Boral — H1 FY2003 Earnings Presentation
24 slides from Boral's earnings presentation, Feb 12, 2003
Slide 1: 2003 Interim Results Presentation
2003 Interim Results Presentation by Rod Pearse 12 February 2003 Underlying half year profit increases by 57% to $144 million Overview of results presentation • Financial highlights • Markets review • Financial results • Segment overview Building Products, Australia Construction Materials, Austr
Slide 2: Financial highlights: profit up 57% to $144m
Financial highlights: profit up 57% to $144m • PAT up 57% to $144m, driven by: • strong performance in Australia • good results in USA and Asia • turnarounds/growth • effective price management • Sales revenue up 12% to $1.9 billion • EBIT up 49% to $240m • EBIT/Sales margins up from 9.3% to 12.4% •
Slide 3: Strong Australian activity levels
Strong Australian activity levels AUSTRALIA - VALUE OF WORK DONE $98 Billion. Half Years. Seasonally Adjusted. 25 Roads, Highways, 20 Subs & Bridges Non Dwelling 15 10 Dwelling (incl A&A) 5 0 Dec-02 f Dec-97 Dec-01 Dec-99 Dec-00 Dec-98 Jun-97 Jun-98 Jun-02 Jun-99 Jun-00 Jun-01 Source: ABS; BIS Shrap
Slide 4: Dwelling approvals remained high in the Dec-02 half
Dwelling Approvals remained high in the Dec-02 half AUSTRALIA DWELLING APPROVALS Quarterly. Seasonally Adjusted. 20,000 16,000 Total Dwellings 12,000 Houses 8,000 Other Dwellings 4,000 0 Dec-92 Dec-95 Dec-96 Dec-00 Dec-01 Dec-02 Dec-94 Dec-97 Dec-98 Dec-99 Dec-93 Source: ABS 8731 Building on our str
Slide 5: Australian non-dwelling value of work done increasing; US Brick States activity strong
Australian non-dwelling value of work done has been increasing from a low base AUSTRALIA - NON DWELLING VALUE OF WORK DONE $01 Billion. Half Year, Original. 10,000 8,000 Other Business Premises Factories 6,000 Hotels Shops 4,000 Offices 2,000 Social & Institutional 0 Dec-86 Dec-87 Dec-88 Dec-89 Dec-
Slide 6: Underlying profit increased by 57% to $144m
Underlying profit increased by 57% to $144m 6-months to: Dec-02 Jun-02 Dec-01 Dec-Dec % A$ million change Sales revenue 1,931 1,757 1,732 12 EBITDA 337 275 256 32 EBIT 240 182 161 49 Interest 35 31 32 12 Profit before tax 205 150 130 58 Tax 60 50 37 61 Profit after tax 144 100 92 57 Building on our
Slide 7: Boral's balance sheet continues to strengthen
Boral’s balance sheet continues to strengthen 6-months to: Dec-02 Dec-01 % change A$ million Net debt 864 1,056 (18) Interest 35 32 12 Debt / (Debt + Equity), % 29 35.5 (18) Debt / Equity, % 41 55 (25) Interest cover, times 6.8 5.1 33 Funds employed, $m 2,968 2,972 - ROFE, % (MAT) 14.6 9.3 57 NTA /
Slide 8: Margins have continued to improve
Margins have continued to improve EBIT/Sales EBITDA/Sales 14% 18% 16% 12% 14% 10% 12% 8% 10% 6% 8% 6% 4% 4% 2% 2% 0% 0% HY03 HY03 FY97 FY98 FY99 FY02 FY00 FY01 FY97 FY98 FY00 FY02 FY99 FY01 Results for reported building and construction materials businesses each year Building on our strong resource
Slide 9: Strong lift in Australian returns
Stronger volumes & prices together with underlying improvements underpin the improved EBIT result $240 m $161 m Cost Acq/Growth FX/POSA/ Volume inflation /Divest Other HY02 Price Operational Offshore HY03 Improvement operations Building on our strong resource and market positions Interim Results FY2
Slide 10: Stronger results from Building Products, Australia
Stronger results from Building Products, Australia • Sales up 22% to $591m EBIT / Revenue ROFE* • EBIT up 80% to $65m 12% 16% • EBIT/Sales margin up 10% 14% 12% from 7.5% to 11.1% 8% 10% • EBITDA/Sales margin 6% 8% up from 11.8% to 14.9% 6% 4% • Funds employed down 4% 2% 2% 2% to $809m 0% 0% • ROFE*
Slide 11: Boral Masonry High Court win; Construction Materials Australia returns
Boral Masonry won High Court appeal in predatory pricing case • Landmark decision • Trial judge’s decision correct - Boral did not have market power • Boral set prices by reference to the market • Good for consumers – promotes vigorous price competition • Boral’s conduct was lawful, vigorous & compe
Slide 12: Improved pricing and volume uplifts in Construction Materials, Australia
Improved pricing and volume uplifts benefited Construction Materials, Australia • Improved Cement, Quarry & Quarries Concrete pricing Cement division** • Stronger Concrete & Quarry volumes Contracting • Growth in Cement volumes & Transport lime sales QEU • Cement capacity constraint • Improved Aspha
Slide 13: Strong US results maintained in US$
Strong US results maintained in US$; A$5m negative exchange rate impact on translation • Sales steady at US$210m EBIT / Revenue ROFE* (exc. MonierLifetile) • EBIT steady at US$30m 16% 20% 14% 18% • EBIT/Sales margin 16% 12% steady at 14.2% 14% 10% 12% • EBITDA/Sales margin 8% 10% 8% up from 19.9% to
Slide 14: Strong turnaround sustained in Asia
Strong turnaround sustained in Asia ASIA EBIT (including Plasterboard and Construction Materials) A$ million 15 10 5 0 1H99 2H99 1H00 2H00 1H01 2H01 1H02 2H02 1H03 -5 -10 -15 -20 Building on our strong resource and market positions Interim Results FY2003 Steady improvement from Asian operations • Sa
Slide 15: Boral's Strategic Intent; Perform & Grow Strategy
Boral’s Strategic Intent “Boral intends to be a value-driven, focused building and construction materials supplier operating in Australia and increasingly offshore” CEO (Elect), October 1999 Building on our strong resource and market positions Interim Results FY2003 Perform & Grow Strategy Operation
Slide 16: Growing around leading reserve and market positions
“We will grow around our leading reserve and market positions” CEO Elect, Oct-99 ASIA Plasterboard* Indonesia #1 Malaysia #1 The Philippines #1 China (east) #1 Korea #1 USA Thailand #1 Fly ash #2 Indonesia Concrete #1 Bricks #1 Clay Roof tiles #1 Concrete Roof tiles #1 AUSTRALIA Bricks #1 Masonry #1
Slide 17: Leading cement positions; cement upgrade program
Boral has leading cement positions in NSW & Victoria Clinker / Cement plant Grinding Mill Limestone / Lime Flyash Sunstate Cement Port Augusta Collie Eraring Mt Piper Kooragang Island Marulan Maldon Berrima Waurn Ponds Building on our strong resource and market positions Interim Results FY2003 Our c
Slide 18: Franklin Brick acquisition strengthens #1 position in USA
The Franklin Brick acquisition will strengthen our #1 position in Bricks in the USA • US$66m acquisition; trailing EBITDA multiple of 6.1 times • Following the acquisition Boral will have 48 distribution centres in 13 US states • Move further into direct sales to end customers • Improved operating m
Slide 19: Delivering on our Financial Objectives; share price up 16%
We are delivering on our Financial Objectives FINANCIAL OBJECTIVES: • Exceed the weighted average cost of capital (WACC) on a sustainable basis through the building cycle • Beat the competition in comparable markets • Deliver superior total shareholder returns (TSR) Building on our strong resource a
Slide 20: Boral continues to deliver top quartile TSR performance
Boral continues to deliver top quartile TSR performance TSR PERFORMANCE OF ASX100 - March 2000 to December 2002* 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 30.9% BORAL * Start price 1 March 2000: $2.32, Closing share price 31 December 2002: $4.35 Source: Bloomberg Building on our strong res
Slide 21: Australian dwelling activity should soften by Dec-03
Australian dwelling activity should soften by Dec-03 AUSTRALIA DWELLING VALUE OF WORK DONE Forecast $97/98 Billion. Quarterly. Seasonally Adjusted. 8 6 Dwelling Value of Work Done 4 2 0 Dec-96 Dec-97 Dec-98 Dec-01 Dec-99 Dec-00 Dec-03 Dec-02 Source: ABS 8752, BIS Shrapnel Dec 02 forecast Building on
Slide 22: Overall Australian VWD expected well above FY2002
Overall Australian VWD in FY2003 and FY2004 is expected to be well above FY2002 AUSTRALIA - VALUE OF WORK DONE (BUILDING & CONSTRUCTION) $98 Billion. Seasonally adjusted. 50 45 Roads, Highways, 40 Subdivisions & Bridges 35 30 Non Dwelling 25 20 15 Dwelling (incl A&A) 10 5 0 1992 1994 1995 1998 1991
Slide 23: Asian construction demand continues to grow; Outlook for FY2003
Asian construction demand continues to grow Korea Thailand Indonesia China - Shanghai Value of construction orders Gross fixed capital Value of completion. Value of construction received. Trillion Won formation. Billion bhat Trillion Rp work done. Billion yuan 40 600 40 70 30 30 400 20 20 35 200 10
Slide 24: Boral 2003 Interim Results
Boral 2003 Interim Results 24