Boral — H1 2004 Earnings Presentation
20 slides from Boral's earnings presentation, Feb 10, 2004
Slide 1: Boral Interim Results 2004
Boral Interim Results 2004 Rod Pearse, Managing Director 10 February 2004 Outline Financial Highlights & Markets Review Financial Results Segment Performance Perform & Grow Strategy Outlook Interim Results 2004 2 1
Slide 2: Financial highlights: Profit up 29%
Financial highlights: Profit up 29% NPAT ↑ 29% To $186m Sales ↑ 8% To $2,081m EBIT ↑ 25% To $299m EBIT margin ↑ 16% To 14.4% EPS ↑ 28% To 32.1 cents Interim dividend ↑ 27% To 14 cents Franking ↑ 33% To 100% Return on equity1 ↑ 23% To 14.9% 1. MAT Interim Results 2004 3 Financial highlights Improve
Slide 3: Strong result underpinned by increased market activity
Strong result underpinned by increased market activity Change in Value of Work Done/ Commenced – 1H04 vs 1H03 10% 8% 9% 6% 7% 8% 6% 4% 5% 2% 0% -2% -5% -4% -6% Australian Australian non- Australian Total Australia1 US dwelling - US non-dwelling dwelling (incl dwelling1 RHS&B1,2 Boral's "US - Boral's
Slide 4: Financial Results
Financial Results Underlying profit increased by 29% to $186m 6 months to Dec-03 Jun-03 Dec-02 Dec pcp A$m %∆ Sales revenue 2,081 1,900 1,931 8 EBITDA 392 335 337 16 EBIT 299 238 240 25 Net Interest 29 33 35 (16) Profit before tax 270 205 205 32 Tax 83 66 60 39 NPAT 186 139 144 29 Interim Results 20
Slide 5: Sales and EBIT continue to strengthen
Sales and EBIT continue to strengthen Sales EBIT $m $m 299 2,200 2,081 300 2,000 1,800 250 1,600 200 1,400 1,200 150 1,000 800 100 600 400 50 200 0 0 99 00 01 02 0 1 2 'D 3 99 00 Ju 1 Ju 2 3 0 01 D 2 'D 3 3 0 0 0 0 -0 -0 -0 0 0 0 -0 - - - - - - n- n- n- n- n- n- n- n- ec ec ec ec ec ec ec ec ec ec J
Slide 6: EBIT variance analysis; Balance sheet remains strong
EBIT variance analysis A$m 299 240 Cost Price Escalation Turnarounds FX EBIT Volume PEP Asia/ Other EBIT 1H03 Growth 1H04 Interim Results 2004 11 Balance sheet remains strong As at Dec-03 Dec-02 Dec pcp A$m %∆ Net debt 882 864 2 Net debt/ equity 40% 41% Net debt/ (net debt + equity) 28% 29% Net inte
Slide 7: Return on shareholders' funds strengthened substantially
Return on shareholders’ funds strengthened substantially NPAT / Equity 1 14.9% 13.2% 1 12.1% 9.5% 9.9% 8.7% 8.3% FY99 FY00 FY01 FY02 FY03 1H03 1H04 1. MAT Interim Results 2004 13 Earnings per share increased 28% Cents / share Dividend Grossed up dividend EPS 36 32 32 28 25 24 24 20 20 16 16 18 17 16
Slide 8: Segment Performance
Segment Performance Financial performance improved across all segments EBIT HY Dec-02 $m 35% HY Dec-03 180 160 153 140 120 113 21% 100 11% 79 80 66 60 60 54 25% 40 13 17 20 0 Construction Building Products, USA Asia Materials, Australia Australia Interim Results 2004 16 8
Slide 9: Construction Materials: strong uplift in revenue and earnings
Construction Materials: strong uplift in revenue and earnings 6 months to Dec-03 Dec-02 %∆ Share of external revenue – 1H04 A$m Sales 1,035 919 13 Cement division2 21% Quarries 12% Contracting EBITDA 202 160 26 2% EBIT 153 113 35 Transport 5% EBITDA/ Sales 19.5% 17.5% 11 QEU 4% EBIT/ Sales 14.8% 12.
Slide 10: Construction Materials: business performance
Construction Materials: business performance Cement Cement prices up 7%, underlying volume growth of 2% Division Cement imports now 9% of market Benefits from upgrades yet to come Scaffolding – strong result driven by strong market and increased penetration in residential market ACM Quarry
Slide 11: QEU earnings outlook; Building Products performance
QEU: sustainable earnings expected to increase to around $40m pa from FY05 Actual timing of QEU projects will depend on government approvals and market conditions PLDC • 3,500 - 4,000 residential lots • 40% shareholding Moorebank Greystanes Business Greystanes residential Greystanes Business Hub - N
Slide 12: Building Products: continued improvement in performance
Building Products: continued improvement in performance EBIT / Sales ROFE 14% 18% 12.9% 16.6% 16% 12% 14.1% 11.0% 14% 10% 12% 8% 10% 8% 6% 6% 4% 4% 2% 2% 0% 0% FY99 FY00 FY01 FY02 FY03 1H03 1H04 FY99 FY00 FY01 FY02 FY03 1H03 1H04 Interim Results 2004 23 Building Products: business performance Price/
Slide 13: USA: US$ EBIT up 38%, A$ EBIT up 11%
USA: US$ EBIT up 38%, A$ EBIT up 11% 6 months to Dec-03 Dec-02 %∆ Share of external revenue – 1H04 US$m Sales 269 210 28 Bricks Flyash 14% 63% EBIT 41 30 38 A$m Concrete rooftiles1 Sales 389 379 3 19% EBIT 60 54 11 Clay EBIT/ Sales 15.3% 14.2% 8 rooftiles 4% Funds employed 600 709 (15) ROFE 18.5% 14
Slide 14: USA and Asia: business performance
USA: business performance Price/ Volume USA Housing market remains buoyant Adverse exchange rate EBIT impact of A$15m Bricks Earnings up but higher gas costs negatively impacted earnings by around A$10m Prices steady Franklin Brick performing in line with expectation Concrete Strong perf
Slide 15: Asia: profit contribution continues to improve
Asia: profit contribution continues to improve EBIT1 EBIT/ Sales1,2 $m 20 15% 13.5% 17 13 10% 8.4% 15 10 5% 0% 5 -5% 0 -10% -5 -15% -10 -20% -15 -25% -20 -30% Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 'Dec-03 1H03 1H04 FY99 FY00 FY01 FY02 FY03 1. Includes Plasterboard and
Slide 16: Perform & Grow strategy
Perform & Grow strategy Quality Qualityresources resources&& Objectives assets assets Lowest Lowestcost costposition position 1. Exceed WACC through the cycle Perform Perform Margin Marginmanagement management 2. Deliver better financial returns than the Balance Balancesheet sheetfocus focus competi
Slide 17: Benefits still to come from over $250m in announced growth capital
Benefits still to come from over $250m in announced growth capital Expected Growth project Benefits benefits from: Cement upgrades Waurn Ponds (Vic) $25m p.a. cost benefits Sep-04 Q Berrima (NSW) Well positioned to meet demand surges Jun-04 Q Galong (Lime, NSW) Additional 150,000 tpa quick
Slide 18: Boral continues to deliver superior shareholder returns
Boral continues to deliver superior shareholder returns TSR Performance of ASX100 – 21 Feb 2000 to 31 Dec 2003 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Companies listed post Boral’s demerger 27% Boral * Opening Price (21 Feb 00): $2.43, Closing Price (31 Dec 03): $5.08; Calculation: End P
Slide 19: Australian value of work done expected to increase
Australian value of work done is expected to continue to increase in FY04 to FY06 Australia – Value of Work Done A$97/98 billion. Seasonally adjusted Forecast +8.6% 55 -3.5% +4.3% +4.8% 50 -11.6% 45 40 +2.5% +3.4% +9.7% -8.4% -13.3% Dwelling 35 (incl A&A) 30 25 Roads, +10.0% -10.9% Highways, 20 +4.2
Slide 20: Outlook for FY2004
Outlook for FY2004 • Australian dwelling activity expected to be flat yoy in the Jun-04 half • Australian non-dwelling activity expected to be up on last year in the Jun-04 half • Sustained high level of US housing activity expected in Jun-04 half but impacted by stronger A$ • Underlying economic gr