Fletcher Building Limited · NZX:FBU
Fletcher Building — H1 2008 Earnings Presentation
47 slides from Fletcher Building's earnings presentation, Feb 13, 2008
Slide 1: Half Year Results to December 2007
For personal use only Half Year Results to December 2007 13 February 2008
Slide 2: Disclaimer
For personal use only Disclaimer This half year results presentation dated 13 February 2008 provides additional comment on the media release of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions, earnings a
Slide 3: Highlights
3 Highlights For personal use only Net Earnings $235 million Record operating earnings. Geographic and market diversification continues to deliver improved earnings despite softer EPS 47.0 cps markets • Capital Expenditure of $165m+ Progress With committed and in progress Growth Projects • Formica a
Slide 4: Summary of Results
4 Summary of Results For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths Sales 3547 2980 5926 EBITDA 490 418 859 EBIT 394 340 703 Net Earnings 235 193 484 EPS (cents) 47.0 41.1 101.9 Dividend cps 24.0 22.0 45.0 Half Year Results – February 2008
Slide 5: Geographic Diversity
5 Geographic Diversity For personal use only Revenue $NZm 6 Months Dec 07 6 Months Dec 06 Other, 3% Europe, 0% Other, 2% Asia, 1% Europe, 6% Nth America, Asia, 3% 1% Nth America, 7% Aus, 35% NZ, 52% NZ, 60% Aus, 30% Half Year Results – February 2008
Slide 6: Market Diversity
6 Market Diversity For personal use only Revenue $NZm 6 Months Dec 07 6 Months Dec 06 Building Products, 11% Building Steel, 17% Products, 12% Steel, 20% Distribution, 16% Distribution, 17% Laminates & Laminates & Panels, 19% Panels, 30% Infrastructure, 26% Infrastructure, 32% Half Year Results – Fe
Slide 7: Earnings by Division
7 Earnings by Division For personal use only 145 Dec 2007 122 Dec 2006 91 * 74 72 65 47 46 42 39 Building Products Distribution Infrastructure Laminates & Panels Steel * Includes Formica acquired 2 July 2007 Half Year Results – February 2008
Slide 8: Divisional Performance
For personal use only Divisional Performance
Slide 9: Building Products
For personal use only Building Products
Slide 10: Building Products Results
10 Building Products Results For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths Sales 376 344 697 EBIT 74 72 141 ² Margin % 19.7 20.9 20.0 Funds 572 557 565 Return on Funds % 25.9 27.8 ¹ 25.8 ¹ 1. Proforma returns based on 6 months of acquisitions 2. Excludes unusual write-off
Slide 11: Building Products
11 Building Products For personal use only Plasterboard: Volumes and earnings similar to pcp. Market share held. New Christchurch distribution centre underway. Insulation: Australian volumes similar to last year but market remains weak in NSW. New Zealand demand similar to pcp. Furnace rebuild under
Slide 12: Distribution
For personal use only Distribution
Slide 13: Distribution Results
13 Distribution Results For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths Sales 565 518 1064 EBIT 42 39 80 Margin % 7.4 7.5 7.5 Funds 167 149 163 Return on Funds % 50.3 52.3 49.1 Half Year Results – February 2008
Slide 14: Distribution
14 Distribution For personal use only Earnings: Sales up 9% on pcp in a competitive market. Margins were under some competitive pressure, but overall operational earnings up 8% on pcp. Branch Upgrade Programme: Continues with upgrades in Cromwell, Taranaki, Ohakune, Thames and Christchurch Frames &
Slide 15: Infrastructure
For personal use only Infrastructure
Slide 16: Infrastructure Results
16 Infrastructure Results For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths Sales 921 962 1944 EBIT 145 122 271 Margin % 15.7 12.7 13.9 Funds 879 769 767 Return on Funds % 33.0 31.7 35.3 Half Year Results – February 2008
Slide 17: Infrastructure
17 Infrastructure For personal use only Golden Bay Cement: Volumes similar to pcp with earnings improved as new plant performance increases. Price increase of 2.5% announced for February 2008. Firth: Key Readymix and Masonry volumes down 2.3% on pcp. Earnings followed a similar track. Winstone Aggre
Slide 18: Infrastructure
18 Infrastructure For personal use only Rocla Quarries & Pipeline Products: Excellent results with earnings 25%+ over pcp. Good demand for all products in RPP, but particularly poles and sleepers. NSW sand sales slow with market. Copa Water, Calga Sand and Maslin Beach acquired. Construction: Good r
Slide 19: Laminates & Panels (including Formica)
For personal use only Laminates & Panels (including Formica)
Slide 20: Laminates & Panels Results
20 Laminates & Panels Results For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths Sales 1074 553 1058 EBIT 91 65 131 ¹ Margin % 8.5 11.8 12.4 Funds 1884 869 814 Return on Funds % 9.7 15.0 16.1 1. Excludes unusual gain of $20 million Half Year Results – February 2008
Slide 21: Laminates & Panels
21 Laminates & Panels For personal use only Australia: Good sales growth (all states increased revenue) in Australia, but margins competitive. Exports steady and earnings ahead of pcp. Further investment planned in componentry. New Zealand: Strong sales but loss of Taupo impacted on export sales. Ea
Slide 22: Formica
22 Formica For personal use only Profit improvement projects are underway, however, in most cases they are running behind on time, but management are confident that they will deliver their full value albeit later than expected. Evendale Restructuring: Sierra press closed and volumes transferred
Slide 23: Formica
23 Formica For personal use only Formica’s contribution to the Laminates & Panels earnings: US$ Normalised EBITDA 40.8 Less Depreciation 12.5 Normalised EBIT 28.3 Less increased manufacturing and one-off 12.3 costs US$ 16.0 NZ$ 21.0 Half Year Results – February 2008
Slide 24: Steel
For personal use only Steel
Slide 25: Steel Results
25 Steel Results For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths Sales 611 602 1161 EBIT 47 46 80 ¹ Margin % 7.7 7.6 7.0 Funds 542 474 496 Return on Funds % 17.3 19.4 16.1 1. Excludes unusual write-offs of $9 million Half Year Results – February 2008
Slide 26: Steel
26 Steel For personal use only Rollforming: Stramit, Dimond and Pacific Coilcoaters improved earnings on pcp in a competitive environment. Fair Dinkum Homes and Sheds acquired to extend distribution into ‘sheds’. Long Steel Products: Whilst earnings were down slightly on pcp due to price volatility,
Slide 27: Financials
For personal use only Financials
Slide 28: Net Earnings
28 Net Earnings For personal use only Dec Dec Jun 2007 2006 2007 $m 6 Mths 6 Mths 12 Mths EBIT 394 340 703 ¹ Interest 67 45 87 Tax 83 92 113 ² Minority Interests 9 10 19 Net Earnings 235 193 484 1. Includes unusual gain of $5m 2. Includes one-off tax benefit of $80m Half Year Results – February 2008
Slide 29: Simplified Balance Sheet
29 Simplified Balance Sheet For personal use only Dec Jun 2007 2007 NZ$m NZ$m Assets Current Assets 2119 1742 Fixed Assets 1922 1515 Intangibles & Goodwill 1141 629 Provision for Deferred Taxation -34 3 Investments 208 141 Total Fletcher Building Assets 5356 4030 Liabilities Current Liabilities 1192
Slide 30: Key Ratios: Total Shareholder Return
30 Key Ratios For personal use only Total Shareholder Return (TSR) Percentage 61 43 42 40 33 24 6 -4 Jun 01¹ Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Dec 07 (6 mths) 1. June 01 is the return for the 3 months from separation date 2. TSR calculated ((Gross Dividend Paid + Movement in Share Price)/Ope
Slide 31: Key Ratios: Debt/Debt Plus Equity
31 Key Ratios For personal use only Debt/Debt Plus Equity Percentage 49.2 49.9 44.4 43.1 40.2 39.7 37.1 22.2 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05¹ Jun 06 Jun 07 Dec 07 1. Restated for IFRS (6 mths) Half Year Results – February 2008
Slide 32: Key Ratios: Return on Average Equity
32 Key Ratios For personal use only Return on Average Equity¹ Percentage 29.5 24.6 26.0 23.0 24.3 19.6 16.9 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05² Jun 06 Jun 07 Dec 07 (6 mths) -43.8 1. Net earnings after capital notes interest/shareholders funds 2. Restated for IFRS Half Year Results – February 2008
Slide 33: Key Ratios: Return on Average Funds
33 Key Ratios For personal use only Return on Average Funds¹ Percentage 29.3 26.1 24.8 24.4 24.7 23.1 20.4 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05² Jun 06 Jun 07 Dec 07 (6 mths) 1. EBIT/(Average net debt+equity+capital notes) - deferred tax asset -8.6 2. Restated for IFRS Half Year Results – February 200
Slide 34: Key Ratios: Interest Cover
34 Key Ratios For personal use only Interest Cover¹ Times 9.6 9.8 9.3 7.8 7.3 7.3 5.8 3.1 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Dec 07 (6 mths) 1. EBITDA pre unusuals/interest paid including capital note interest Half Year Results – February 2008
Slide 35: Net Debt Movement
For personal use only NZ$ m 0 400 800 1200 1600 2000 Opening Debt 654 Cash from ops (316) 92 Working capital Half Year Results – February 2008 Capex 140 Acquisitions 990 Net Debt Movement Divestments (37) Dividends 96 Min Distn 18 FX on Debt 12 Actual Debt 31 Dec 1,628 35
Slide 36: Strategic Update
For personal use only Strategic Update
Slide 37: Strategic Agenda
37 Strategic Agenda For personal use only Earnings Reliability Internal Growth External Growth Half Year Results – February 2008
Slide 38: Earnings Reliability
38 Earnings Reliability For personal use only Company outlook should be cognisant of both product and geographic diversity. For New Zealand – Infometrics Nov 07 estimate of total volume of work commenced. For Australia – BIS Dec 07 estimate of total volume of work commenced. Half Year Results
Slide 39: New Zealand Volume of Work Commenced
39 New Zealand Volume of Work Commenced For personal use only Residential Consents $m 1995/96 Infrastructure WPIP prices 6000 40000 30000 4000 20000 2000 10000 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2004 2005 2006 2007 2008 2009 2010 2011 2012 Residential Non Residential WPIP $m 1995/96 in
Slide 40: Australia Volume of Work Commenced
40 Australia Volume of Work Commenced For personal use only $bn 2004/05 Residential Approvals prices Infrastructure WPIP '000s 150 250 200 100 150 100 50 50 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Residential $bn 2004/05 $bn 2004/05 Non Residential WPIP pr
Slide 41: Internal Growth
41 Internal Growth For personal use only 990 590 109 105 122 116 121 131 94 79 61 28 Jun 2005 Jun 2006 Jun 2007 Dec 2007 Stay in Business Growth & Productivity Acquisitions Half Year Results – February 2008
Slide 42: Internal Growth Opportunities
42 Internal Growth Opportunities For personal use only Significant capex spend continues Projects include: Australian Quarry Expansion Particleboard Upgrade in Australia Cement Terminal, Auckland Distribution ERP System European Roof Tile Plant Insulation Furnace Upgrade, New Zealand
Slide 43: External Growth Opportunities
43 External Growth Opportunities For personal use only We continue to review external growth opportunities. Half Year Results – February 2008
Slide 44: Outlook
For personal use only Outlook
Slide 45: Outlook 2008/2009
45 Outlook 2008/2009 For personal use only New Zealand: Strong infrastructure market, supported by steady non- residential, offsetting declining residential markets. Australia: Residential markets forecast to remain steady, offsetting softness in non-residential and infrastructure activity. U.S.: Si
Slide 46: Outlook 2008/2009
46 Outlook 2008/2009 For personal use only Overhanging these market related forecasts are: continued uncertainty in the international credit markets. possibility of US recession and flow on effects. intervention through interest rate action in major economies – US, UK, EUR, Aus and NZ – to d
Slide 47: For personal use only
For personal use only