Boral — H1 2005 Earnings Presentation
23 slides from Boral's earnings presentation, Feb 8, 2005
Slide 1: Results for the half year to December 2004
Boral Results for the half year to December 2004 CEO & Managing Director, Rod Pearse 8 February 2005 Agenda Financial Highlights and Markets Review Financial Results Divisional Performance Perform & Grow Strategy Outlook Results for the half year to December 2004 2 1
Slide 2: Financial Highlights & Markets Review
Financial Highlights & Markets Review Results for the half year to December 2004 3 Financial highlights Sales 4% To $2,157m Underlying EBIT1 3% To $307m EBIT1 margin 1% To 14.2% Underlying net profit after tax1 3% To $191m EPS1 2% To 32.8 cents Interim dividend fully franked 21% To 17.0 cents Return
Slide 3: Performance highlights; Mixed market conditions
Performance highlights Australia result steady; USA strength offset Asian weakness Construction Materials – steady EBIT on generally softer volumes, particularly in NSW, but effective price management Building Products – EBIT up 4% despite lower volumes; drivers were price and cost improvement
Slide 4: NSW dwelling & non-dwelling approvals particularly weak
NSW dwelling & non-dwelling approvals particularly weak Percentage change in dwellings approvals and non-dwellings value of work approved – 1H2004 vs 1H2005 Houses Other dwellings Non-dwellings 35.5% 20.9% 12.0% 6.0% 1.13% -7.9% -10.4% -11.4% -11.4% -11.3% -14.20% -14.9% -15.10% -17.5% -15.9% -19.6%
Slide 5: Underlying net profit up 3% to $191m
Underlying net profit up 3% to $191m Dec-04 Jun-04 Dec-03 Dec pcp A$m Half Half Half %∆ Sales revenue 2,157 2,069 2,081 4 EBITDA1 412 402 392 5 EBIT1 307 301 299 3 Net interest 33 37 29 12 Profit before tax1 274 264 270 2 Tax1 83 81 83 - Underlying NPAT1 191 184 186 3 Significant item after tax (11)
Slide 6: Strong margins supported by effective price & cost management
Strong margins supported by effective price & cost management EBIT1 / Sales EBITDA1 / Sales 16% 20% 18.8 19.1 14.4 14.2 14% 16% 12% 10% 12% 8% 6% 8% 4% 4% 2% 0% 0% 97 98 99 00 01 02 03 04 04 05 97 98 99 00 01 02 03 04 04 05 FY FY FY FY FY FY FY FY 1H 1H FY FY FY FY FY FY FY FY 1H 1H 1. Before signif
Slide 7: Boral's balance sheet is strong
Boral’s balance sheet is strong As at Dec-04 Dec-03 A$m Net debt 1,183 882 Net debt/ equity 49% 40% Net debt/ (net debt + equity) 33% 28% Net interest cover 8.8x 10.2x Funds employed 3,592 3,109 EBITDA1 margin on sales 19.1% 18.8% 1. Before one-off cost associated with Adelaide Brighton bid Results
Slide 8: Underlying EPS up 2% and dividend up 21% on pcp
Underlying EPS up 2% and dividend up 21% on pcp Cents / share Dividend Grossed up dividend EPS 36 1 32.8 32 28 24 20 16 12 8 16 17 14 11 12 4 9 9 9 9 9 10 0 1H00 2H00 1H01 2H01 1H02 2H02 1H03 2H03 1H04 2H04 1H05 1. Reported earnings per share is 30.8 cents Results for the half year to December 2004
Slide 9: Divisional performance
Divisional performance Results for the half year to December 2004 17 Building Products & USA improved their EBIT performance A$m 1H04 1H05 153 153 4% 79 82 10% 66 60 41% 17 10 Construction Materials, Building Products, USA Asia Australia Australia Results for the half year to December 2004 18 9
Slide 10: Building Products: continued underlying improvement in performance
Building Products: continued underlying improvement in performance $m 1H Sales 2H Sales EBIT/ Sales 6 months to Dec-04 Dec-03 %∆ 1,500 14% A$m 13.3% 12% 1,200 Sales 618 618 - 10% EBITDA 105 101 4 900 8% EBIT 82 79 4 6% Funds Empl. 859 799 8 600 % 4% 300 EBITDA/ Sales 17.1 16.3 2% EBIT/ Sales 13.3 12
Slide 11: Building Products: EBIT up 4% despite significant decline in dwelling construction
Building Products: EBIT up 4% despite significant decline in dwelling construction Bricks: earnings uplift underpinned by stronger pricing outcomes & higher volumes in WA, partially offset by lower East Coast volumes Roofing: earnings lower reflecting softer dwelling activity and increased compe
Slide 12: Construction Materials: prices up, volumes mixed
Construction Materials: prices up, volumes mixed External sales hoh ∆ 1H05 1H04 %∆ - A$m prices / volume Cement1 240 221 9 Quarries 134 123 9 Concrete 424 407 4 Asphalt 170 170 - Transport 54 57 (5) Contracting 12 19 (33) QEU 38 38 - TOTAL 1,073 1,035 4 1. Cement division includes BCSC (external rev
Slide 13: USA: strong markets; record earnings
USA: strong markets; record earnings A$m 1H Sales 2H Sales EBIT/ Sales 6 months to Dec-04 Dec-03 %∆ 1,000 18% US$m 16% 16.5% Sales 293 269 9 800 14% EBIT 48 41 17 12% 600 A$m 10% Sales 398 389 2 8% 400 EBIT 66 60 10 6% Funds Empl. 683 600 14 4% % 200 EBIT/ Sales 16.5 15.3 2% ROFE (MAT) 17.7 18.5 0 0
Slide 14: USA: improved performance from all businesses
USA: improved performance from all businesses Continued strong housing market has driven demand for all products A$ EBIT impacted by around A$4m adverse currency movement Bricks: US$ earnings up with strong selling prices and flat production costs offsetting lower volumes due to capacity/inven
Slide 15: Asia: difficult conditions in two key plasterboard markets
Asia: difficult conditions in two key plasterboard markets EBIT down 41% to $10m reflecting difficult conditions in South Korea & Thailand Plasterboard JV contribution of $5m, down 60%. Overall, volumes and revenues flat but prices were down in South Korea & Thailand – South Korean market down s
Slide 16: We continue to deliver against objectives
We continue to deliver against objectives Objectives Performance ROFE1 of 17.6% comfortably exceeds 1. Exceed WACC through WACC the cycle Returns from Construction Materials, 2. Deliver better financial Asia and USA compare well against returns than the competitors. Gap closing against competition i
Slide 17: Growth: $300m committed to Growth in Australia and increasingly offshore
Growth: $300m committed to Growth in Australia and increasingly offshore (Dec Half) 8 countries 666 Total operating sites (excludes distribution) 85 ASIA Plasterboard1 Korea #2 Thailand #1 China (east) #1 Indonesia #1 Malaysia #1 77 USA The Philippines #1 Bricks #1 Clay Roof tiles #1 504 AUSTRALIA C
Slide 18: Stronger underlying margins support ongoing growth / capital management
Stronger underlying margins support ongoing growth / capital management 700 Growth capex 90 Stay-in-business capex 600 Net Debt/Equity (%) 80 Capital Expenditure (A$m) 500 70 400 Net Debt / Equity 60 (%) 300 50 200 Target Gearing Range 40 100 0 30 FY99 FY00 FY01 FY02 FY03 FY04 1H05 Results for the h
Slide 19: Growth: building on our strong positions in Asia
Growth: building on our strong positions in Asia (A$80m) “Consistent with Boral’s strategy to grow increasingly offshore” Jul-04: Concrete & Quarries #3 ready-mixed concrete player in Thailand US$45m acquisition of Current production of 1.4m m3 p.a. of Hanson’s ready-mixed concrete and 1.5mt p.a
Slide 20: Outlook: Australian Dwellings approvals / starts softening
Outlook Results for the half year to December 2004 39 Australian Dwellings approvals / starts softening Australia – Dwelling construction indicators Quarterly. Seasonally Adjusted 60,000 12,000 Dwelling Approvals Value of Work Done Dwelling Starts 50,000 10,000 (A$97/98 Million) Number of Dwellings
Slide 21: Australian Non-Dwelling activity growth less than expected
Australian Non-Dwelling activity growth less than expected Australia – Non-dwelling construction indicators Moving Annual Total (A$Billion) Value of Work Done vs Approved Value of Work Yet to be Done vs Under Construction $20,000 $80,000 Value of Work Under Construction $18,000 BT to$70,000 provide
Slide 22: BIS Shrapnel expect Australian construction activity to remain robust
BIS Shrapnel expect Australian construction activity to remain robust in FY06 and FY07 Australia – Value of Work Done A$97/98 billion. Seasonally adjusted 55 % change Dwelling (incl A&A) +6.1 (1.5) 50 Roads, Highways, Subd & bridges +0.6 45 Non-Dwelling 40 35 (2.0) +4.0 (10.0) 30 25 (5.6) 20 +10.4 +
Slide 23: Asian construction demand expected to grow
Asian construction demand, except for South Korea in short term, expected to grow South 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 by public