Boral — Investor Day (May 2013)
63 slides from Boral's investor day presentation, May 6, 2013
Slide 1: ASX cover letter for Investor Strategy Day slides
Build something great™ BORAL ® Boral Limited Level 39 AMP Centre 50 Bridge Street Sydney NSW 2000 GPO Box 910 6 May 2013 Sydney NSW 2001 T: +61 (02) 9220 6300 F:+61 (02) 9233 3725 The Manager, Listings Australian Securities Exchange ASX Market Announcements Level 14, Exchange Centre 20 Bridge Street
Slide 2: Boral Construction Materials & Cement Investor Strategy Day and Site Tour
Boral Construction Materials & Cement Investor Strategy Day and Site Tour 6 – 7 May 2013
Slide 3: Agenda
Investor Strategy Day and Site Tour May 2013 AGENDA Time Presentation Speaker Monday, 6 May 2013 1.45pm Registration 2.00pm Overview Boral’s strategy and priorities Mike Kane, CEO & Managing Director Joe Goss, Divisional Managing Director, 2.30pm Introduction and opening comments Boral Construction
Slide 4: Trading Update and Commentary
Trading Update and Commentary Mike Kane, CEO & Managing Director 6 May 2013
Slide 5: Weather impacts in Eastern Australia
Investor Strategy Day and Site Tour May 2013 WEATHER IMPACTS IN EASTERN AUSTRALIA Have impacted performance – benefits of below average rainfall in 1H FY2013 reversed in 3Q FY2013 Rainfall in Eastern Australia 1H FY2012 2H FY2012 1H FY2013 3Q FY2013 4 Source: Australian Government Bureau of Meteorol
Slide 6: Trading update - FY2013
Investor Strategy Day and Site Tour May 2013 TRADING UPDATE - FY2013 Weaker than expected results from Construction Materials and Building Products in 3Q Construction Materials & Cement impacted by poor weather in SEQ in 3Q, declining residential activity in Vic and major project delays in both
Slide 7: Overview of Boral's Strategy and Priorities
Overview of Boral’s Strategy and Priorities Mike Kane, CEO & Managing Director 6 May 2013
Slide 8: Return on invested capital has been too low
Investor Strategy Day and Site Tour May 2013 RETURN ON INVESTED CAPITAL HAS BEEN TOO LOW A performance turnaround is imperative to earn the right to attract future capital EBIT return on funds employed1 % 18.4 Boral Exc USA 16.4 18.2 14.9 12.3 16.4 13.1 15.9 12.7 11.0 11.9 11.1 11.4 14.2 7.9 11.9 12
Slide 9: Our current strategic focus is on fixing the business
Investor Strategy Day and Site Tour May 2013 OUR CURRENT STRATEGIC FOCUS IS ON FIXING THE BUSINESS FIX EXECUTE TRANSFORM Portfolio clean-up to core essentials Leverage integrated Focus on immediate Achieve best practice R&D capacity to move priorities outlined in operational and safety to su
Slide 10: Strategic priorities
Investor Strategy Day and Site Tour May 2013 STRATEGIC PRIORITIES Portfolio Immediate Key Levers of Management Priorities Change Cost reductions Cash generation Capital expenditure Re-align portfolio to focus on more attractive Deliver on immediate Use key levers of markets with higher priorit
Slide 11: A focus on portfolio management to strengthen the business
Investor Strategy Day and Site Tour May 2013 A FOCUS ON PORTFOLIO MANAGEMENT TO STRENGTHEN THE BUSINESS FOR THE FUTURE Divested Acquired Invested Capital Rationalised Combined SA / Vic Precast Panels Construction Materials Construction businesses Wagners Qld quarries & Ceased clinker Peppe
Slide 12: Boral's divisions re-structured and simplified
Investor Strategy Day and Site Tour May 2013 BORAL’S DIVISIONS HAVE BEEN RE-STRUCTURED & SIMPLIFIED REFLECTING THE PORTFOLIO CHANGES Mike Kane CEO & Managing Director Frederic de Joseph Goss Darren Schulz Al Borm Divisional Managing Executive General Rougemont Divisional Managing President & CEO Dir
Slide 13: Boral's portfolio
Investor Strategy Day and Site Tour May 2013 BORAL’S PORTFOLIO Presents opportunities in construction materials & cement in Australia, gypsum in Asia & Australia and cladding in the US Gypsum: • Asia • Australia USA: • Cladding (Bricks, “Arguably the best Stone, Trim) gypsum position in • Roof Tiles
Slide 14: Significant progress made in achieving immediate priorities
Investor Strategy Day and Site Tour May 2013 SIGNIFICANT PROGRESS MADE IN ACHIEVING IMMEDIATE PRIORITIES OBJECTIVES ACHIEVEMENTS Realign overhead costs & organisation 1,100 reduction in employees from Cost structure to reduce the burden on Boral’s restructuring, rationalisation and outsourcing r
Slide 15: Continued focus on key levers of change
Investor Strategy Day and Site Tour May 2013 CONTINUED FOCUS ON KEY LEVERS OF CHANGE Aiming for best practice safety, underpinning everything we do The Boral Production System is using LEAN to reduce waste and physical inventories and to increase output from a reduced footprint A ‘One Boral’ a
Slide 16: The Boral Production System
Investor Strategy Day and Site Tour May 2013 THE BORAL PRODUCTION SYSTEM Will help Boral to deliver best practice safety outcomes, increased output, reduced wastage, lower inventory levels and added value to our supply chain FEATURES / TOOLKIT CURRENT EXAMPLES Shift start-up meetings Visual mana
Slide 17: Boral Construction Materials & Cement Investor Strategy Day and Site Tour (Part 2)
Boral Construction Materials & Cement Investor Strategy Day and Site Tour (Part 2) 6 – 7 May 2013
Slide 18: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales Construction Materials Greg Price Southern Region Construction Materia
Slide 19: Boral's new integrated Construction Materials & Cement division
Boral Construction Materials & Cement Boral’s new integrated Construction Materials & Cement division Joe Goss Divisional Managing Director Steve Pyne Greg Price Paul Dalton Wayne Manners Shane Graham Ross Harper EGM EGM EGM EGM EGM EGM BCM QLD/NT BCM NSW/ACT BCM Southern Region BCM WA Major Project
Slide 20: A strong locally based business well positioned for the future
Boral Construction Materials & Cement A strong locally based business well positioned for the future The only fully Diversified revenue Large footprint integrated base and market concentrated in key construction materials exposure east coast markets participant CM&C external revenue CM&C exter
Slide 21: Clear priorities for the CM&C division to focus on and fix
Boral Construction Materials & Cement There are some clear priorities for the CM&C division to focus on and fix Safety Performance – LTIFR (CM&C) FIX ~18m total hours 6.6 6.3 Safety 3.4 3.2 2.9 - Engaging people 2.8 - Developing frontline management World Class (1.0) Performance FY07 FY08 FY09 F
Slide 22: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales Construction Materials Greg Price Southern Region Construction Materia
Slide 23: Full suite of bulk and packaged cement, lime and concrete placing products
Boral Construction Materials & Cement A full suite of bulk and packaged products within the Cement, Lime and Concrete Placing business Cement Cement Cement Limestone & Lime Concrete Placing Berrima, NSW Waurn Ponds, VIC Maldon, NSW Marulan, NSW DeMartin& Gasparini Assets Kiln 6: Dry process Kiln
Slide 24: Direct supply presence in over two-thirds of the Australian cement market
Boral Construction Materials & Cement Boral has a direct supply presence in over two-thirds of the Australian cement market Australian Cement Participation Darwin Boral participation 3 kilns (1 suspended) Townsville 6 mills (1 mothballed) North Qld (7%) NT (1%) 1 clinker receival Gladstone 1
Slide 25: Converting Waurn Ponds to clinker imports will avoid escalating input costs
Boral Construction Materials & Cement Converting Waurn Ponds to clinker imports will avoid escalating input costs Waurn Ponds Cement Cash Cost Rationale for clinker suspension: ($ per tonne) 1. Low clinker import costs - Strong $A 3 years later - Moderately low clinker costs - Low shipping costs Ope
Slide 26: Transition to imports consistent with structural changes in Australian cement industry
Boral Construction Materials & Cement Boral’s transition to imports in Victoria is consistent with structural changes to the Australian cement industry Cementitious Production Volume by Source1 Imports have grown over the last ten years to (million tonnes per year) reach 30% of Australian supply (
Slide 27: Case Study: Innovation in cement product development
Boral Construction Materials & Cement Case Study: Innovation in cement product development for low carbon, high performance concrete products Case Study: New concrete formulations with significantly lower cement content and dramatically improved properties Situation: Portland cement production consu
Slide 28: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales Construction Materials Greg Price Southern Region Construction Materia
Slide 29: Major projects provide revenue growth opportunities but need to be well managed
Boral Construction Materials & Cement Major projects provide revenue growth opportunities but need to be well managed Major Projects can be: To manage these Boral has: Higher risk and appropriately higher margins Supporting Executive General Manager Major Projects Resource intensive organisati
Slide 30: Boral delivers successfully in the major projects segment
Boral Construction Materials & Cement Boral delivers successfully in the major projects segment by leveraging multiple capabilities Leveraging Hold existing relationships with most customers in the segment existing customers Recognised as key provider in this space Strong contracting Establish
Slide 31: Tailored solutions for large scale, remote, complex projects
Boral Construction Materials & Cement Boral provides tailored solutions for large scale, often remote, technically complex projects across Australia Wheatstone LNG Facility (WA) - Existing client relationship with Bechtel - Leveraged existing sector experience - Four (4) on-site concrete plants -
Slide 32: Tailored solutions for large scale, remote, complex projects (continued)
Boral Construction Materials & Cement Boral provides tailored solutions for large scale, often remote, technically complex projects across Australia Peninsula Link (VIC) - 27 kms of freeway, 28 bridges - Bundled product solution (quarries & asphalt) - Provided on-site asphalt plant to minimise tra
Slide 33: Future pipeline for major projects is coming off the peak
Boral Construction Materials & Cement The future pipeline for major projects is coming off the peak, but remains at a relatively high level Australian Building Activity for Key Major Project Segments Boral’s major project Value of Work Done (VWD) capability provides exposure ($09/10 billion) to a
Slide 34: Major project opportunities in the pipeline post-LNG
Boral Construction Materials & Cement Major project opportunities are in the pipeline, offering the potential to continue the strong contribution post-LNG Deloitte Access Economics Investment Monitor: Company Total cost $m State Project Start date End date Cortona Resources 240 New South Wales New u
Slide 35: Boral will continue to develop its major projects capability
Boral Construction Materials & Cement Boral will continue to refine and develop its major projects capability to adapt to the market and increase profitability Major projects… Ongoing benefits of major projects to Boral Delivers earnings that supplement the traditional housing cycle Maximise val
Slide 36: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales Construction Materials Greg Price Southern Region Construction Materia
Slide 37: Integrated exposure in all key QLD/NT markets and segments
Boral Construction Materials & Cement Business has integrated exposure in all key QLD/NT markets and segments Queensland & Northern Territory Construction Materials Queensland / Northern Territoty Markets Characteristic QUA CON ASP Cairns Tourism related Mt. Isa Mining activity Townsvill
Slide 38: Market leading resource position in SEQ and regional markets
Boral Construction Materials & Cement A market leading resource position in the key SEQ market, strong resource positions in regional markets SEQ Resource Position SEQ Reserves vs. Competitors1 Market leading reserve position Recent resource approvals – core expertise for business Low delivere
Slide 39: Market conditions in Queensland are flat
Boral Construction Materials & Cement Market conditions in Queensland are flat with weak SEQ activity offset by stronger regional demand QLD/NT Building Activity SEQ market very challenging, some Value of Work Done (VWD) ($09/10 billion) improvement in residential activity in CY14 30 25 Regional
Slide 40: Case Study: Safety
Boral Construction Materials & Cement Case Study: Safety Case Study: Safety as an enabler of employee engagement Situation: Employee engagement on safety is essential to align values through the organisation Boral’s safety management system was overly complex and inhibited employee ownership of safe
Slide 41: Wagners and Sunshine Coast Quarries acquisitions strengthen SEQ position
Boral Construction Materials & Cement The Wagners Construction Materials and Sunshine Coast Quarries acquisitions strengthen our SEQ market position Fundamentals remain strong - Integrated supply chain - Low cost resource positions in long term growth markets - Improved market position in SEQ In
Slide 42: Wagners acquisition facilitated geographic expansion
Boral Construction Materials & Cement The Wagners acquisition has facilitated geographic expansion to leverage our integrated value offering Warrego Highway Project Flood recovery project partnering with Seymour Whyte ~$30m construction materials revenue Unique integrated construction material
Slide 43: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales Construction Materials Greg Price Southern Region Construction Materia
Slide 44: Large integrated footprint supplying key markets in NSW and ACT
Boral Construction Materials & Cement A large integrated footprint supplying key markets in NSW and ACT New South Wales / ACT Construction Materials New South Wales / ACT Markets Characteristic QUA CON ASP Infrastructure investment / Extreme Far North tourism Infrastructure investment / Far No
Slide 45: Construction Materials NSW has superior resource positions
Boral Construction Materials & Cement Construction Materials NSW has superior resource positions in key markets Sydney Metro Reserves Position SYD Reserves vs. Competitors1 Leading reserve position Peppertree replacing PLDC Natural and manufactured sand positions Boral Com p1 Com p2 Hunter Qua
Slide 46: Activity in New South Wales is improving
Boral Construction Materials & Cement Activity in New South Wales is improving NSW Building Activity Sydney market improving through multi- Value of Work Done (VWD) ($09/10 billion) residential housing & infrastructure 35 30 Underlying regional markets remain soft and R,H,S & B challenging 25 20
Slide 47: Case Study: Sales & Marketing Excellence
Boral Construction Materials & Cement Case Study: Sales & Marketing Excellence Case Study: Providing a “One Boral” solution for a major home builder Situation: A major residential developer was developing 420 homes in Tamworth, NSW Boral was able to provide a solution across multiple building produc
Slide 48: Investment in Peppertree Quarry secures Sydney aggregates position
Boral Construction Materials & Cement Investment in Peppertree Quarry is securing Boral’s leading position in the Sydney aggregates market Sydney Aggregates Project On track for commissioning by the end of 2013 Peppertree Quarry - 82 million tonnes of proven and approved reserve - Plant initial
Slide 49: Ongoing project activity in underlying markets
Boral Construction Materials & Cement Ongoing project activity in underlying markets Sydney Airport - Boral won the runway resurfacing work for a very demanding client - Provided a safe solution to a technically complex project - Completed project in 2012 Cadia - Long term contract relationship
Slide 50: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales / ACT Construction Materials Greg Price Southern Region Construction M
Slide 51: Consolidated Southern Region has a market leading integrated footprint
Boral Construction Materials & Cement The consolidated Southern Region has a market leading, integrated footprint in key markets Southern Region Construction Materials Victoria Markets Characteristic QUA CON ASP Mildura Smaller agricultural centre Albury-Wodonga Large regional centre Bendigo
Slide 52: Leading resource position with long term, low cost quarries
Boral Construction Materials & Cement The region has a leading resource position with long term, low cost quarries in metro markets MELB Reserves vs. Competitors1 Melbourne Metro Quarries Leading reserve position Strong footprint servicing industry leading integrated position Boral Com p1 Com p2
Slide 53: Southern Region activity levels have softened
Boral Construction Materials & Cement Activity levels in the Southern Region markets have softened from recent historically high levels Consolidated outlook for building activity to Southern Region Building Activity Value of Work Done (VWD) soften from recent highs ($09/10 billion) 35 Melbourne
Slide 54: Case Study: Boral Production System
Boral Construction Materials & Cement Case Study: Boral Production System Case Study: Applying the Boral Production System to improve working capital outcomes Situation: Quarry yields are driven by geology, the challenge for resource companies is to maximise saleable product Key principles of balanc
Slide 55: Landfill is a growing business extracting whole-of-life value from quarries
Boral Construction Materials & Cement Landfill is a growing business that demonstrates our ability to extract maximum value from whole-of-life quarrying Landfill Typical Lifecycle of Quarry-Landfill Operation Deer Park is the largest landfill in Victoria, as well as a renewable energy generator an
Slide 56: Consolidation of South Australian business into Southern Region
Boral Construction Materials & Cement The consolidation of the South Australian business into the Southern Region will reduce our fixed cost base Southern Region consolidation Recent organisational review identified high fixed cost base in South Australia More than 30 roles to be removed prior t
Slide 57: Agenda
Boral Construction Materials & Cement AGENDA Initial impressions and overview of Boral CM&C Joe Goss Cement Ross Harper Major Projects Shane Graham Queensland / Northern Territory Construction Materials Steve Pyne New South Wales Construction Materials Greg Price Southern Region Construction Materia
Slide 58: WA business has integrated positions in selected key markets
Boral Construction Materials & Cement The WA business has integrated positions in selected key markets Western Australia Construction Materials Western Australia Markets Characteristic QUA CON ASP Mining region, large project North West pipeline Greater Perth Major metro market Kalgoorlie
Slide 59: Strong quarry position in Perth, placed to grow in the North West
Boral Construction Materials & Cement We have a strong quarry position in Perth and are well placed to grow our participation in the North West Perth Metro Resource Positions Perth Reserves vs. Competitors1 Downstream network underpinned by Orange Grove Quarry Long term sand supply secured throu
Slide 60: Dwelling downturn partially offset by non-dwelling volumes in WA
Boral Construction Materials & Cement A downturn in dwelling activity is being partially offset by non-dwelling volumes in Western Australia Underlying market has improved with Western Australia Building Activity Value of Work Done (VWD) positive residential outlook and continued ($09/10 billion)
Slide 61: Case Study: Leveraging the Key Levers of Change
Boral Construction Materials & Cement Case Study: Leveraging the Key Levers of Change in the market Case Study: Applying the key levers of change to maximise strengthen our value proposition Situation: The resource sector and major contractors in WA demand high performance in safety and operations i
Slide 62: WA operational portfolio will continue to be refined
Boral Construction Materials & Cement The operational portfolio in WA will continue to be refined to maximise exposure to attractive markets WA Focus The underlying business is exposed to an economy heavily driven by mining and resources In recent years, major projects have provided incremental
Slide 63: Build something great
Build something great™