Boral — Macquarie Equities Australia Conference 2016
30 slides from Boral's conference presentation, May 5, 2016
Slide 1: Boral – positioned for growth
Boral – positioned for growth Macquarie Equities Australia Conference Mike Kane, CEO & Managing Director, Boral Limited | 5 May 2016
Slide 2: Boral overview
Boral overview 1H FY2016 external revenue3 • Boral is an international building by division, % and construction materials group USA with operations in Australia, the 20 USA and Asia Construction Materials Gypsum4 14 58 & Cement • ~A$4.8 billion market capitalisation1 8 Building Products • S&P/ASX 10
Slide 3: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions 2. Demonstrated margin expansion ability, including price and cost benefits 3. Growth in key markets and across all geographies 4. Bringing innovative products to market 5. Strong balance sheet an
Slide 4: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions • Significant pick-up in major roads and infrastructure expected over next 5-6 years, while slowdown in resource-based projects is working through 2. Demonstrated margin expansion ability, includi
Slide 5: Boral's Australian assets and market exposures position the company well
Boral’s Australian assets and market exposures positions the company well BORAL’S AUSTRALIAN REVENUES BY STATE1, % NT 2 20 1 2 61 QLD 1 17 WA / QLD 1 NT 22 12 1 WA 12 13 1 SA NSW / 3 ACT 11 1 30 22 44 NSW/ 7 10 1 93 ACT 2 2 1 13 Vic / 9 Tas / 4 SA OPERATING FOOTPRINT VIC/TAS (total number of operati
Slide 6: Strengthened position in Australia while markets transition
Strengthened position in Australia while markets transition Other engineering2, VWD A$ billions Detached dwellings5, # starts 120.0 140,000 100.0 Boral’s Australian 120,000 100,000 80.0 60.0 revenue 80,000 60,000 40.0 20.0 by end-market1, % 40,000 20,000 - - Other RHS&B3,4, VWD A$ billions Other Det
Slide 7: Australian major road projects pipeline
Australian major road projects pipeline Investment in roads infrastructure expected to translate into stronger materials demand towards end of FY2016 / FY2017 Major Road Construction Projects – Australia Value of work done by year, A$b (as at February 2016) 7
Slide 8: Major roads are part of a broader pipeline of infrastructure & commercial construction work
Major roads are part of a broader pipeline of infrastructure & commercial construction work All Major Construction Projects (excluding resource sector) – Australia Value of work done by year, A$b (as at February 2016) $bn 25 Forecasts 20 Buildings 15 Rail 10 Roads 5 0 2012 2013 2014 2015 2016 2017 2
Slide 9: Concrete demand in Australia
Concrete demand in Australia Industry concrete demand in Australia is forecast to stay at high levels for the next five years Macromonitor Forecast1 Concrete Demand across all Australian construction markets, (‘000) m3 30,000 Forecast volumes WA / NT • ~1.6% CAGR2 in concrete 25,000 volumes forecast
Slide 10: Asphalt demand in Australia
Asphalt demand in Australia Industry asphalt demand in Australia is forecast to increase and remain high for the next five years Macromonitor Forecast1 Asphalt Demand across all Australian construction markets, (‘000) tonne3 Forecast volumes 12,000 WA / NT • ~3.0% CAGR2 in asphalt volumes 10,000 for
Slide 11: Boral is well positioned geographically
Boral is well positioned geographically Macromonitor has modelled East Coast industry materials volumes to increase by between 1.4% and 3.3% CAGR to 2020, with Qld at 8% WA / NT QLD CONCRETE ASPHALT CONCRETE ASPHALT Boral’s Australian ~2.4% CAGR2 ~8.0% CAGR2 ~0.3% CAGR2 ~-4% CAGR2 4,000 1,800 revenu
Slide 12: In CM&C, Boral is well positioned with strategic reserves & integrated downstream operations
In CM&C, Boral is well positioned with strategic reserves & integrated downstream operations 40-50% Quarry QUARRIES 5-15% Quarry CEMENT volumes sold volumes sold Aggregates BITUMEN ~70% of needs internally to and sand internally to from domestic Concrete Asphalt Bitumen Importers manufacturing Austr
Slide 13: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions 2. Demonstrated margin expansion ability, including price and cost benefits • Cost reductions, efficiency improvements and better pricing 3. Growth in key markets and across all geographies 4. Bri
Slide 14: Demonstrated margin expansion ability – including price and cost benefits
Demonstrated margin expansion ability – including price and cost benefits Construction Materials & Cement USG Boral EBIT variance A$m Underlying EBIT variance A$m Cost Cost Other3 escalation reduction Volume Price 91 Cost & other Cost reduction escalation Volume Price 150 159 70 1H FY15 1H FY15 1H F
Slide 15: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions 2. Demonstrated margin expansion ability, including price and cost benefits 3. Growth in key markets and across all geographies • Australia: growth trajectory for major roads and infrastructure •
Slide 16: Operations in high growth countries as well as new products will underpin USG Boral's growth
Operations in high growth countries as well as new products will underpin USG Boral’s growth China SHARE OF REVENUE1, % GDP growth 7.3% Population 1.37 bn Population growth 0.5% Other India Australia GDP growth 7.3% Urban population 55.6% 13 Indonesia Rate of urbanisation 3.1% 6 Population 1.25 bn 3
Slide 17: In the USA, new residential construction is continuing to recover in all regions
In the USA, new residential construction is continuing to recover in all regions Forecasters1 currently expect an average of ~1.2m US housing starts in FY2016 and ~1.5m by FY2018, with all regions forecast to recover strongly ‘000 SHARE OF BORAL’S ‘000 NORTHEAST2 Housing Starts MIDWEST2 Housing Star
Slide 18: Continued confidence in the US housing recovery
Continued confidence in the US housing recovery Positive momentum in US housing starts driven by current housing deficit and continued improvement in US fundamentals • Growing US housing undersupply – cumulative housing deficit of Short-term ~3.9 million units factors • Builder confidence continues
Slide 19: USA EBIT and housing starts over time
USA EBIT and housing starts over time We are seeing improved returns at lower levels of housing starts EBIT (US$ millions) vs. Total US Housing Starts $200 2,400 2,016 2,036 1,945 1HFY16 (Annualised $150 $139 1,546 1,800 housing starts) $103 1,132 1,146 $100 1,054 1,200 $80 954 $75 872 646 687 594 5
Slide 20: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions 2. Demonstrated margin expansion ability, including price and cost benefits 3. Growth in key markets and across all geographies 4. Bringing innovative products to market • Australia / Asia: Sheetr
Slide 21: Sheetrock technology is helping us grow faster than the competition in high growth markets
Sheetrock® technology is helping us grow faster than the competition in high growth markets Next generation technology upgrades Sheetrock® Board • Producing Sheetrock® wall and ceiling boards that are: up to 15% lighter higher strength sag-defying Competitor’s Board Sheetrock® board Competitor
Slide 22: USG Boral has an enviable position, which we are protecting and growing through innovation
USG Boral has an enviable position, which we are protecting and growing through innovation Ex-China, USG Boral market share across the Since FY2007 plasterboard sales volume CAGR of region in which we operate is around 40% 6% p.a. (incl Aus/NZ) and 7% in Asia (excl Aus/NZ) Plasterboard market share,
Slide 23: Innovation is delivering incremental benefits and is important for long term growth in the USA
Innovation is delivering incremental benefits and is important for long term growth in the USA Sustainable Transformational New Development Growth R&D Centre Current Poly-Ash Process New platform development New location for Production support & adjacent products durability, polymer Product ex
Slide 24: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions 2. Demonstrated margin expansion ability, including price and cost benefits 3. Growth in key markets and across all geographies 4. Bringing innovative products to market 5. Strong balance sheet an
Slide 25: Balance sheet
Balance sheet Gearing remains at lower end of historical range Gearing1 % As at 31 December 2015: 31 30 23 • Net debt of $1.03b increased by $208m 19 20 since 30 June 2015, largely due to on- 18 14 market share buy-back and translation of US$ denominated debt FY11 FY12 FY13 FY14 FY15 1H FY15 1H FY16
Slide 26: Boral today – well positioned for growth
Boral today – well positioned for growth 1. Strengthened position in Australia while market transitions • Significant pick-up in major roads and infrastructure expected over next 5-6 years, while slowdown in resource-based projects is working through 2. Demonstrated margin expansion ability, includi
Slide 27: Questions
Questions
Slide 28: Back-up slide
Back-up slide
Slide 29: Supporting slide – outlook for FY2016 as presented at the half-year results
Supporting slide – outlook for FY2016 as presented at the half-year results (10 Feb 2016) • Expect continued strong results with underlying FY2016 EBIT to be marginally above FY2015 (excluding Property in both years) Boral • Expect 2H underlying earnings to be lower than 1H FY2016 due to continuing
Slide 30: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 5 May 2016. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic reporti