Fletcher Building Limited · NZX:FBU
Fletcher Building — FY2023 Earnings Presentation
32 slides from Fletcher Building's earnings presentation, Aug 16, 2023
Slide 1: Full Year Results to 30 June 2023
Fletcher Building Full Year Results to 30 June 2023 16 August 2023 Fletcher Building Limited
Slide 2: Important Information
Important Information This presentation has been prepared by Fletcher Building Limited and its group of companies (“Fletcher Building”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This presentation provides addi
Slide 3: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Outlook Ross Taylor Fletcher Building Limited
Slide 4: FY23 summary
FY23 summary Solid Group EBIT and EBIT margin performance overall FY23 performance EBIT $798m, up 6% vs FY22 EBIT margin 9.4%, good performance in a slowing market Net earnings $235m, includes flagged construction provisions of $255m ROFE 17.1%, balance sheet strong, solid FY23 trading cas
Slide 5: FY23 results at a glance
FY23 results at a glance Strong earnings & margin uplift driven by materials & distribution divisions despite softer market & NZ weather events Revenue ($b) EBIT1 ($m) FY23 trading highlights 8.5 8.5 756 798 Materials & distribution divisions EBIT up 18% YoY despite market volumes 5-7% lower in FY
Slide 6: FY23 results at a glance
FY23 results at a glance Strong 2H23 cash flows after rebuild of land & housing stocks; higher leverage ratio through growth investments Trading Cash Flow1 ($m) Leverage (Net Debt/EBITDA2) FY23 trading highlights 462 475 1.2x Materials & distribution divisions strong trading cash flows2 of $720m 0
Slide 7: FY23 results at a glance
FY23 results at a glance Final dividend of 16.0 cents per share declared, fully imputed; total FY23 dividends 34.0 cents per share Net Earnings ($m) EPS (cps) FY23 trading highlights 484 452 60.0 57.7 Net Earnings of $235m includes Significant Items of $301m (vs 432 53.5 $54m in FY22) mainly relat
Slide 8: Safety & Sustainability
Safety & Sustainability Continued progress as safety culture continues to be embedded; Carbon reduction on track Safety: good progress continues Sustainability: 30% lower carbon by 2030, net zero by 2050 Total Recordable Injury 12% reduction in TRIFR vs Carbon (CO2) Emissions & 19% reduction in
Slide 9: Customer & People
Customer & People Improved customer performance from better customer service, product quality & range; Employee engagement uplift Customer: driving customer solutions & services Engagement: focus on continued improvement Net Promoter Score1 Above average NPS of 40, on Employee Engagement Rating
Slide 10: Divisional performance summary
Divisional performance summary EBIT1 & margin improvements across most divisions, strong Resi in tough market Division EBIT1 EBIT1 Margin FY23 trading highlights Building Building Products, Distribution and Concrete solid operational $215m 14.9% Products2 FY22: $192m FY22: 13.2% performance in sof
Slide 11: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Outlook Ross Taylor Fletcher Building Limited
Slide 12: Income Statement
Income Statement EBIT1 improvement from materials & distribution more than offsetting lower Resi & Devt earnings Income statement Jun 2022 Jun 2023 NZ$m 12 months 12 months Var FY23 income statement Revenue 8,498 8,469 0% EBIT1 growth ahead of revenue reflects solid performance in a EBITDA 1,106 1
Slide 13: EBIT margin uplift despite softening market
EBIT margin uplift despite softening market Continued focus on operational performance delivering solid outcomes EBIT1 Margin: Materials & Distribution Divisions FY23 EBIT1 Margin Materials & distribution divisions sustained EBIT margin 9.4% 8.0% 8.3% improvement since FY19. FY23 margin up 110bps
Slide 14: Cash flow
Cash flow Solid trading cash flows particularly in materials & distribution divisions Cash flow Jun 2022 Jun 2023 NZ$m 12 months 12 months FY23 cash flows EBIT before significant items 756 798 Materials & distribution divisions: strong trading cash flows1 of Depreciation and amortisation 350 358 $
Slide 15: Working Capital
Working Capital Land & housing stocks rebuild in Resi & Devt, inventories balanced, customer collections tightly controlled Cash flow working capital movements Jun 2023 NZ$m 12 months FY23 working capital Materials and Distribution Divisions Materials & distribution divisions: • Debtors 34 Debto
Slide 16: Construction legacy projects
Construction legacy projects Material cash outflow in FY24 on NZICC & P2W will also impact cash tax payments Actual & Forecast FCC Legacy Project Cash Flows ($m) Buildings: NZICC cash outflows $105m higher (impact of $70m in FY24, $35m in FY25) in line with additional provision announced on 11 c.9
Slide 17: Iplex AU Pro-fit Pipes
Iplex AU Pro-fit Pipes Update on product quality complaints received in Western Australia Iplex Australia (Iplex AU) has received product quality complaints relating to a hot- and cold-water polybutylene pipe, Pro-fit, that it previously manufactured and sold. The Pro-fit product was sold only in
Slide 18: Capex
Capex Base capex well-controlled, above base investments underway to deliver growth opportunities Capex and Investments Jun 2022 Jun 2023 NZ$m 12 months 12 months Investment focus Base capex 213 230 Base capex includes maintenance spend, manufacturing Above Base: WWB new plant 156 90 automation im
Slide 19: Net debt
Net debt Investment initiatives underway, returns to shareholders and tax payments prominent features of FY23 Net Debt: Jun 22 to Jun 23 (NZ$m) 24 842 311 191 641 1,412 62 92 240 44 670 21 Net Debt Inventory - Resi & Dev't Construction Other Funding Net Tax paid Dividend Other 1 Trading Net Debt Jun
Slide 20: Leverage
Leverage Increased to lower end of target range as flagged, balance sheet continues to be in a strong position Leverage (Net Debt / EBITDA1) Leverage and Balance Sheet Group leverage higher at FY23 due to growth investments and Resi & Devt – as flagged 2.0x Strong balance sheet supports ongoing
Slide 21: Funding
Funding Group is well-funded and has strong liquidity of $1.4b Debt facilities and drawings Facilities Drawings Debt maturity profile ($m) NZ$m 30 Jun 23 30 Jun 23 849 Bank Loans 1,960 946 805 USPP 458 458 Capital Notes 343 343 664 Other 30 30 600 Total 2,791 1,777 325 380 735 Undrawn credit lines
Slide 22: Dividend
Dividend Final dividend of 16.0 cents per share Dividend (cps) FY23 dividend FY23 full-year dividend of 34 cps is a 59% pay-out ratio1 40.0 Reflects a solid FY23 earnings result, while also having regard to the 34.0 expected cash-flow impact of the FCC legacy projects FY23 final dividend fully
Slide 23: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Outlook Ross Taylor Fletcher Building Limited
Slide 24: Outlook
Outlook Well positioned for cycle, disciplines & culture driving performance, with clear pathway for growth Solid FY23 delivered in softer trading conditions Construction legacy nearing completion, some risk to manage FY24: Materials & Distribution focus on preserving operational gains as ma
Slide 25: Appendix
Appendix Fletcher Building Limited
Slide 26: Building Products
Building Products FY23 results: delivery of new products, continued capex investment & margin performance improvement Gross Revenue ($m) EBIT ($m)1 FY23 trading performance 1,458 1,443 215 Revenue down 1%: softening 2H23 resi market & persistent wet 192 weather; focus on customer offerings and eff
Slide 27: Distribution
Distribution FY23 results: return to more normal trading conditions Gross Revenue ($m) EBIT ($m)1 FY23 trading performance 1,789 1,824 137 141 Revenue up 2%: improved pricing & sales disciplines, customer centricity focus with sales capability enhanced and rollout of Sales & Service Transformation
Slide 28: Concrete
Concrete FY23 results: strong performance despite softening resi market, inflation & weather events Gross Revenue ($m) EBIT ($m)1 FY23 trading performance 1,033 1,085 156 Revenue up 5%: commercial & infra. market supportive but 146 softening resi market & wet weather EBIT up 7% and EBIT margin o
Slide 29: Australia
Australia FY23 results: higher margin category & customer focus through enhanced product offerings & digital Gross Revenue ($m) EBIT ($m)1 FY23 trading performance 2,806 3,016 180 Revenue up 7%: supportive civil market, but softening 2H23 resi. & A&A sector; strong pricing discipline, core product
Slide 30: Residential and Development
Residential and Development FY23 results: lower house sales but solid result in challenging market Gross Revenue ($m) EBIT ($m)1 FY23 trading performance 692 217 Revenue down 12% with lower sales, prices and Industrial 607 48 Development. In Residential: 617 unit sales (vs. 670 in FY22), solid 147
Slide 31: Construction
Construction FY23 results: three roads opened, good BPC but weather impacts, esp in Higgins Gross Revenue1 ($m) EBIT ($m)1,2 FY23 trading performance 1,573 1,325 32 Revenue down 16%: reduced volume of work on legacy roading & 28 vertical build EBIT $32m: BPC performed well; while Higgins lower d
Slide 32: Divisional revenue exposure and FB revenue by market
Divisional revenue exposure and FB revenue by market Divisional Revenue Exposure by Sector Total FB Revenue by Market (%) AU Building Resi, 46% Com, 33% Infra, 21% Infrastructure Products AU NZ Commercial Residential 4% 9% Distribution Resi, 73% Com, 27% 33% AU 20% Residential Concrete Resi, 43% Com