James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Q2 FY2012 Earnings Presentation
56 slides from James Hardie Industries's earnings presentation, Nov 18, 2011
Slide 1: Q2 FY12 Management Presentation
Exhibit 99.4 James Q2 17 November FY12 Hardie MANAGEMENT 2011 PRESENTATION
Slide 2: Disclaimer
James This DISCLAIMER on by forward-looking proceedings; (ASIC); •personal mortgages Words expressions looking Forward-looking their statements. Hardie an increases environmental domicile customer the segments; Australian, cause expectations 2 projections expectations statements asbestos Forms the F
Slide 3: Agenda
James •AGENDA Questions In document or for debt profit asbestos”, stated, 3 Overview Financial this derived measuring payback”, excluding Hardie Management results starting and “Effective from Review andand its Answers “Net Operating certain asbestos, sales comparisons on –Presentation, debt tax Rus
Slide 4: Operating Review
James Gries, OPERATING Louis HardieCEO REVIEW
Slide 5: Group Overview
James GROUP offset •partially US$ FY Net Diluted expenses 1 5 As 2nd Half Interim Comparisons 2012 operating of Millions quarter by year Hardie 30 earnings offset OVERVIEW FY higher dividend and September operating 2011 operating tax Q2 profit by are freight per adjustments Q2% higher Change of ofex
Slide 6: USA and Europe Fibre Cement: 2nd Quarter Comparisons
James USA 2nd Net Sales Average EBIT 1 6 Comparisons Sales Quarter AND Volume up Margin Hardie Price 20% upEUROPE Result 14% up to flat are US$47.3 1.1 14% to atof 1pts US$228.7 US$659 FIBRE the toto 347.1 2nd million 20.7% CEMENT per quarter mmsf million msf of the current fiscal year versus the 2n
Slide 7: USA and Europe Fibre Cement: Half Year Comparisons
James USA Half Net Sales Average EBIT 1 7 Comparisons Sales Year AND Volume flat Margin Hardie Price at up Result EUROPE US$95.3 3% down up up are to 13% 1%of US$448.5 0.8 to FIBRE to million the679.6 pts US$660 half toCEMENT mmsf 21.2% year million perofmsf the current fiscal year versus the half y
Slide 8: USA and Europe Fibre Cement Average Net Sales Price
James USA Average 680 U FY06 1 8 S$660 FY12 640 AND FY07 Hardie average 600 NetEUROPE FY08 560 Sales net 520 FY09 Price sales FIBRE 480(US FY10 price 440CEMENT dollars) 400 represents FY11360Q2 FY12 2nd quarter year to date; other years presented are for the full year
Slide 9: USA and Europe Fibre Cement Q2 EBIT and EBIT Margin
JHExcludes USA 140 Q2 35 EBIT 1 9 30 ® FY04 120 AND James and US$M MARGIN EBIT 25100 20 Q2 EBIT EUROPE impairment Margin 15 Hardie 80 FY05 10 60 Margin %540 Q2 0FIBRE 20 FY06 charges 10 CEMENT Q2ofFY07 US$45.6 Q2 FY08 million Q2inFY09 Q4 FY08 Q2 FY10 Q2 FY11 Q2 FY12
Slide 10: JH USA Primary Market Performance
JH ® USA Primary 30% Q106 %JHBP NC/R&R Rolling All 10 market 20% AND James Q206 4Qtr Growth Growth 10% and EUROPE Q306 Hardie - NC/R&R JHBP market 0% (sdft) Performance Q406 -10% Growth FIBRE share Q107 Growth -20%figures (sdft) CEMENT Q207 -30%are Q307 -40% management Q407 Q108‘s Q208 estimates. Q3
Slide 11: Asia Pacific Fibre Cement: 2nd Quarter Comparisons
JHComparisons ASIA 2nd Net Sales Average EBIT 1 11 ®Sales Quarter Volume James up Margin PACIFIC Price 42% upResult Hardie 18% up to down are FIBRE US$25.5 4.2 6% toof 14% pts US$102.9 tothe 106.1 CEMENT to to2nd million 24.8% A$923 mmsf quarter million perof msf the current fiscal year versus the 2
Slide 12: Asia Pacific Fibre Cement: Half Year Comparisons
JHComparisons ASIA Half Net Sales Average EBIT 1 12 ®Sales Year Volume James up Margin PACIFIC Price 17% up Result Hardie 14% up down to down are FIBRE US$46.6 0.5 1toof1% 2% pts US$196.7 theCEMENT to tohalf million 203.8 23.7% A$914 year million mmsf per of the msfcurrent fiscal year versus the hal
Slide 13: Group 2nd Quarter Summary
JHComparisons GROUP USA Increased, Increased Continuing Asia Weaker Higher cost Lower Partially resulting 1 13 ®ofPacific and James raw manufacturing SG&A sales markets 2nd offset from Europe freight steady material primary Hardie Fibre volume, QUARTER geographic expenses by are incosts Fibre demand
Slide 14: Total U.S. Housing Starts
JH ®400 TOTAL U.S. (Thousands 600 Q1`05 -9% -44.2% Housing 14 -6.6% Housing James Q2`05 -45.8% USA 200 starts -4.9% of Hardie 0HOUSING Q3`05 Starts Starts) -200 %Growth -50.6% -19% -400 Calendar Q4`05 30% -19.0% (same -600 STARTS Q1`06 20% Quarters -800 QtrPY) -21.3% 10% Q2`06 –-1000 US0% -25% CENSU
Slide 15: Group Outlook
JH ®Pacific GROUP United Although Pulp Freight Company share Asia Australia: New Philippines: 15 prices Zealand: and James States costs OUTLOOK industry the initiatives, despite have the Hardie have exterior activity business softened aincreased, activity recent such cladding in continues the but cu
Slide 16: Group Outlook: Key Priorities
JH ®company’s GROUP Key Grow Overall The Deliver Continue Increase Build 16 Priorities James the primary Group primary market manufacturing OUTLOOK to operational rollout shift Hardie demand Strategy key focus penetration demand to our amedium strength higher isand job efficiency to: growth pack ext
Slide 17: Financial Review
James Hardie FINANCIAL Russell Chenu,REVIEW CFO
Slide 18: Earnings and Operations Overview
James Earnings Operations OVERVIEW expenses US Strong Interim As 18 of sales 30 Hardie net dividend September volume this (primarily operating quarter of in the US4.0 in 2011, cash reflect the prior flow US the cents increased corresponding company business) has perenabled security sales hadavolume,
Slide 19: Consequences of Changes in A$/US$ Exchange Rate
James CONSEQUENCES A$/US$ 31 0.60 0.70 0.80 0.90 1.00 1.10 1.20 Earnings Unfavourable Favourable March 19 MarHardie 2011 08 Exchange Balance 30 impact Jun impact Sheet 08 from Rate OF 30 onCHANGES Sep translation corporate 08 31 costs Dec of – A$ Asia asbestos 08 incurred VERSUS 31 Pacific Mar liabi
Slide 20: Q2 Results US$
James RESULTS US$ Gross SG&A Research Asbestos EBIT Other Income Net 1 amended 20The sales interest operating Millions 143.6 expense second profit Hardie expenses tax assessment. adjustments 331.6 &–expense expense development (56.2) 112.6 Q2 quarter Q2 profit (0.5) 287.6 (48.6) ‘12 93.4 - (2.9) 1(l
Slide 21: Q2 Results US$ (continued)
James RESULTS US$ Asbestos Asbestos: Other ASIC Tax Net expenses 1 2 amended 21The Includes operating expense adjustments Millions asbestos related second Hardie assessment. and adjustments AICF – related Q2 expenses tax quarter Q2 profit 1(0.1) (CONTINUED) 2SG&A adjustments ‘12 0.3 to (loss) exclud
Slide 22: Half Year Results US$
James RESULTS US$ HY Gross SG&A Research Asbestos EBIT Other Income Net 1 assessment. 22The ‘12 sales interest operating Millions 161.1 expense half profit Hardie expenses HY tax adjustments 645.2 &year –expense expense ‘11 development Readers 70.8 220.8 Half profit (2.0) results 606.0 %(94.1) -Year
Slide 23: Half Year Results US$ (continued)
James RESULTS US$ HY Asbestos Asbestos: Other ASIC Tax Net expenses 1 2 assessment. 23The Includes ‘12 operating expense adjustments Millions asbestos related half Hardie HYand adjustments AICF year –‘11 Readers related Half expenses tax profit 1results %2-SG&A adjustments Year (0.7) 0.2 Change to (
Slide 24: Q2 Segment Net Sales US$
James SEGMENT US$ Q2 USA Asia Total 24 ‘12 Millions Pacific and 331.6 Hardie Q2Europe ‘11 287.6 NET Fibre % Fibre SALES Change 15 Cement Cement –102.9 Q2 228.7 86.9 200.7 18 14
Slide 25: Half Year Segment Net Sales US$
James SEGMENT US$ HY USA Asia Total 25 ‘12 Millions Pacific and 645.2 Hardie HYEurope 606.0 ‘11 NET Fibre %Fibre SALES 6Cement Change Cement –196.7 Half448.5 Year 172.3433.7 14 3
Slide 26: Q2 Segment EBIT US$
James SEGMENT US$ Q2 USA Asia Research General expenses Asbestos AICF ASIC Total 1 segment 26Research ’12 Millions Pacific and segment EBIT SG&A (expenses) Hardie Q2 corporate rather (9.7) 58.0 adjustments Europe &’11 and excluding 143.6 development EBIT Fibre expenses 42.1 EBIT (10.2) %than develop
Slide 27: Half Year Segment EBIT US$
James SEGMENT US$ HY USA Asia Research General expenses Asbestos AICF ASIC Total 1 segment 27Research ‘12 Millions Pacific and segment EBIT SG&A (expenses) Hardie HY corporate rather (17.2) 114.5 adjustments Europe &and excluding 161.1 ‘11 development EBIT Fibre expenses EBIT than 107.0 development
Slide 28: Q2 Income Tax Expense US$
James INCOME US$ Asbestos Other Operating asbestos Asbestos: Tax Income Effective tax 1 2 amended 28The Includes adjustments expense adjustments Millions asbestos second Hardie tax 54.9 assessment. adjustments tax TAX profit AICF expense related rate quarter 47.3 Q2 1EXPENSE 25.9% (loss) before 2(0.
Slide 29: Half Year Income Tax Expense US$
James INCOME US$ Asbestos Other Operating asbestos Asbestos: Tax Income Effective tax 1 2 assessment. 29The Includes adjustments expense adjustments Millions asbestos half Hardie tax 108.2 adjustments tax TAX profit AICF year expense Readers related rate HY 105.5 1results EXPENSE 26.2% before 2-SG&A
Slide 30: Half Year Cashflow US$
James CASHFLOW US$ EBIT Non-cash Asbestos Other Cash Payment Tax Interest Change Changes Net Purchases Proceeds Common Equity Effect Movement Beginning Ending 1 30Certain working Operating payments Millions Generated 161.1 non-cash of Hardie issued Net paid inin to exchange from adjustments reclassi
Slide 31: Debt US$
At 30 DEBT US$ Total Gross Cash Unutilised Net Weighted James 31 debt Millions 23.3 facilities September debt Hardie 36.7 decreased average facilities 60.0 remains 320.0 2011 remaining by andwell US$3.7 cashwithin term 283.3 million of its total financial compared facilities debt to was net covenant
Slide 32: Legacy Issues Update: ATO
LEGACY ATO James Charge On The Hearing 32 22 ATO –August Hardie Hardie’s 1999 ofdate filed US$345.2 ISSUES Disputed for 2011, an initial the application UPDATE the application million appeal Amended Full Federal effective dismissed forfor Assessment special special Court 1 by September leave the uph
Slide 33: Asbestos Fund Update
James ASBESTOS A$ Contribution Insurance Interest Claims Operating Other AICF 1 33Inmillions accordance 1.1 cash net Hardie paid income cash and costs and (51.5) FUND tocross and deposits AFFA and (2.5) with deposits unrealised claim UPDATE the by-Amended James 31 recoveries -March 30 –gain Hardie P
Slide 34: Key Ratios
James KEY HY EPS EBIT/ Gearing Net 1 tax 2 Note 34Excludes adjustments ‘12 Interest Debt (Diluted) :RATIOS Hardie For Sales HY Ratio Payback the asbestos ‘11 Expense Paid (EBIT 2011 1 HY 2.7% 18.3c Cover 0.2yrs margin) and ‘10 adjustments, Cover 10.6% 14.0c 22010 1.0yrs 30.1x 218.2c 13.9% financial
Slide 35: Summary
James SUMMARY Net The Stable Higher Appreciation 1 35Comparisons operating 2ndHardie US, sales freight SG&A quarter subdued volumes 1of profit, costs expenses are Asia results of Australian excluding Pacific the due reflected: (in 2nd tothe the business’ quarter and asbestos, US gains New business)
Slide 36: Guidance
James Challenges GUIDANCE Management The 36 company Hardie remain, confirms cautions continues with that previously to theguidance conditions perform operating indicated well isremain environment dependent financially FY12 uncertain upon full and in the year housing and our US earnings notes employe
Slide 37: Questions
&® James Hardie QUESTIONS
Slide 38: Appendix
&® James Hardie APPENDIX
Slide 39: Global Strategy
Jamesproducts GLOBAL Aggressively Grow Offer Introduce 39 our Hardie differentiated overall STRATEGY grow with market demand superior products position for value our to while to products deliver thatdefending ofa our in sustainable targeted competitors our share market competitive in existing segmen
Slide 40: USA Fibre Cement Revenue and Housing Starts
James USA Top 3,000 Jan-00 $1,300 Revenue JH Rolling 40 Volume Line FIBRE 2,800 Hardie Jul-00 $1,200 12 (US$M) Growth month (mmsf), Housing 2,600 CEMENT Jan-01 $1,100 average 2,400 Starts Starts Jul-01 $1,000 2,200 (000s of JH Jan-02 seasonally $900 Revenue 2,000 Units) Jul-02 $800 1,800 adjusted $7
Slide 41: Q2 General Corporate Costs US$
James US$ Q2 Stock Other expenses costs ASIC Domicile General 41 ‘12 Millions 9.7 costs compensation related Hardie Q2 Corporate corporate 9.5 and change ‘11% 7.9 (2) expenses domicile 6.5 Change related costs Costs (22) expense change (recoveries) excluding 10.2 costs – Q20.1 1.8 -related 0.7 -3.0
Slide 42: Half Year General Corporate Costs US$
JamesMillions US$ Stock Other expenses costs ASIC Domicile General 42 17.2 costs compensation related Hardie Corporate corporate and change 16.9 13.4 expenses domicile HY(2) 12.1 related ‘12 costs Costs expense (11) HYchange (recoveries) excluding 17.9 costs –‘11% Half 9.0 3.8 -related 1.6 Year Chan
Slide 43: Q2 EBITDA US$
JamesMillions EBITDA US$ EBIT Research General Depreciation USA Asia Asbestos AICF ASIC Total 43 Pacific and EBITDA SG&A (expenses) Hardie corporate –adjustments Europe &Q2development Fibre and expenses Q2 excluding 158.2 Fibre Amortisation recoveries 12 excluding Cement Q2 (40.6) 86.9 (0.8) Cement
Slide 44: Half Year EBITDA US$
James EBITDA HY US$ EBIT Research General Depreciation USA Asia Asbestos AICF ASIC Total 44 ‘12 Millions Pacific and EBITDA SG&A (expenses) Hardie HY corporate –adjustments Europe &Half ‘11% development Fibre and expenses excluding 191.9 Year Fibre Amortisation recoveries Change excluding Cement 101
Slide 45: Capital Expenditure US$
JamesMillions CAPITAL US$ USA Asia Total 45 Pacific and 18.4 Hardie Europe 24.8 EXPENDITURE Fibre HY(26) Fibre ‘12 Cement HY Cement ‘11% 3.8 2.9 14.6 Change 3121.9 (33)
Slide 46: Net Interest Expense US$
James NET US$ Q2 Gross Interest Realised AICF Net 46 ‘12 interest Millions INTEREST interest Hardie Q2 income loss ‘11 expense on income expense HY -interest 0.2 EXPENSE ‘12 excluding (1.2) 0.2 0.9 (1.1) HYrate 0.3 1.1 (0.9) ‘11 (0.8) swaps 1.4 AICF (2.2) 1.7 (2.0) (1.0) (2.0) interest (2.2) (1.4)in
Slide 47: Legacy Issues Update: ASIC
James LEGACY ASIC NSW Company’s Non-executive On Appeals Judgement 47 13Court Proceedings Hardie May were ISSUES has 2011, appeal ofheard Appeal directors’ been ASIC dismissed UPDATE by reserved judgement the and appeals High one former Court upheld handed over executive down threeondays granted 17
Slide 48: Endnotes
James This ENDNOTES Analysis Non-financial Definitions ABS AFFA AICF ASIC ATO NBSK Financial EBIT Operating Net 48 operating Management –and ––Hardie Australian –Australian Asbestos Amended Northern of Measures EBIT profit Results, profit Terms Margin - Injuries Taxation is Bureau Presentation and B
Slide 49: Endnotes (continued)
James ENDNOTES Sales mmsf msf Financial Gearing Net Return 49 interest debt – Volumes thousand –Hardie on million Ratio payback (cash) Ratios Capital expense paid (CONTINUED) ––square Net cover Short-term –employed Net debt cover feet, –debt EBIT (cash) –where –EBIT (cash) and EBIT divided divided l
Slide 50: Non-US GAAP Financial Measures
James NON-US not results non-US Q2 US$ Asbestos Asbestos: AICF ASIC Net EBIT 50 Q2 be sales Millions $and excluding margin SG&A related Hardie considered in HY 143.6 GAAP adjustments $aGAAP EBIT manner HY 331.6 expenses excluding FY $ measures (56.2) margin asbestos FINANCIAL $2012 tothat 287.6 be(8
Slide 51: Non-US GAAP Financial Measures (continued)
James NON-US under its Q2 US$ Asbestos Asbestos: AICF Tax Net ASIC 1 1999 51The operating Q2 operating expense adjustments Millions amended US SG&A interest related expenses second Hardie HY adjustments GAAP HY related results expenses quarter FY profit income assessment. and 1FINANCIAL and 2012 0.3
Slide 52: Non-US GAAP Financial Measures (continued)
James NON-US Non-US performance alternative Q2 US$ Net Weighted Diluted 52 Q2 operating Millions Hardie HY earnings GAAP GAAP average method HYunder FY profit Financial per FINANCIAL 2012 common for US excluding share assessing GAAP FYMeasures excluding 2011 shares and asbestos, MEASURES its FYoutst
Slide 53: Non-US GAAP Financial Measures (continued)
James NON-US considered manner Q2 US$ Asbestos AICF Operating Asbestos: Tax Income Effective 1 Court 53The Q2 expense adjustments Millions of SG&A interest second Hardie HY that tax Australia adjustments tax GAAP profit to HY expense isrelated rate expenses quarter be FY income focussed (loss) befor
Slide 54: Non-US GAAP Financial Measures: EBITDA
James NON-US EBITDA– defined with its Q2 US$ EBIT Depreciation Adjusted 54 core Q2 other Millions $Hardie HY business 143.6 byEBITDA GAAP companies. is US HYnot and FY $GAAP (56.2) operations aFINANCIAL amortisation 2012 measure $ 158.2 or Management $FY161.1 as2011 $aof to(40.6) measure financial s
Slide 55: Non-US GAAP Financial Measures (continued)
James NON-US performance alternative results Q2 US$ ASIC Excluding: Domicile General 55 Q2Millions related Hardie of HY corporate operations. change GAAP method HYunder (expenses) FYFINANCIAL related 2012 costs for USManagement assessing GAAP FY $costs excluding recoveries 10.2 2011-and $MEASURES (0
Slide 56: Q2 FY12 Management Presentation
James Q2 17 November FY12 Hardie MANAGEMENT 2011 PRESENTATION
James Hardie Industries — Q2 FY2012 Earnings Presentation on 6ix