Boral — H1 2006 Earnings Presentation
24 slides from Boral's earnings presentation, Feb 8, 2006
Slide 1: Results for the half year to December 2005
Boral Results for the half year to December 2005 CEO & Managing Director, Rod Pearse 8 February 2006 Agenda Financial Highlights and Markets Review Financial Results Divisional Performance Perform & Grow Strategy Outlook Results for the half year to December 2005 2 1
Slide 2: Financial Highlights & Markets Review
Midland Brick Kiln #11 Financial Highlights & Markets Review Financial highlights Revenue 8% to $2,343m EBITDA steady at $393m EBIT 3% to $293m Profit after tax 9% to $172m EPS 9% to 29.5 cents Interim dividend fully franked steady at 17.0 cents Return on equity (MAT) 14% to 13.6% Note - Six months
Slide 3: Performance highlights
Performance highlights Construction Materials – Strong volumes & effective pricing; $136m EBIT down 13% due to QEU timing, Waurn Ponds commissioning costs & some unrecovered fuel costs. EBIT steady excluding QEU Building Products – Volumes down due to lower dwellings but sound pricing outcomes;
Slide 4: Mixed market conditions
Mixed market conditions Market changes – 1H2005 vs 1H2006 20% Australia US – Boral’s US States4 11% 9% 5% -8% Australian Australian Australian USA USA Dwelling Non-dwelling RHS&B Dwelling Non-dwelling Approvals1 VWA1 VWD2 Permits VWC3 1. Source: ABS 2. $97/98 value of work done. Source: ABS, BIS Shr
Slide 5: Financial Results
Sydney detached housing construction activity is the lowest for 30 years Building Approvals for Detached Houses (MAT, December 1984 to December 2005) 30,000 25,000 20,000 Melbourne 15,000 Perth 10,000 Brisbane Sydney Adelaide, 5,000 Darwin, Hobart 0 Dec-84 Dec-85 Dec-86 Dec-87 Dec-88 Dec-89 Dec-90 D
Slide 6: Profit after tax down 9% to $172m
Profit after tax down 9% to $172m A$m 1H06 1H051 %∆ Revenue 2,343 2,161 8 EBITDA 393 395 - EBIT 293 302 (3) Net interest 46 33 40 Profit before tax 247 269 (8) Tax 74 79 (7) Profit after tax 172 189 (9) 1. Six months to Dec-04 includes a one-off pre-tax cost of $16.2m or $11.3m after tax for the Ade
Slide 7: Margins supported by effective price & cost management
Despite housing downturn, margins supported by effective price & cost management EBIT1 / Sales EBITDA1 / Sales 16% 20% 18.3% 14.0% 16.8% 12.5% 16% 12% 12% 8% 8% 4% 4% 0% 0% FY 7 98 FY 9 00 FY 1 02 FY 3 04 05 1H 5 06 97 98 99 00 01 02 03 04 05 05 06 9 9 0 0 0 FY FY FY FY FY 1H FY FY FY FY FY FY FY FY
Slide 8: Boral's balance sheet is in good shape
Boral’s balance sheet is in good shape As at Dec-05 Dec-04 A$m Net debt 1,564 1,183 Net debt/ equity 60% 50% Net debt/ (net debt + equity) 38% 33% Net interest cover 6.4x 9.2x Funds employed 4,155 3,542 EBITDA margin on sales 16.8% 18.3% Results for the half year to December 2005 15 And return on sh
Slide 9: Earnings and dividends per share have grown strongly
Earnings and dividends per share have grown strongly since demerger Cents / share Dividend Grossed up dividend EPS 70 64.2 60.5 60 56.1 50 42.6 40 29.8 30 27.0 20 33 34 26 10 18 18 21 0 CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 Results for the half year to December 2005 17 Safety performance has con
Slide 10: Divisional Performance
Engineered Flooring, Murwillumbah Divisional Performance Australian EBIT earnings down; offshore up A$m 1H05 1H06 13% 156 136 24% 23% 88 83 71 64 32% 12 8 Construction Materials, USA Building Products, Asia Australia Australia Results for the half year to December 2005 20 10
Slide 11: Construction Materials: volumes & prices positives
Construction Materials: volumes & prices positives; fuel, commissioning & other costs negatives 6 months to Dec-05 Dec-04 %∆ A$m $bn 1H Sales 2H Sales EBIT/ Sales 1 2.4 16% Sales 1,179 1,073 10 14% 2.0 EBITDA 195 211 (8) 12% 1.6 11.6% EBIT 136 156 (13) 10% Funds Empl. 2,154 1,886 14 1.2 8% % 6% 0.8
Slide 12: Construction Materials: underlying EBIT steady; QEU timing
Construction Materials: underlying EBIT steady; QEU timing Quarries and concrete: revenues up 8%; stronger market volumes and higher prices substantially absorbed by higher fuel, cement & other costs Asphalt: revenues and margins up; increases in fuel and bitumen costs fully recovered Transpor
Slide 13: Building Products: lower volumes & steady prices
Building Products: lower volumes & steady prices External sales hoh ∆ 1H06 1H05 %∆ A$m prices / volume Bricks 149 155 (4) Roofing 54 58 (6) Masonry 68 71 (5) Plasterboard 166 166 - Timber 113 98 16 Windows 70 70 - TOTAL 621 618 1 Results for the half year to December 2005 25 Building Products: lower
Slide 14: USA: record earnings & margins
USA: record earnings & margins 6 months to Dec-05 Dec-04 %∆ A$m 1,000 1H Sales 2H Sales EBIT/ Sales1 25% US$m Sales 340 293 16 800 20% 19.4% EBIT 66 52 26 600 15% A$m Sales 455 398 14 400 10% EBIT 88 71 24 Funds Empl. 829 688 21 200 5% % EBIT/ Sales 19.4 17.8 0 0% FY99 FY00 FY01 FY02 FY03 FY04 FY05
Slide 15: USA: Perform & Grow strategy on track
USA: “Perform & Grow” strategy on track Bricks: earnings up with strong selling prices and increased direct distribution sales offsetting lower volumes due to plant shuts for upgrades Concrete rooftiles: profit lift driven by strong demand and price increases sufficient to recover increases in c
Slide 16: Perform & Grow Strategy
Asia: Plasterboard & Construction Materials earnings weaker EBIT down 32% to $8m Plasterboard JV contribution of $5m, 31% below last year reflecting one-off adverse adjustments; underlying result steady – South Korean market weak impacting price and volumes – Thailand profits improved with firme
Slide 17: We continue to deliver against objectives
We continue to deliver against objectives Objectives Performance 1. Exceed WACC through ROFE1 of 14.3% exceeds WACC the cycle Returns compare well against 2. Deliver better financial competitors in like markets. Whilst returns than the overall returns from Asia were competition in depressed in CY200
Slide 18: Offshore earnings now 32% of total
A solid lift in offshore earnings which now contributes 32% of total earnings Building Products, Australia Construction Materials, Australia EBIT Offshore 1H00 1H01 1H02 1H03 1H04 1H05 1H06 FY10 Results for the half year to December 2005 35 Growth: some $380m of previously announced projects are und
Slide 19: Growth: $320m of new growth capex committed
Growth: we have also committed to $320m of new growth capex since 30 June, 2005 Expected Growth project Benefits benefits from: Vietnam Jun-06 Q Commence plasterboard manufacturing – 10m m2 (Plasterboard, LBGA) Plasterboard New 40m m2 plant - $106m net investment Dec-07 Q (Qld) Bricks USA
Slide 20: Grow: US$55m new Indiana Brick Plant investment
Grow: US$55m new Indiana Brick Plant investment 120m SBE capacity, low cost plant in profitable region Favorable supply/demand ratio in region MN Completion in Dec-2007 quarter WI Good access to resources MI IA Alternative fuel firing – leading practice of using landfill gas IL IN OH Goo
Slide 21: Grow: US$69m MonierLifetile investments
Grow: US$69m MonierLifetile Florida & Nevada Concrete Roof Tile Plant investments Total investment of US$69m for 900,000 squares1 p.a. of new capacity Lake Wales to support Florida and growth in Georgia / Carolinas; Las Vegas plant will support growth in S.California, Nevada & Arizona Produc
Slide 22: BIS Shrapnel expect Aus construction activity to remain robust in FY06
BIS Shrapnel expect Aus construction activity to remain robust in FY06, softening in FY07 Australia – Value of Work Done A$97/98 billion. Seasonally adjusted 55 % change Dwelling (incl A&A) 50 0.8 (1.7) (3.0) Roads, Highways, Subd & bridges 45 Non-Dwelling 40 35 (2.8) (5.1) (2.7) 30 25 20 (3.9) (2.1
Slide 23: Outlook for FY2006
Asian construction demand expected to grow South Korea Thailand Indonesia China - Eastern Value of construction orders Gross fixed capital Value of completion. Total construction received. Trillion Won formation. Billion Bhat Trillion Rp Output. Billion Yuan 70 900 30 2,500 60 800 25 700 2,000 50 60
Slide 24: Capital Expenditure
Supplementary Information Results for the half year to December 2005 47 Strong underlying margins and balance sheet support ongoing growth 700 Growth capex 90 Stay-in-business capex 80 600 Net Debt/Equity (%) Capital Expenditure (A$m) 70 500 Target 60 Gearing 400 Range 50 Net Debt / Equity (%) 300 4