James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Investor Presentation (August 2003)
34 slides from James Hardie Industries's investor presentation, Aug 8, 2003
Slide 1: High Growth From Unique Technology June 2003
High Growth From Unique Technology June 2003
Slide 2: Attractive Investment Attributes
Focussed on Fibre Cement High growth Unique proprietary technology Sustainable competitive advantage Strong cashflows and balance sheet Low cyclical risk Relentless will to win Attractive Investment Attributes
Slide 3: First to Develop Fibre Cement
First to Develop Fibre Cement James Hardie pioneered the development of fibre cement technology in the 1980s Fibre Cement Sand Cellulose Fibre Water Portland Cement
Slide 4: Many Product Applications
Many Product Applications External siding/soffit lining Internal wall/floor wet area lining Trim and fascia Ceiling lining and flooring External/internal wall systems Partitioning Commercial facades Decorative columns Fencing Drainage pipes
Slide 5: Unique Technology and Scale
Unique Technology and Scale Sustainable Competitive Advantage Unique plant engineering and proprietary process technology and product formulations Superior capital cost efficiency - plant capital cost 1/2 that of competitors Largest, lowest cost manufacturer - plant operating cost 20-30% lower than
Slide 6: R&D Is a Key Driver of Growth
Capabilities and resources 120 scientists, engineers and technicians 30% increase in spend to US$21 million in FY03 - 3% of sales Core projects new proprietary engineered raw materials new proprietary product formulations new engineering and proprietary process technologies lightweight and durable p
Slide 7: Vision and Strategy
Vision and Strategy Aggressively grow the market for fibre cement Secure differentiated positions by leveraging: technology products scale cost market position brand recognition Strong top line growth High shares of large market segments Attractive margins Industry Leadership and Profitable Growth
Slide 8: Balanced Growth Portfolio
Balanced Growth Portfolio James Hardie Business Portfolio - FY 03 GCE Sales EBIT USA - - Established high growth/high return 70% 75% 89% Asia Pacific - - Established high return 21% 24% 17% Other - - Emerging opportunities (Pipes, Roofing, Europe, Chile) 9% 1% (6%) Total 100% 100% 100%
Slide 9: USA Fibre Cement
USA Fibre Cement James Hardie is the largest lowest cost producer of fibre cement in the USA Plant Locations Flat Sheet Plants Capacity (mmsf) Fontana, California 180 Plant City, Florida 300 Cleburne, Texas 500 Tacoma, Washington 200 Peru, Illinois 400 Waxahachie, Texas 360 * Blandon, Pennsylvania 2
Slide 10: USA Fibre Cement Primary Demand
USA Fibre Cement Primary Demand Create awareness at the consumer level Target the builder and contractor (decision maker) Access the market thru traditional channels Category Share Brand program Differentiated product offering Long term price positioning Performance Indicators (Measurements) Revenue
Slide 11: Superior Product Performance vs Engineered Wood
Superior Product Performance Fibre Cement is more durable than wood and engineered wood Fibre Cement Superior Durability Moisture Resistant Fire Resistant Weather Resistant Termite Proof Won't Warp Won't Crack Won't Rot Holds Paint Longer Won't Delaminate ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Engineer
Slide 12: Superior Product Performance vs Vinyl
Superior Product Performance Fibre Cement looks and performs better than vinyl Vinyl Fire Resistant Hail Resistant Wind Resistant Won't Warp Won't Buckle Colour Lasts Longer Strong and Rigid Expands/Contracts Withstands Impact Dimensional Stability Won't Blister Won't Crack ? ? ? ? ? ? ? ? ? ? ? ? ?
Slide 13: Strong Top Line Growth
Strong Top Line Growth 0 200 400 600 800 1000 1200 1400 90 91 92 93 94 95 96 97 98 99 00 01 02 03 VOLUME (MMSF) 0 100 200 300 400 500 600 REVENUE (USDM) Volume Revenue
Slide 14: Numerous Growth Dimensions
Numerous Growth Dimensions Soffit Growth 1997 1998 1999 2000 2001 2002 2003 FY00 FY01 FY02 FY03 Retail Growth 1997 1998 1999 2000 2001 2002 2003 Siding Growth Trim Growth FY00 FY01 FY02 FY03
Slide 15: Mix Is Driving Price
Mix Is Driving Price * Before restructuring and other operating expenses Average Price US$/msf 380 400 420 440 460 480 FY98 FY99 FY00 FY01 FY02 FY03 Higher priced differentiated products are driving average price growth
Slide 16: Growing Share - Siding
Growing Share - Siding 13% of siding market vs long term target of 35-40% Vinyl 49% Plywood 1% OSB 6% Hardboard 5% Aluminum 1% Stucco 7% Cedar 5% Masonry 2% Fibre Cement 13% Brick 8% Other 3%
Slide 17: Growing Share - Siding
Growing Share - Siding Masonary Plywood Aluminum 4% 2% New Construction Southern Division Vinyl 10% 21% Wood 1% Other FC Stucco 26% 28% 0% Hardboard 4% OSB 4% James Hardie US New Construction Siding Market Stucco 15% Masonry 20% Wood 5% OSB 2% Hardboard 4% Vinyl 26% Other FC 1% James Hardie 20% Syn
Slide 18: Growing Share - Siding (ColorPlus)
Growing Share - Siding Sky Gray Natural Cedar Oak Brown Pewter Gray Chestnut Brown Sandstone Khaki Brown Monterey Gray Seclusion Sky Gray ColorPlusTM pre-painted siding Helps take share from vinyl Lifts selling prices Lifts margins
Slide 19: Growing Share - Backer
Growing Share - Backer Wonderboard 19% Certainteed 1% Dens-Shield 8% Util-A-Crete 7% Permabase 8% Hardibacker 28% Durock 29%
Slide 20: Growing Share - Backer
Growing Share - Backer HardiBacker 1/4" Backer Market Dens-Shield 0% 73% PermaBase 4% Util-A-Crete 3% Wonderboard 12% Durock 8% Very strong in 1/4" segment Dens-Shield G-2 Hardibacker PermaBase Util-A-Crete Wonderboard Durock 10% of 1/2" segment - target > 40 %
Slide 21: EBIT and Margins - Growth Is Profitable
0 20 40 60 80 100 120 140 160 FY99 FY00 FY01 FY02 FY03 EBIT (USDM) 0% 5% 10% 15% 20% 25% 30% EBIT % Sales EBIT EBIT% SALES EBIT and Margins - Last 5 years - CAGR 33% Growth is Profitable
Slide 22: Long Term Growth USA Fibre Cement Targets
Long Term Growth USA Fibre Cement Targets 20% Revenue Growth 20% EBIT/Revenue Ratio
Slide 23: Low Shares of Large Markets
Low Shares of Large Markets Product Category Market Size (bsf) New Construction - Siding, Fascia & Soffits 3.5 - Trim 1.3 Total New 4.8 Repair & Remodel - Siding, Fascia & Soffits 3.9 - Trim 1.6 Total R&R 5.4 Grand Total 10.2 bsf bsf = JH standard feet in billion square feet bsf = JH standard feet i
Slide 24: Overall Share Could Double in Years
Overall Share Could Double in 5 Years 2002 James Hardie Share USA Exterior Products Market 10.2 bsf 2007 James Hardie Share USA Exterior Products Market 11.0 bsf James Hardie 11% Other 89% James Hardie 20% Other 80%
Slide 25: Backer Could Grow Even Faster
Backer Could Grow Even Faster 2002 USA Interior Cement Board Market 0.95bsf 2007 USA Interior Cement Board Market 1.1bsf James Hardie 20% Other 80% James Hardie 40% Other 60%
Slide 26: Australia/New Zealand
Australia/New Zealand Grow the market Increase category share Higher value differentiated products Flatten the structure Simplify the business Lower delivered cost Lower SG&A Emphasise step change High performance culture Increase revenue and margins
Slide 27: Philippines and Asia
Philippines and Asia Manufacturing plant commissioned 1999 FY03 sales US$18 million, EBIT slightly positive Fibre cement as substitute for plywood 25% market share domestically Established low cost regional manufacturing hub Low GDP per capita is an obstacle for developing a differentiated JH busine
Slide 28: Chile and South America
Chile and South America Manufacturing plant commissioned 2001 Low cost manufacturing, rapid market penetration 23% share of flat sheet market already achieved Currently operating at EBIT breakeven Plant has been certified to import US products
Slide 29: Pipes
USA manufacturing plant commissioned 2001 Product has advantages over reinforced steel concrete pipes Lower cost to make and install Long term targets national business 4-5 manufacturing plants large share of US$2 billion market Pipes
Slide 30: Roofing
Roofing USA market entry Development of fibre cement roofing technology US roofing market 13 bsf (US siding market 10.2 bsf) Initial target market 2.1 bsf to compete with wood shake superior durability and fire performance US$12m pilot plant being commissioned
Slide 31: Europe
Europe Initially pursuing a low cost, low risk strategy Differentiated products imported from US G2 Backer XLD Trim ColorPlus Siding Focussed market development UK and France JH business model differentiated from current industry approach
Slide 32: High Growth and Attractive Returns
High Growth and Attractive Returns Targeted Long Term Financial Targets Revenue growth > 15% p.a. EBIT Margins > 15% ROA > 15%
Slide 33: Disclaimer
Disclaimer This presentation contains forward-looking statements. Words such as "believe,'' "anticipate,'' "plan,'' "expect,'' "intend,'' "target,'' "estimate,'' "project,'' "predict,'' "forecast,'' "guideline,'' "should,'' "aim'' and similar expressions are intended to identify forward-looking stat
Slide 34: High Growth From Unique Technology June 2003
High Growth From Unique Technology June 2003
Hardie James Industries — Investor Presentation (August 2003) on 6ix