Fletcher Building Limited · NZX:FBU
Fletcher Building — Investor Presentation (March 2009)
22 slides from Fletcher Building's investor presentation, Mar 25, 2009
Slide 1: Analyst Introduction to Steel Division
For personal use only Analyst Introduction to Steel Division Paul Zuckerman - Chief Executive Fletcher Building Steel Division Steel Division – March 2009 1
Slide 2: Disclaimer
Disclaimer For personal use only This presentation contains not only a review of operations, but also some forward looking statements about Fletcher Building and the environment in which the company operates. Because these statements are forward looking, Fletcher Building’s actual results could diff
Slide 3: A brief history of steelmaking in New Zealand
A brief history of steelmaking in New Zealand For personal use only Pacific Steel Group, Auckland - EAF New Zealand Steel, Glenbrook – Integrated Steelworks • Ingot casting started in 1962. 3 strand ROKOP concaster installed 1979 • Commenced in 1968 processing imported coil on a galvanising line • W
Slide 4: The Steel Division's breadth of operations is unique
The Steel Division’s breadth of operations is unique For personal use only Scrap Collecting Rebar Reinforcing Painted Coil End Use, Coating on Armco Safety Tower Merchant Te Apiti Wind Plate Cutting Wire Mesh Coil Kauri Cliffs Railing at Wednesday Steel Farm, Tararua Peak Long Steel Coated Steel Ste
Slide 5: Long Steel provides 100% recycled product to the market
Long Steel provides 100% recycled product to the market For personal use only Scrap. Benchmark is at Billet Wire Rod Rebar Bright Drawn Reo placing Mesh Sky Tower ~US$480/t cfr Korea Laying Head Wire • 15 year old JV with Sims • Commenced operations in 1962 • Major NZ reinforcing fabricator Group, t
Slide 6: Long Steel Drivers – a mix of global and local influences
Long Steel Drivers – a mix of global and local influences For personal use only NZD:USD FX Rate East Asia Import HMS Scrap ($/t) 100 500 80 400 60 300 40 200 20 100 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Oct 03 Oct 04 Oct 05 Oct 06 Oct 07 Asia Rebar Price (US$/t) NZ Construct
Slide 7: Coated Steel – Premium construction products & services
Coated Steel – Premium construction products & services For personal use only Painted Steel Coil PCC Coil on Kauri Cliffs Westpac Stadium Long Span Commercial Gold Coast Convention Corrugate House Roof Cladding and Roof Roof and Purlins Centre, QLD • Part of Fletchers since 1988 • Part of Fletchers
Slide 8: Coated Steel Drivers – regional construction activity
Coated Steel Drivers – regional construction activity For personal use only Australian Real Non-res. Work Done (A$b p.a.) Australian Residential Approvals (,000 p.a.) 30 225 25 200 20 175 15 150 10 125 5 100 2000 2001 2002 2003 2004 2005 2006 2007 '08F '09F '10F '11F 2000 2001 2002 2003 2004 2005 20
Slide 9: Steel Distribution – servicing our customer's needs
Steel Distribution – servicing our customer’s needs For personal use only Dipping Wire Small Parts Engineering Rounds Pipes into Rural HC Bar Coil Processing Line Wire Staples • Two sites – AKL and CHCH • Leading stockist/distributor of long and flat steel • Fencing products • Biggest zinc bath in N
Slide 10: The Australasian steel industry structure is improving
The Australasian steel industry structure is improving For personal use only Long Steel Coated Steel Steel Distribution Australia OneSteel Smorgon merger BlueScope Steel OneSteel, BlueScope BestBar/Tata - reinforcing Lysaght, Stramit, Metroll, Southern Steel, CMC ATM, Orrcon - pipe/tube/rhs Steeline
Slide 11: Steel continues to grow and invest for the future
Steel continues to grow and invest for the future For personal use only Improved geographic coverage, New Plymouth branch. New plate profiling equipment. Acquired Fair Dinkum, Garage World and Eziform. Aligned into Fletcher Easysteel for Significant investment in regional plants, equipment. customer
Slide 12: NZ steel consumption has risen steadily
NZ steel consumption has risen steadily For personal use only MAIN SEGMENTS 1,200,000 20,000 • Residential Construction 18,000 1,000,000 • Commercial/Industrial 16,000 800,000 • Manufacturing Sector 14,000 Consumption (tonnes) • Heavy Buildings (GFCF $m) 600,000 12,000 • Infrastructure and 10,000 40
Slide 13: The NZ residential market
The NZ residential market For personal use only • Housing activity is currently depressed with modest price declines Other • Pressed and stone coated steel tiles 12% service 1/4 of the roofing market Longrun Steel 39% • Sector revenue is estimated at ~NZ$180m Concrete 24% • Estimated 30,000 steel to
Slide 14: A forecast drop in residential activity is becoming reality
A forecast drop in residential activity is becoming reality For personal use only 35,000 30 Forecast 25 30,000 Consents (LH scale) 20 25,000 15 20,000 New Zealand’s first State House at Miramar in Wellington. Built by the Fletcher Construction 10 Company in 1937. 15,000 5 10,000 0 5,000 Nominal Hous
Slide 15: The NZ commercial & industrial building market
The NZ commercial & industrial building market For personal use only • Very strong steel share • Membranes are more significant than in the residential sector Delegat's winery, Blenheim • Sector revenue is estimated at ~NZ$220m • Estimated 75,000 steel tonnes Other 12% Concrete 4% Tile Steel 4% Long
Slide 16: Commercial building activity is forecast to soften as well
Commercial building activity is forecast to soften as well For personal use only Non-residential activity at 1995 - 96 prices. Gross fixed capital formation ($m) 5,000 Forecast 4,500 4,000 3,500 Installing steel plant cladding at Pacific Steel in 1962. This building housed ingot casting until 1979.
Slide 17: Manufacturing has moved off shore and spending is down
Manufacturing has moved off shore and spending is down For personal use only 7% 0.90 6% Forecast 0.80 • GDP and FX rate are fundamental drivers. 5% 0.70 4% 0.60 • Circa 300,000 tonnes are 3% 0.50 consumed: flat, merchant, special Percent US$ FX 2% 0.40 steels, etc 1% 0.30 • There has been some migra
Slide 18: Heavy construction projects continue to hold up the market
Heavy construction projects continue to hold up the market Activity at 1995-1996 prices. Gross fixed capital formation ($m) For personal use only 5,000 Forecast • GDP growth went into negative territory 4,500 in Q1 2008, but genuine recession likely began in Q2 4,000 3,500 • Circa 300,000 tonnes con
Slide 19: Large scale infrastructure and engineering projects continue
Large scale infrastructure and engineering projects continue For personal use only • Fueled by government spending • Significant participants are Downer, Fletchers, Mainzeal, and Multiplex • Serviced by large regional fabricators • Steel usage of 150,000+ tonnes per annum • Upgrades to transportatio
Slide 20: Investment in power generation is forecast to be strong
Investment in power generation is forecast to be strong For personal use only • 3% of NZ’s electricity is from wind but its share is growing fast • 20% effective capacity share in Denmark, which is less windy • Medium term expectation for wind is for vicinity 1200 MW, which would consume about 25,00
Slide 21: Beyond our control but must be monitored…
Beyond our control but must be monitored… For personal use only • Kiwi/USD and AUD/USD exchange rates NZD USD Exchange Rate 1991-2008 0.9 • Export economics – dairy, seafood, beef, timber, aluminium, etc. 0.8 • Banking/credit crisis 0.7 NZ$:US$ 0.6 • Change in government policy toward spending 0.5 •
Slide 22: Steel Division - Summary
Steel Division - Summary For personal use only • Fletcher Steel is a NZ$1.5B business • Holds a unique and significant position in the Australasian region • History of growth and performance • We continue to invest for the future • Solid brands with a reputation for service and innovation Steel Divi
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