2001 Annual Report - OneSteel

“OneSteel has pursued a highlyfocused strategy to put the companyon the path of meeting its vision tobecome the safest and mostprofitable Australian steel company,providing value to shareholders,customers and employees.”managing director’sI am delighted to provide the first ManagingDirector’s review for OneSteel’s inaugural yearof operations.OneSteel’s first eight months of operations as apublicly listed company have been challengingwith trading conditions declining on the back ofthe pre-GST introduction building boom and theSydney Olympics. It became evident in the monthsrunning up to December 2000 that marketconditions were going to be difficult over calendaryear 2001.On top of a major restructuring of OneSteelto move it towards an integrated business,deteriorating market conditions meant the newmanagement team had to make some harddecisions and manage significant change inthe business.At the same time, we became involved in asuccessful joint bid for Email. This was ofgreat strategic importance to OneSteel andrepresents approximately 10% revenue growthfor the company.Given the very difficult market conditions and allthe challenges occurring as a result of the “spinout”from BHP and the acquisition of Email, I amvery proud of the commitment and applicationfrom everyone in OneSteel that delivered:• Cash generation of $170 million; and• A 41% improvement in safety performance.STRATEGIES FOR IMPROVING PROFIT AND GROWTHA number of key strategies were developed totransform OneSteel’s business. Some of thosestrategies are longer term in nature and deal withindustry structural issues while others are moreshort-term organisational strategies which havealready begun to yield some benefit.A summary of key strategies and some of theoutcomes over the last 12 months are as follows.Integration of OneSteel businesses. WhenOneSteel was originally conceived it was a looseamalgamation of eight related operational units(refer Figure Two). In line with the underlyingphilosophy of the business and embodied in thename OneSteel, the objective was to create oneintegrated business focused from the customerback through distribution, and manufacturing toraw material management. By creating a tightvertically integrated business, OneSteel could takeout duplication and maximise value at each pointin the production and distribution chain.As demonstrated in Figure Two, the eight businessunits have been merged into four which hasallowed duplication to be taken out of thebusiness in areas such as finance, administration,sales, marketing and information technology.With the reorganisation of the operational units,the next phase is to develop supportinginformation and technology systems that willprovide the impetus for further integration at theday-to-day operational level of the businesses.Restructuring of sales and marketing. Thisinitiative is aimed at providing customers with asingle contact point within the company for allproduct requirements. Market Mills significantlyrestructured its sales and marketing area with thetransition from product-based sales and marketingteams to customer-based teams. More recently, asales and operational review team across bothmanufacturing and distribution businesses hasbeen established to coordinate production andsales planning to more closely align with marketdemand for each product line.8