James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — FY2005 Earnings Presentation
59 slides from James Hardie Industries's earnings presentation, May 19, 2005
Slide 1: 4th quarter operating profit up 48% to US$46.3 million
16 May 2005 Analyst and Media enquiries about results, please contact Steve Ashe on Tel: 61 2 8274 5246 Mob: 0408 164 011 4 th quarter operating profit up 48% to US$46.3 million Full year operating profit US$127.9 million James Hardie today announced a 48% increase in operating profit from continuin
Slide 2: 4th Quarter and Full Year – 31 March 2005
4 th Quarter and Full Year – 31 March 2005 US$Millions 4 th QTR FY05 FY FY05 James Hardie Net Sales Up % to US$ 316.4 Up % to US$ 1,210.4 EBIT 1 Up % to US$ 64.6 Up % to US$ 196.2 Operating Profit from Continuing Operations 1 Up % to US$ 46.3 Up % to US$ 127.9 Net Operating Profit Including Disconti
Slide 3: Results for the 4th Quarter Ended 31 March 2005
16 May 2005 Analyst and Media enquiries about results, please contact Steve Ashe on Tel: 61 2 8274 5246 Mob: 0408 164 011 James Hardie Industries N.V. Results for the 4 th Quarter Ended 31 March 2005 US GAAP - US$ Millions Three Months Ended 31 March FY 2005 FY 2004 % Change Net Sales USA Fibre Ceme
Slide 4: Results for the Full Year Ended 31 March 2005
16 May 2005 Analyst and Media enquiries about results, please contact Steve Ashe on Tel: 61 2 8274 5246 Mob: 0408 164 011 James Hardie Industries N.V. Results for the Full Year Ended 31 March 2005 US GAAP - US$ Millions Year Ended 31 March FY 2005 FY 2004 % Change Net Sales USA Fibre Cement $ 939.2
Slide 5: FY05 4th Quarter and Full Year Results
FY05 4th Quarter and Full Year Results 16 May 2005 Unless otherwise stated, results are for continuing operations only and comparisons are of the 4th quarter of the current fiscal year versus the 4th quarter of the prior fiscal year.
Slide 6: Agenda
Overview and Operating Review - Louis Gries, CEO Financial Review - Russell Chenu, CFO Voluntary asbestos compensation funding proposal - Russell Chenu, CFO Questions and Answers Agenda
Slide 7: Overview
Overview Strong 4th quarter results Strong sales growth EBIT improvement Production volume growth New capacity Better plant utilisation Exceeding business targets Progress being made on Principal Agreement Full year results very satisfactory, but bottom line impacted by significant SCI and other rel
Slide 8: Overview 4th Quarter and FY'05
* Including Discontinued Operations Overview 4th Quarter and FY'05 Q4'05% FY'05% Net Sales up 26 up 23 Gross Profit up 35 up 19 EBIT1 up 86 up 14 Operating Profit1 up 48 up 2 Net Operating Profit1 * up 45 down (2)
Slide 9: Highlights 4th Quarter
Highlights 4th Quarter USA Fibre Cement - EBIT up 79% Australia and New Zealand Fibre Cement - EBIT up 46% Philippines Fibre Cement - EBIT growth Chile Fibre Cement - positive EBIT Hardie Pipe - about EBIT breakeven
Slide 10: Highlights Full Year
Highlights Full Year USA Fibre Cement - EBIT up 24% Australia and New Zealand Fibre Cement - EBIT up 20% Philippines Fibre Cement - EBIT more than doubled Chile Fibre Cement - positive EBIT in all quarters Hardie Pipe - significant reduction in EBIT loss
Slide 11: Exceeding Targets
Exceeding Targets FY'05 Actual Long Term Target p.a. Revenue Growth 23% >15% EBIT1/Sales 16%* >15% ROA (EBIT1/GCE) 23% >15% *Includes SCI and related expenses of US$28.1 million
Slide 12: Operating Review
Operating Review Louis Gries, CEO
Slide 13: USA Fibre Cement
USA Fibre Cement
Slide 14: 4th Quarter Result - Strong Sales Growth
4th Quarter Result - Strong Sales Growth Net Sales up 34% to US$247.2 million Sales Volume up 23% to 472.6 mmsf1 Average Price up 8% to US$523 per msf1 EBIT1 up 79% to US$77.1 million EBIT Margin1 up 7.9 pts to 31.2% USA Fibre Cement
Slide 15: Full Year Result
Full Year Result Net Sales up 27% to US$939.2 million Sales Volume up 22% to 1855.1 mmsf1 Average Price up 4% to US$506 per msf1 EBIT1 up 24% to US$241.5 million EBIT Margin1 down 0.8 pt to 25.7% USA Fibre Cement
Slide 16: USA Fibre Cement 4th Quarter Trading Conditions
USA Fibre Cement 4th Quarter Trading Conditions Housing construction activity remained buoyant Low interest rates Strong house prices Consumer and builder confidence
Slide 17: USA Fibre Cement Key Points
USA Fibre Cement Key Points Continued growth in demand for fibre cement Strong sales performance Increased penetration of exterior and interior markets Good growth in both emerging and established markets ColorPlus strategy progressing well Higher prices Margin expansion Ramp up of new Reno, Nevada
Slide 18: USA Fibre Cement Outlook
USA Fibre Cement Outlook Continued growth in demand for fibre cement Housing construction to remain healthy over balance of calendar year Permits strong Backlog of unused permits Builder confidence strong Interest rates low - but modest increases expected Further market penetration against alternati
Slide 19: USA Fibre Cement Top Line Growth
USA Fibre Cement 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Revenue (USDM) Top Line Growth 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 Volume (mmsf) / Starts (000's Units) $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 JH Volume JH Revenue Housing Starts
Slide 20: USA Fibre Cement Average Selling Price
USA Fibre Cement Average Selling Price US$ per MSF1
Slide 21: USA Fibre Cement EBIT and EBIT Margin
USA Fibre Cement *Excludes restructuring and other operating expenses EBIT US$M EBIT MARGIN % EBIT and EBIT Margin*,1 0 10 20 30 40 50 60 70 80 90 FY99 FY00 FY01 FY02 FY03 FY04 FY05 0 5 10 15 20 25 30 35 EBIT EBIT/Sales
Slide 22: USA Fibre Cement Strategy
USA Fibre Cement Strategy Aggressively grow market for fibre cement Grow our overall market position while defending our share in existing market segments Offer products with superior value to that of our competitors, introducing differentiated products to reduce direct price competition
Slide 23: Asia Pacific Fibre Cement
Asia Pacific Fibre Cement
Slide 24: Asia Pacific Fibre Cement 4th Quarter Result
Asia Pacific Fibre Cement 4th Quarter Result Net Sales down 1% to US$58.2 million Sales Volume up 1% to 89.5 mmsf1 EBIT1 up 48% to US$12.3 million EBIT Margin1 up 7.0 pts to 21.1%
Slide 25: Asia Pacific Fibre Cement Full Year Result
Asia Pacific Fibre Cement Full Year Result Net Sales up 7% to US$236.1 million Sales Volume up 4% to 376.9 mmsf1 EBIT1 up 25% to US$46.8 million EBIT Margin1 up 2.7 pts to 19.8%
Slide 26: Asia Pacific Fibre Cement Strategy
Strategy Grow primary demand for fibre cement Vigorously protect and grow category share in existing market segments Leverage our superior technology to offer differentiated products and systems with superior value to those of competitors Ongoing manufacturing improvements to further lower cost of p
Slide 27: Australia and New Zealand - Key Points
Asia Pacific Fibre Cement Australia and New Zealand - Key Points Australia - new housing and renovations continued to weaken New Zealand - housing flat, but still at healthy level Product bans and boycotts in Australia are being progressively lifted Net sales down 4% - down 6% in A$ Volumes down 6%
Slide 28: Australia and New Zealand - Outlook
Asia Pacific Fibre Cement Australia and New Zealand - Outlook New housing and renovation activity in Australia to remain soft short-term New housing activity in New Zealand to remain relatively healthy More product bans and boycotts in Australia to be lifted Further manufacturing efficiency gains an
Slide 29: Philippines Key Points
Asia Pacific Fibre Cement Philippines Key Points Further market penetration Higher domestic prices Net sales up 40% in local currency Stronger EBIT Outlook Building and construction activity to soften Solid EBIT performance
Slide 30: Chile Fibre Cement Key Points
Other Fibre Cement Chile Fibre Cement Key Points Improved economic conditions Domestic and export sales up strongly Higher average net sales price Outlook Entering seasonally slower period for construction activity Further market penetration and share growth Higher domestic prices
Slide 31: USA Hardie Pipe Key Points
Other Fibre Cement USA Hardie(r) Pipe Key Points Stronger non-residential construction activity in Florida Strong sales growth Higher prices Further improvements in manufacturing performance Significant reduction in EBIT loss - nearing breakeven Outlook Further sales growth and market penetration Mo
Slide 32: Europe Fibre Cement
Other Fibre Cement Europe Fibre Cement Continuing to expand distribution channels Awareness growing among distributors, builders and contractors Sales are building steadily Artisan(tm) Roofing Roofing product launched in all targeted markets in California Continuing to prove business model
Slide 33: Research and Development
Research and Development Key driver of growth Core projects engineered raw materials product formulations engineering and process technologies lightweight and durable products for all climates Sustainable competitive advantage continuing to be built
Slide 34: Outlook
Outlook FY06 sales growth in North America expected to be less than FY05, but still much better than the overall market Further SCI and related costs to continue through first half FY06
Slide 35: Financial Review
Financial Review Russell Chenu, CFO
Slide 36: Overview
Overview Strong financial position Continued strong operating cashflow generation - up 35% v FY04 to US$219.8m Low net debt - down 56% v FY04 to US$45.8m Dividend declared US 6 cents a share Record date 9 June 2005 Payment date 1 July 2005
Slide 37: Results - Q4
US$ Million Q4 '05 Q4'04 % Change Net Sales 316.4 251.3 26 Gross Profit 121.3 89.7 35 SG&A (42.4) (46.3) (8) Research & Development (5.2) (6.5) (20) SCI and Other Related Expenses (3.7) - - Other Operating Expense (5.4) (2.1) - EBIT1 64.6 34.8 86 Net Interest Expense (0.6) (2.5) (76) Other Income 0.
Slide 38: Results - Full Year
Results - Full Year US$ Million FY '05 FY'04 % Change Net Sales 1,210.4 981.9 23 Gross Profit 426.4 358.9 19 SG&A (174.5) (162.0) 8 Research & Development (21.6) (22.6) (4) SCI and Other Related Expenses (28.1) - - Other Operating Expense (6.0) (2.1) - EBIT1 196.2 172.2 14 Net Interest Expense (5.1)
Slide 39: Segment Net Sales - Q4
Segment Net Sales - Q4 US$ Million Q4 '05 Q4 '04 % Change USA Fibre Cement 247.2 185.1 34 Asia Pacific Fibre Cement 58.2 59.0 (1) Other Fibre Cement 11.0 7.2 53 Total 316.4 251.3 26
Slide 40: Segment Net Sales - Full Year
Segment Net Sales - Full Year US$ Million FY '05 FY '04 % Change USA Fibre Cement 939.2 738.6 27 Asia Pacific Fibre Cement 236.1 219.8 7 Other Fibre Cement 35.1 23.5 49 Total 1,210.4 981.9 23
Slide 41: Segment EBIT - Q4
Segment EBIT1 - Q4 US$ Million Q4 '05 Q4'04 % Change USA Fibre Cement 77.1 43.2 79 Asia Pacific Fibre Cement 12.3 8.3 48 Other Fibre Cement (1.7) (4.1) 59 R & D (6.1) (5.6) (9) Total Segment EBIT 81.6 41.8 95 General Corporate (17.0) (7.0) - Total EBIT 64.6 34.8 86 R&D includes "core" R&D expenses a
Slide 42: Segment EBIT - Full Year
Segment EBIT1 - Full Year US$ Million FY'05 FY'04 % Change USA Fibre Cement 241.5 195.6 24 Asia Pacific Fibre Cement 46.8 37.6 25 Other Fibre Cement (11.8) (15.9) 26 R & D (17.5) (17.6) 1 Total Segment EBIT 259.0 199.7 30 General Corporate (62.8) (27.5) - Total EBIT 196.2 172.2 14
Slide 43: Net Interest Expense
Net Interest Expense US$ Million Q4'05 Q4'04 %Change Net Interest Expense (0.6) (2.5) (76) FY'05 FY'04 %Change Net Interest Expense (5.1) (10.0) (49)
Slide 44: Income Tax Expense
Income Tax Expense US$ Million Q4'05 Q4'04 %Change Income Tax Expense (17.9) (7.9) 127 Rate 27.9% 20.2% FY'05 FY'04 %Change Income Tax Expense (61.9) (40.4) 53 Rate 32.6% 24.4%
Slide 45: EBITDA - Q4
EBITDA1 - Q4 Q4'05 Q4'04 % Change EBIT1 USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement R & D General Corporate 77.1 12.3 (1.7) (6.1) (17.0) 43.2 8.3 (4.1) (5.6) (7.0) 79 48 59 (9) (43) Depreciation and Amortisation USA Fibre Cement Asia Pacific Fibre Cement Other 6.1 2.7 0.8 6.8 2.7 0
Slide 46: EBITDA - Full Year
EBITDA1 - Full Year FY'05 FY'04 % Change EBIT1 USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement R & D General Corporate 241.5 46.8 (11.8) (17.5) (62.8) 195.6 37.6 (15.9) (17.6) (27.5) 24 24 26 1 - Depreciation and Amortisation USA Fibre Cement Asia Pacific Fibre Cement Other 23.1 10.0 3
Slide 47: Capital Expenditure - Full Year
Capital Expenditure - Full Year Capital Expenditure Capital Expenditure Depreciation Depreciation US$ Million FY'05 FY'04 FY'05 FY'04 USA Fibre Cement 145.0 56.2 23.1 24.6 Asia Pacific Fibre Cement 4.0 8.4 10.0 9.7 Other 4.2 10.2 3.2 1.6 Total Segments 153.2 74.8 36.3 35.9 Other includes Other Fibre
Slide 48: Key Ratios
Key Ratios FY'05 FY '04 FY '03 EPS (Diluted) 27.7c 27.2c 18.2c Dividend Paid 3.0c 5.0c 7.5c Return on Shareholders Funds* # 22.4% 27.6% 42.3% Return on Capital Employed# 23.6% 23.4% 20.9% EBIT1/Sales 16.2% 17.5% 16.4% Gearing Ratio1 6.8% 17.0% 21.4% Net Interest Expense Cover 38.5x 17.2x 6.5x Net In
Slide 49: Voluntary asbestos-related compensation funding proposal
Voluntary asbestos-related compensation funding proposal Russell Chenu, CFO
Slide 50: Voluntary Asbestos Compensation Funding Proposal Timing Update
Voluntary Asbestos Compensation Funding Proposal Timing Update Satisfactory progress on Principal Agreement no significant departures from Heads of Agreement Estimated completion date of Principal Agreement June - legal complexities Timetable for late July EGM appearing ambitious
Slide 51: Updated Actuarial Estimate
Voluntary Asbestos Compensation Funding Proposal Updated Actuarial Estimate KPMG Actuaries' NPV estimate of liability at 31/3/05 A$1,684.9bn Adjustment yet to be made for estimated savings from NSW Government Review Expected assessment at 31/3/05 based on 30 June 2004 estimate A$1,569.8bn Increase o
Slide 52: Actuarial Estimates Overview
Actuarial Estimates Overview A$Billions 2004 30 June 2005 31 March Central Estimate - Discounted 1.536 1.685 Central Estimate - Undiscounted 3.586 3.604 Range - Undiscounted 2.0 - 5.7 2.0 - 5.9 Voluntary Asbestos Compensation Funding Proposal
Slide 53: Likely Accounting for Asbestos Liability
Likely Accounting for Asbestos Liability No provision for proposed liability at 31 March 2005 - not probable and estimable at this time (SFAS5) Subject to completion, accounting treatment for take-up of provision likely to be: Based on undiscounted Central Estimate as calculated by KPMG Actuaries Ca
Slide 54: Reconciliation of Possible Accounting Provision to Actuarial Estimate
Voluntary Asbestos Compensation Funding Proposal Reconciliation of Possible Accounting Provision to Actuarial Estimate Notes: Proposal is subject to shareholder and lender approval. Take-up of provision only when probable and estimable - SFAS5 Excludes estimated legal and administrative cost savings
Slide 55: Summary
Summary Strong growth in operating and financial performance assisted by buoyant US residential housing market Outperformed US housing market growth in North America SCI and related matters a significant cost burden Company in sound financial position
Slide 56: Questions & Answers
Questions & Answers
Slide 57: Disclaimer
Disclaimer This Presentation contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with the Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectuses, i
Slide 58: Endnotes
Endnotes This Management Presentation forms part of a package of information about the company's results. It should be read in conjunction with the other parts of this package, including Management's Analysis of Results, a Media Release, a Financial Report and Results at a Glance document. 1Definiti
Slide 59: FY05 4th Quarter and Full Year Results
FY05 4th Quarter and Full Year Results 16 May 2005 Unless otherwise stated, results are for continuing operations only and comparisons are of the 4th quarter of the current fiscal year versus the 4th quarter of the prior fiscal year.
Hardie James Industries — FY2005 Earnings Presentation on 6ix