Boral — Investor Presentation (December 2003)
17 slides from Boral's investor presentation, December 2003
Slide 1: Boral USA
Boral USA December 2003 Outline • Business overview • Delivering a “Perform & Grow” strategy • Outlook • Boral USA Bricks update • Boral Material Technologies Inc update 1
Slide 2: Boral USA's operations today
Boral USA’s operations today FY03 sales contribution1 FY03 USA revenue split USA Fly ash 23% Concrete rooftiles2 Clay rooftiles Bricks Total revenue - A$4.2bn1 1 Includes revenue from MonierLifetile and Asian joint ventures which are equity accounted 2 MonierLifetile – 50% joint venture with Lafarge
Slide 3: Boral USA's operations today; History of Boral in the USA
Boral USA’s operations today Bricks • 23 plants across eight states, primarily in Southeastern and Southwestern USA • 52 direct selling sites, including 23 Franklin locations Boral Material Technologies Inc (BMTI) • 40 locations including operations at electrical utility plants, fly ash terminals an
Slide 4: Boral USA Financials
Boral USA’s industry exposure Infrastructure Insitutional 7% 8% Commercial 12% Dwelling 73% Boral USA Financials 4
Slide 5: Performance underpinned by robust market conditions
Performance underpinned by robust market conditions Adjusted1 US Revenue, EBITDA and EBIT EBIT (RHS) EBITDA (RHS) Sales (LHS) US$m US$m 600 120 500 100 400 80 300 60 200 40 100 20 0 0 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 1 Adjusted for Boral’s share of the MonierLifetile joint vent
Slide 6: Perform and Grow: operational improvement and growth initiatives
Perform and Grow: operational improvement initiatives Bricks • Increasing resale revenues – e.g. cast stone and mortar • Real production costs (ex-gas) flat to declining over the last five years MonierLifetile • Rationalized plants • Centralized customer service function • Increasing operational eff
Slide 7: Environmental management / initiatives
Environmental management / initiatives • USA division has a dedicated Environmental, Safety & Health Director and two Environmental Managers • To date emphasis has been on regulatory compliance – No material fines received over last four financial years (total <US$30k) – 82% of internally identified
Slide 8: Outlook: US dwelling activity expected to remain strong
Outlook US dwelling activity expected to remain strong USA Brick States* – Value of Work Commenced US$1992, (Billions). Seasonally adjusted Forecast 180 160 140 120 Non- dwelling 100 80 60 Dwelling 40 20 0 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04f FY05f FY06f F
Slide 9: Boral USA Bricks update
FY2004 Outlook • US$ earnings steady • Lower A$ earnings • Sustained high level of US housing activity • Additional 9 months contribution from Franklin Brick • Improved results from clay and concrete rooftiles • US$10m negative impact from gas price increases Boral USA Bricks update 9
Slide 10: Business overview: Boral Bricks 2003
Business overview • Largest brick company in the USA • Produces all product segments – Face – Woodmould – Commercial – Pavers – Shapes • Low cost supplier • Strong distributor relationships • Industry leading customer service • Following the acquisition of Franklin, enlarged distribution network • 5
Slide 11: Boral is the largest player in a consolidating market
Boral is the largest player in a consolidating market USA Brick market share 1995 2003 Others 38% Acme 10% Others Acme Boral 9.5% Boral Cherokee Sanford 5% US Brick 12% CRH General Bickerstaff 8% Wienerberger Hanson Shale 10.5% Glen-Gery 7% Total = 7.0bn SBE Total = 8.1bn SBE Regional wall share and
Slide 12: USA siding market: competitive cladding versus brick
USA siding market: Competitive cladding versus brick Vinyl Bricks Wood Fibre cement Stucco Other 35% 30% 25% 20% 15% 10% 5% 0% 1995 1996 1997 1998 1999 2000 2001 2002 Source: US Census Bureau and NAHB Why did Boral buy Franklin Brick? • Size (largest independent U.S. brick distributor) • Strategic l
Slide 13: Franklin Brick acquisition secured distribution of key markets
Franklin Brick acquisition secured distribution of key markets Nashville Boral Plants Boral Retail Franklin Brick Atlanta Shaded states represent 74% of U.S. brick consumption Significant synergy benefits from Franklin Brick are being realised Synergies • Shipping logistics • Distribution centers •
Slide 14: Vision and E-commerce; average selling price of brick
Boral Vision and E-commerce • Started with static reporting • Additional capabilities added (FY03) • Moving toward interactive online ordering www.boralbricks.com this year Average selling price of brick has remained relatively flat Calendar year average ASP per 1000 brick US$ 200 190 180 170 160 15
Slide 15: Boral Material Technologies Inc. - update
Bricks - Looking forward • Strengthen direct selling / Franklin Brick integration • Ongoing manufacturing cost reductions • Alternative fuels/ optimum fuel management • Price management • Industry leading customer service Boral Material Technologies Inc. - update 15
Slide 16: Overview of BMTI
Overview of BMTI • One of the largest marketers and distributors of coal combustion products in the USA • Fly ash has cementitious properties • Used as a cement substitute in construction materials markets • 40 locations including operations at electrical utility plants, fly ash terminals, and sales
Slide 17: Rationale for exit from Admixtures business
Rationale for exit from Admixtures business • BMTI’s position in admixtures was not a leadership position (#1 or #2) • Lack of significant competitive advantage • Strategic intent to focus on better returns from fly ash - Contracts - Quality - Technology - Marketing 17