James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Investor Presentation (February 2004)
34 slides from James Hardie Industries's investor presentation, Feb 26, 2004
Slide 1: High Growth From Unique Technology
High Growth From Unique Technology February 2004 Exhibit 99.1
Slide 2: Focussed on Fibre Cement: Attractive Investment Attributes
Focussed on Fibre Cement Photo(s) Attractive Investment Attributes High growth Unique proprietary technology Sustainable competitive advantage Strong cashflows and balance sheet Low cyclical risk Relentless will to win
Slide 3: First to Develop Fibre Cement
First to Develop Fibre Cement James Hardie pioneered the development of fibre cement technology in the 1980s Fibre Cement Sand Cellulose Fibre Water Portland Cement Photo(s)
Slide 4: Many Product Applications
Many Product Applications External siding/soffit lining Internal wall/floor wet area lining Trim and fascia Ceiling lining and flooring External/internal wall systems Partitioning Commercial facades Decorative columns Fencing Drainage pipes Photo(s)
Slide 5: Unique Technology and Scale Sustainable Competitive Advantage
Unique Technology and Scale Sustainable Competitive Advantage Unique plant engineering and proprietary process technology and product formulations Superior capital cost efficiency - plant capital cost less than 1/2 that of competitors Largest, lowest cost manufacturer - plant operating cost 20-30% l
Slide 6: R&D is a Key Driver of Growth
Capabilities and resources 120 scientists, engineers and technicians 30% increase in spend to US$21 million in FY03 - 3% of sales Core projects new proprietary engineered raw materials new proprietary product formulations new engineering and proprietary process technologies lightweight and durable p
Slide 7: Strategy: Industry Leadership and Profitable Growth
Strategy Industry Leadership and Profitable Growth Aggressively grow the market Secure differentiated position Generate strong top line growth Win high shares of large segments Sustain attractive margins Photo(s)
Slide 8: Balanced Growth Portfolio
Balanced Growth Portfolio James Hardie Business Portfolio - FY 03 GCE Sales EBIT1 USA - - Established high growth/high return 70% 75% 89% Asia Pacific - - Established high return 21% 24% 17% Other - - Emerging opportunities (Pipes, Roofing, Europe, Chile) 9% 1% (6%) Total 100% 100% 100%
Slide 9: North America Fibre Cement
North America Fibre Cement James Hardie is the largest lowest cost producer of fibre cement in North America Plant Locations Flat Sheet Plants Capacity (mmsf) Fontana, California 180 Plant City, Florida 300 Cleburne, Texas 500 Tacoma, Washington 200 Peru, Illinois 560* Waxahachie, Texas 360 Blandon,
Slide 10: Increased Scale
Increased Scale 1990 1994 1998 2001 2003 mmsf 60 100 150 200 300 Production Capacity Per Line
Slide 11: Lower Capital Cost
Lower Capital Cost 1990 1995 1997 1998 2000 2004 USD/sf Capital Cost/Unit of Capacity
Slide 12: Superior Product Performance vs Engineered Wood
Superior Product Performance Fibre Cement is more durable than wood and engineered wood Fibre Cement Superior Durability Moisture Resistant Fire Resistant Weather Resistant Termite Proof Won't Warp Won't Crack Won't Rot Holds Paint Longer Won't Delaminate ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Engineer
Slide 13: Superior Product Performance vs Vinyl
Superior Product Performance Fibre Cement looks and performs better than vinyl Vinyl Fire Resistant Hail Resistant Wind Resistant Won't Warp Won't Buckle Colour Lasts Longer Strong and Rigid Expands/Contracts Withstands Impact Dimensional Stability Won't Blister Won't Crack ? ? ? ? ? ? ? ? ? ? ? ? ?
Slide 14: Numerous Growth Dimensions
Soffit Growth 1997 1998 1999 2000 2001 2002 2003 FY00 FY01 FY02 FY03 Retail Growth 1997 1998 1999 2000 2001 2002 2003 Siding Growth Trim Growth FY00 FY01 FY02 FY03 Numerous Growth Dimensions 1/4" Hardibacker Growth FY97 FY98 FY99 FY00 FY01 FY02 FY03 1/2" Hardibacker Growth FY97 FY98 FY99 FY00 FY01 F
Slide 15: Mix Is Driving Price
Higher priced differentiated products are driving average price growth Mix Is Driving Price US$ per MSF
Slide 16: North America Fibre Cement Revenue Growth Continuing to Outstrip Volume Growth
North America Fibre Cement Revenue Growth Continuing to outstrip Volume Growth 0 200 400 600 800 1000 1200 1400 1600 1800 90 91 92 93 94 95 96 97 98 99 00 01 02 03 VOLUME (MMSF) and Starts (ooo's units) 0 125 250 375 500 625 750 REVENUE (US$M) Volume Revenue Housing Starts
Slide 17: Market Data
Market Data Market Size (bsf) Product Category New Construction - Siding, Fascia & Soffits 5.9 - Trim 1.2 Total New 7.1 Repair & Remodel - Siding, Fascia & Soffits 4.5 - Trim 0.9 Total R&R 5.4 Grand Total 12.5 Note - This information is based on the latest market survey data collected and analysed b
Slide 18: Stable Market Growth
Stable Market Growth Market Size (bsf) 0 5 10 15 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 Market Size
Slide 19: Sales on Track to More Than Double
Sales on track to more than double 02 - 07 JH Volume (bsf) 0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 1 2 JH Exterior Volume
Slide 20: Share on Track to More Than Double
Share on track to more than double 02 - 07 Market Share % FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 0 5 10 15 Market Share
Slide 21: Backer Could Grow Even Faster
Backer Could Grow Even Faster Updated Estimate USA Interior Cement Board Market 0.97bsf 2007 USA Interior Cement Board Market 1.1bsf Note - This information is based on the latest market survey data collected and analysed by James Hardie and is based on source material from the NAHB, NAHB Builder Pr
Slide 22: Australia/New Zealand
Australia/New Zealand YTD sales US$140m - up 22% YTD EBIT1 up 19% Higher value differentiated products Lower delivered cost Emphasise step change High performance culture Increase revenue and margins Photo(s)
Slide 23: Philippines and Asia
Philippines and Asia Manufacturing plant commissioned 1999 YTD sales US$18 million up 39% EBIT1 positive Fibre cement as substitute for plywood 26% share of domestic plywood substitution market Established low cost regional manufacturing hub Low GDP per capita is an obstacle for developing a differe
Slide 24: Chile and South America
Chile and South America Manufacturing plant commissioned 2001 Low cost manufacturing, rapid market penetration, high growth 23% share of flat sheet market already achieved Positive EBIT1 Introducing differentiated products Photo(s)
Slide 25: Pipes
USA manufacturing plant commissioned 2001 Product has advantages over reinforced steel concrete pipes - - light, long, strong Lower cost to make and install YTD volume growth up 107% Long term targets national business large share of US$2 billion market Pipes Photo(s)
Slide 26: Roofing
Roofing USA market entry Development of fibre cement roofing technology US roofing market 13 bsf Initial target market 2.1 bsf to compete with wood shake superior durability and fire performance US$12m pilot plant commissioned Photo(s)
Slide 27: Europe
Europe Initially pursuing a low cost, low risk strategy Differentiated products imported from US G2 Backer XLD Trim ColorPlus Siding Focussed market development UK and France JH business model differentiated from current industry approach
Slide 28: Results Year To Date
Results Year To Date US$Million Sales 730.6 Up 24% Gross Profit 269.2 Up 26% EBIT1 137.4 Up 36% Operating Profit2 94.0 Up 56% YTD04 - 9ME Dec 03
Slide 29: Results Year To Date: USA Fibre Cement
Results Year To Date US$Million Sales 553.5 Up 22% EBIT1 152.4 Up 30% Volume 1136mmsf Up 16% EBIT Margin 27.5% Up 1.6pts YTD04 - 9ME Dec 03 USA Fibre Cement
Slide 30: Results Year To Date: Other Businesses
Results Year To Date YTD04 - 9ME Dec 03 Other Businesses ANZ sales up 22%. EBIT1 up 19% Philippines sales up 39%. EBIT positive USA Pipes sales up 108%. Still in losses, but nearing positive cashflow Chile sales up 245%. EBIT positive
Slide 31: Key Ratios
Key Ratios YTD '04 FY '03 FY '02 EPS (Basic) 21.0c 18.7c 6.4c Return on Shareholders Funds* 28.7% 42.3% 8.9% Return on Capital Employed* 26.2% 21.2% 8.6% EBIT2/Sales 18.8% 16.4% 8.0% Gearing 22.9% 21.4% 44.7% Net Interest Cover 18.3x 6.6x 3.0x *Annualised
Slide 32: High Growth and Attractive Returns Targeted
High Growth and Attractive Returns Targeted Long Term Financial Targets Target Actual FY03 Actual YTD04 Revenue Growth > 15% p.a. 32% 24% EBIT Margins1 > 15% 16% 19% ROA > 15% 21% 22% Photo(s)
Slide 33: Disclaimer
Disclaimer This presentation contains forward-looking statements. Words such as "believe,'' "anticipate,'' "plan,'' "expect,'' "intend,'' "target,'' "estimate,'' "project,'' "predict,'' "forecast,'' "guideline,'' "should,'' "aim'' and similar expressions are intended to identify forward-looking stat
Slide 34: Notes
Notes 1. EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We believe EBIT and EBIT margin to be relevant and useful information as these are the primary measures used by our management to measure the operating profit or loss of our business. EBIT
Hardie James Industries — Investor Presentation (February 2004) on 6ix