41 slides from Fletcher Building's shareholder meeting presentation, Nov 13, 2007
Slide 1: Annual Shareholders' Meeting
For personal use only Annual Shareholders’ Meeting 13 November 2007
Slide 2: Dr Roderick Deane, Chairman
For personal use only Dr Roderick Deane Chairman
Slide 3: Directors
Directors For personal use only Dr Roderick Deane (Chairman) Paul Baines Geoffrey McGrath Jonathan Ling (Managing Director) Sir Dryden Spring Kerrin Vautier Ralph Waters Hugh Fletcher
Slide 4: Meeting agenda
Meeting agenda For personal use only Chairman’s overview Chief executive officer’s address Trading outlook Shareholder questions and discussion Consideration of, and voting on, the resolutions of the meeting
Slide 5: Sales
Sales For personal use only $m 5 ,9 2 6 5 ,5 2 0 4 ,6 3 6 3 ,9 3 4 3 ,2 0 4 2003 2004 2005 2006 2007
Slide 6: Net earnings
Net earnings For personal use only $m 484 8 5* 379 347 240 168 3 9 9 ** 2003 2004 2005 2006 2007 *Net unusual items **Net earnings on a normalised basis
Slide 7: Earnings per share
Earnings per share For personal use only Cents 102 78 81 56 43 2003 2004 2005 2006 2007
Slide 8: Dividends
Dividends For personal use only Cents per share 45 40 32 25 19 2003 2004 2005 2006 2007
Slide 9: Total shareholder return (TSR)
Total shareholder return (TSR) For personal use only Percentage 61 43 42 40 33 2003 2004 2005 2006 2007
Slide 10: Return on average funds
Return on average funds For personal use only Percentage 29 26 24 25 25 2003 2004 2005 2006 2007
Slide 11: Operating cashflow
Operating cashflow For personal use only $m 560 479 483 424 276 2003 2004 2005 2006 2007
Slide 12: Capital expenditure
Capital expenditure For personal use only $m 346 266 Acquisitions 94 Acquisitions 28 Internal growth 116 Internal growth 131 Stay in business 122 Stay in business 121 2006 2007
Slide 13: Balance sheet
Balance sheet For personal use only Pre Formica gearing Interest cover Percentage Times 37 9.8 9.3 22 2006 2007 2006 2007
Slide 14: Formica acquisition
Formica acquisition For personal use only A highly complementary business to our Laminex operations A company with a strong brand and international manufacturing footprint A further step in the company’s geographic and market sector diversity Financing now complete, with financial gearing st
Slide 15: Shareholder reporting
Shareholder reporting For personal use only Listed companies may now... – provide printed annual report, or – publish the report on the company’s website (and notify right of request for printed copy) Cost savings Reduced environmental impact Our approach – publish annual report on www.fletc
Slide 16: Governance and management
Governance and management For personal use only Detailed commentary in annual report Board changes likely over next two years Management changes have been effected smoothly Formica acquisition brings challenges and opportunities Continuing focus on good governance and management transparen
Slide 17: Employees
Employees For personal use only The company continues to benefit from the strong commitment of its employees Management development and health and safety 1 1 .5 9 .7 remain key priorities 6 .5 Lost time injury rate down 32% to 6.5 per one million hours worked 2005 2006 2007 LTIFR per one milli
Slide 18: Sir James Fletcher 1914 – 2007
Sir James Fletcher 1914 – 2007 For personal use only
Slide 19: Strategic direction
Strategic direction For personal use only Further growth through acquisition likely Greater international presence Invested $2.6 billion in acquisitions in past 5 years Acquisition opportunities from private equity still available as businesses complete their turnaround phase
Slide 20: Our acquisition criteria
Our acquisition criteria For personal use only Complementary business Leading market position Favourable industry structure Strong management Attractive acquisition parameters for early positive financial impact
Slide 21: Jonathan Ling, Chief Executive and Managing Director
For personal use only Jonathan Ling Chief Executive and Managing Director
Slide 22: Market conditions
Market conditions For personal use only Softer overall, but varying across regions and sectors New Zealand – residential weaker – continuing strength in commercial building and infrastructure Australia – New South Wales and Victoria relatively weak High NZ$ impact on Building Products and St
Slide 23: Operating earnings
Operating earnings For personal use only $m 703 675 612 460 331 2003 2004 2005 2006 2007
Slide 24: Divisional operating earnings
Divisional operating earnings For personal use only $m 271 255 142 141 131 116 93 75 80 80 Infrastructure Distribution Building Products Steel Laminates & Panels 2006 2007
Slide 25: Infrastructure
Infrastructure For personal use only Sales up 7% to $1.94 billion Operating earnings up 6% to $271 million Sixth consecutive year of sales and earnings growth New Zealand demand weaker overall New South Wales particularly soft ... but all key businesses lifted operating earnings
Slide 26: Infrastructure
Infrastructure For personal use only Increased prices and reduced overheads for cement and aggregates Strong demand for pipes Quarry products higher, except in NSW Higher prices and margins in residential Further strong growth in general construction – backlog $775 million, rising to over
Slide 27: Distribution
Distribution For personal use only Sales up 11% to $1.06 billion Operating earnings up 7% to $80 million Store development programme – five new PlaceMakers – six stores expanded/upgraded – distribution facility in Auckland Capital investment of $18 million Acquisitions – three Maddren Timb
Slide 28: Building Products
Building Products For personal use only Sales up 11% to $697 million Operating earnings down 1% to $141 million Good performance in the conditions – flat new residential market in NZ – decline on east coast of Australia – strong $NZ
Slide 29: Building Products
Building Products For personal use only Plasterboard sales up 4%, with steady earnings Insulation down – 29% in Australia in soft residential markets – 13% in NZ with higher costs and import pressures Strong growth in metal roof tiles Strong performances in sinkware and floors Forman Group
Slide 30: Steel
Steel For personal use only Sales up 7% to $1.2 billion Operating earnings down 14% to $80 million First year as a separate division – split from Building Products from 1 July 2006 Tough year, with major increases in scrap metal prices
Slide 31: Steel
Steel For personal use only Long steel – Scrap metal prices up 27% to record levels – Import competition toughened by high $NZ Rollforming – Steady earnings despite tough trading environment Merchandising – Strong performance and sales growth Acquisitions – Eziform Sheetmetals and Fair Dinku
Slide 32: Laminates & Panels
Laminates & Panels For personal use only Sales up 3% to $1.06 billion Operating earnings up 13% to $131 million Australia – sales growth offset by margin pressure… but cost control leading to increased earnings – difficult year for Wespine joint venture New Zealand – sales reduced by fire at
Slide 33: Laminates & Panels
Laminates & Panels For personal use only Capital investment of $35 million Kumeu plant upgrade increased production 17% Environmental & production gains at Dardanup Work commenced on – heat energy plant at Gympie MDF – distribution centre in Perth New products – veneers and wet area surfac
Slide 34: Formica Corporation – product leader
Formica Corporation – product leader For personal use only Recognised global leader in High Performance Laminates with operations in North America, Europe and Asia Predominantly focused on HPL, with emerging positions in complementary products – solid surface and stone HPL Solid surface Stone Ot
Slide 35: Formica Corporation – overview
Formica Corporation – overview For personal use only Purchase price US$700 million (NZ$913 million) Additional contingent payments of up to US$50 million based on performance Reasonable acquisition multiple – 7.2 times EBITDA Lifted non-NZ revenue from 38% to 47% Met all our well establish
Slide 36: Formica Corporation – current priorities
Formica Corporation – current priorities For personal use only Further opportunities for growth and development – Australia/NZ cost-competitiveness – Asia distribution network Realisation of synergies well on track Performance to date satisfactory – Asian and European businesses performing wel
Slide 37: Environmental sustainability
Environmental sustainability For personal use only Participation in Carbon Disclosure Project NZ Emissions Trading scheme – details not yet finalised by Government – Golden Bay Cement and Pacific Steel will have to purchase and surrender carbon units – all operations will face higher energy cost
Slide 38: Dr Roderick Deane, Chairman
For personal use only Dr Roderick Deane Chairman
Slide 39: Outlook
Outlook For personal use only New Zealand – decline in housing, offset by backlog in alterations and additions – commercial construction and infrastructure remain strong – over $1 billion construction backlog Australia – residential and infrastructure markets vary – non-residential construction
Slide 40: Outlook (continued)
Outlook (continued) For personal use only Earnings ahead in first four months Overall – satisfactory performance expected – most analysts predict $450-$460 million net earnings after tax and before unusuals – comfortable with this range
Slide 41: For personal use only
For personal use only