective, quite frankly. So yes, we're growing share in COLORBOND. We're also growing share against timber in residential steel framing. So those value-added products in building construction, yes, thank you for calling out TRU-SPEC. We have grown share dramatically in TRU-SPEC, particularly in relation to imports. So it's just a much better and high-quality product. And the fabricators of the world much prefer it as a domestic supply option. So yes, we are growing. We are absolutely growing share made in that space. Destocking for in the material products, I mean, hard for me to comment. I really don't have enough visibility on their channels or their volumes specifically to know what happened to them in terms of destocking or restocking. But I'm confident that we're continuing to grow share.

And just in terms of any commentary as to any impact from customers or builders downtrading?

Sorry, yes, I missed that. Now, downtrading, not really. As I've said in terms of the guidance, sorry, I missed that. As I've said in terms of the guidance, our building customers are telling us they're still busy out till the end of this calendar year. We've, of course, been watching some of the financial concerns with some of the builders. We had some feedback from the ASP team that building customers are spending more money on marketing and ensuring that they're in the face of the customer. So that's a sign, obviously, that as they look forward, they're seeing some volumes fall away. Interestingly, one of the areas that they were marketing was their financial stability. So that was an interesting -- an interesting aside from the ASP team. But no, we're not seeing any material change or significant change in our outlook, which is why we've got a good outlook for this current half.

And I think, Dan, just on that downtrading comment because I know we've seen some of the other building product companies coming out around bathroom hardware or other materials where they've down-traded or gone to a lower-cost product. I think for us, if you take roofing or steel framing, for example, the actual underlying product cost is a relatively small portion of the overall bill. And typically, the consumer will prioritize high-quality, long-lasting product in the case of COLORBOND what they're receiving. So I don't think that that's not necessarily something we've seen in our key products.

If I can just slip in one more, Mark Scicluna. Just in reference to your first half 2014 guidance, I realize that these things swing around quite a bit. But it looks like spot HRC spreads and met coal are a fair way against your guidance assumptions. I suspect that you're not effectively making a call of these assumptions will improve. But how should we be viewing these recent weaker spot conditions?

Yes, yes. No, thanks, Dan. And you're right, they do move around very quickly. So -- but at some point, we need to point pick a forecast and stick with it. You're right. So hard coking coal is certainly sitting a bit higher than what we've currently got in the guidance. I think we're around $250 million or $260 million at the moment. We were forecasting some softening in the coal price on improved supply. But you're right, that's a kind of day-to-day, week to month week-to-week kind of dynamic. From our guidance perspective, iron ore is looking pretty much in line. And the other areas are really around the Aussie dollar, which has fallen away a bit in recent days and weeks. So I think all up there, there are a reasonable set of assumptions. I think the other thing I'll point out with our Asia spreads, particularly is just given the nature of our raw material holdings and the inherent lags, any deviation from these are really something that could impact at the back end of the half, and then we probably have what seems now like a relatively conservative FX position. So that's kind of where we stand on the assumptions, Dan.

One assumption that you didn't mention was U.S. spreads. Do you suspect that some of the recent weakness is due to the United Auto Workers' potential strike?

Yes, possibly, possibly. Although, I guess, on the ground, that any impacts from that haven't really taken a bite out of that yet. And we have seen futures obviously soften up a bit, and they're down at about 750 across the balance of the half, which I'm sure, again, pretty hard to call exactly what's in there, but I'm sure they're factoring in some sort of impact from those potential strikes. I guess from our perspective, we had spreads last half -- or second half '23 of about 460. We're guiding a $50 reduction on that, which gets you to a point which is not too dissimilar from the current spot level from what we're seeing. Seeing, Dan, now as I mentioned, futures prices have it softening up a bit but then obviously, we -- if that were to prevail, we perhaps expect to see some softening in scrap prices to help alleviate that. So I think a reasonably balanced position right at the moment, Dan, on the U.S. spread side.

Your next question comes from Lee Power from UBS.

Just what I'm trying to think about the moving parts in the second half '23 and what that means going forward. So if I think about the guidance you had out there for the second half, you had North Star up 50%. So that was kind of implying closer to a $300 million number. And then it looks like it's been offset by a much better ASP result. I mean you talked to conversion costs higher in the U.S. and obviously spreads elements that kind of makes sense. In terms of ASP, was the difference just the better dispatches versus what you were going for, which is flat year-on-year? And if not, can you maybe talk to what else is going on in mix or something else that we should think about going forward?

Yes. Thanks, Lee. So you've called out the right drivers around North Star. And I'll cover that and then I'll touch on ASP. I think from an North perspective, back in April, when we updated guidance, steel prices are up around $1,200 a short ton. They probably did fall away a bit quicker than perhaps we were expecting at that point in time, and now we're back around the $800 or short ton level. So that was the bigger driver in North Star compared to what we expected in April. And then over in ASP, the main driver was really around dispatch rate. So as you mentioned, back then we called to similar dispatches. We ended up about 80,000 tonnes higher than the first half. So we ended up doing a little bit better on dispatches, and that was really around that demand holding up and the dispatches improving from what we expected back in April. And the other driver was on the cost side, we actually end up doing a little bit better on the cost front, which helped contribute to the ASP outcome. So that are the 2 drivers, Lee.

Okay. And so there's nothing around like -- I know you also don't like to talk about this stuff, but like to share in terms of COLORBOND on market share or anything like that, there's no kind of longer-term drivers that we should think about?

I wouldn't say within a particular half-ly, I don't think that's kind of not -- these things tend to play out over a longer period of time. And so like Mark said, I think over the medium term, we've certainly been gaining share in some of those premium products, but it was a particular driver within the last half, if that makes sense.

Okay. Awesome. And then just on the capital allocation. Obviously, the reline ticks up a little bit. I probably missed it somewhere, but the BlueScope Properties expansion, I think you had $275 million. Is that just all -- I know that's not in the chart. I think it was supposed to come in '23. Did that all get delivered in '23? Or have you just pulled back on that? And if so, why?

No. That's a good pickup, Lee. So that's largely deployed. So there's a little bit more to go, but nothing material. That's been largely deployed now, and that's why we removed it from the chart.

And then maybe just one last one. So I know you've got like additional capacity coming in Australia. When we think about domestic dispatches, are we close to peak now?

Well we're full now, which is why we're talking about MCL7. So we're full now. But as I've touched on, Lee, I still think if you look at the medium to longer-term backdrop, I mean one of the dilemmas we face with these capacity expansions as they come as a step. There's no gradual ramp-up. We get 240,000 kilo-tonnes for our investment. So there are a step up. But we're confident if you think about housing -- think about the housing shortages in Australia, think about net migration, think about the share position that we think will continue to grow both in COLORBOND and steel framing. That's what gives us the confidence to go ahead with MCL7. So from immediate, this is about a medium and longer-term investment. It will make its returns -- it won't happen in year 1, but it will make its returns, but it gives us the capacity to deal with a broader or a larger domestic market as we grow share in that space might.

Your next question comes from Chen Jiang from Bank of America.

A couple from me, please. Just on the building and coated products from U.S., you guided first half FY '24 underlying EBIT around 3 quarters of second half. I'm wondering with the continuing integration of the coating business, shouldn't the [ second half ] be stronger than the first half rather than the 3 quarters? Could you please just give us more color for this segment?

Thanks, Jiang. So I think when that buildings and coated products North America segment now includes a range of our assets. So it includes the recently acquired Coatings business, but it also includes the broader pre-engineered buildings business, the property group and also the West Coast of the U.S. assets that are in joint venture with Nippon's. So it is a broader space. And effectively, what we're calling out there, the primary driver of those lower earnings expected in one half '24 are really around the normalization, particularly in the margins for our buildings, buildings business. So that buildings business and some of the downstream businesses have been earning very strong margins in recent periods, and that's being driven by those rapid declines in U.S. steel prices, meaning their feed costs have dropped away dramatically, but they have some longer-term contracts in place. So that's been bolstering their margins. Really, what we're calling to there is the primary driver is a normalization of those margins back towards a bit more of a through-cycle type level. That's by far the bigger driver then of the 1.5 '24 guidance for that segment.

So I guess, the strong margin from the downstream business seems like a one-off in the second half? Is that what you're trying to say? And it will normalize in the -- going forward?

Yes. I think what I'd say is that the last 12 to 18 months for the Buildings business and the downstream business, they have been generating above side above through-cycle type margins. We're seeing a normalization in saying that, the underlying performance both from a volume perspective, margin management, there's been a lot of work done in those businesses to help improve or lift up what their through-cycle margin level is. We're just seeing a bit of a normalization in that price cycle, which is flowing through to 1.5 '24.

Just another question on your U.S. business, well, sorry, the overall portfolio with a lot of investment projects to be taken in the next few years, are you happy with the current growth projects? And how should we think of our future potential opportunities, such as [indiscernible] acquisitions from U.S., if any, given the current dynamics between U.S. Steel and Cliffs?

Yes, Chen, I mean the way that I'd characterize that as we're watching with great interest in the U.S., I mean, we're still a really small player in the U.S. and think that there's more value we can create there, not only with the growth platform that we put in place, and we're currently executing on, but potentially further growth. We don't have anything specific in mind. Nothing's nothing is in front of us. But as you point out, the industry is in a bit of a state of flux from a structural point of view in North America and who knows what might emerge from that. So we're watching with great interest. And if something became available that we felt was appropriate in our wheelhouse, then yes, we'd be interested in looking at it.

Mark, maybe last question on the cost of the potential impact of the safeguard mechanism, how should we think of your cost from Australia in the mid and long-term?

Yes. We've effectively mitigated the cost of any safeguard mechanism as we go through the process, Chen, which was the sort of the position we wanted to get to. If anything, it's -- there's some modest increases, but we're confident enough to sign up on the blast furnace reline given the discussions we've had with the federal government.

Sorry, did you say you try to mitigate the cost and…

Yes, there's effectively just only a modest cost increase, nothing significant at all.

And just remind me, I mean, what methods has -- approached have been done to reduce the cost or to avoid the cost?

We've worked with the government effectively on the abatement regime, Chen, is the way it's been -- is the way we've worked -- the way it's been dealt with the abatement rates are now rates that we think are appropriate for a business that's hard to abate like ours in the absence of a technology -- in the absence of a technology solution. So it's not yet finalized. I should clarify that. The safeguard mechanisms haven't been completely finalized, but we're confident that the regime that's been talked about the regime that we think will get put in place will mean that we don't have any material impact. There's no material impact from a blast furnace perspective.

Your next question comes from Paul McTaggart from Citigroup.

So I just wanted to ask on this topic of emissions reduction. I noticed in your slides, you called out the potential for some magnetite. So I just wanted to, wonder. Well, I was wondering, do you -- can you use it as direct feed in your blast furnace? Do you need to agglomerate it first? Or does it need to be pelletized. And obviously we're producing magnetite in Australia. Now we have plenty of it. So there's potential to do more. So I just want to get a sense of how you might see that playing out, which should obviously come in earlier than probably DRI-Melter technology?

Yes. Thanks, Paul. So look, magnetite typically does need to be pelletized and then it's used in -- so it does need to be pelletized and that's part of the process. Part of the reason for the higher cost for magnetite as well. So we don't typically use a lot of magnetite in the furnaces because of the cost position. I think what we're probably alluding to is if you think about the newer technologies that are emerging and they're dependent on the enablers. And as we've called that out, the enablers, really we need here are renewable energy. We need the technology, of course, but we also -- we need the resource and magnetite something like 15% of global iron ore resources. You're right. We do have some in Australia, the absolute amount, I'm not sure about, but we do have some in Australia. So it's very much a minor part of the iron ore trade and it's at a higher cost. So there are all the sorts of issues that we need to get our head around as we start and think about what is an alternative to a hematite blast furnace option that might give you a better level of intensity, but it also gives you a very different cost profile. So they are absolutely the issues that need to be addressed, Paul, as we think about what the new technology solutions might be.

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

That's great. Thanks, guys. Appreciate your interest. I know it's a busy time for you all. So thank you for taking out the time to listen to us. And I'm sure we'll bump into you over the next week or 2. I appreciate your support. Thank you.