Fletcher Building Limited · NZX:FBU
Fletcher Building — Investor Day (June 2025)
52 slides from Fletcher Building's investor day presentation, Jun 24, 2025
Slide 1: Investor Day June 2025
INSERT TEXT HERE Investor Day June 2025
Slide 2: Agenda
Agenda 24 June 2025 NZT Section Presenter Duration (mins) 9:00am Overview Peter Crowley 10 Strategic review outcomes and immediate 9:10 Andrew Reding 30 priorities 9:35 Balance sheet settings and capital allocation Will Wright 20 10:00 Trading conditions & FY25 update Andrew Reding 15 10:15 Combined
Slide 3: Overview
Overview Peter Crowley, Chair
Slide 4: Medium term focus on manufacturing and distribution of building products and materials
Medium term focus on manufacturing and distribution of building products and materials 4 | Investor Day | 24 June 2025 | Fletcher Building Limited
Slide 5: Board of Directors
Board of Directors Chair appointed, refresh is now complete PETER CROWLEY SANDRA DODDS CATHY QUINN TONY DRAGICEVICH JACQUI COOMBES Chair and Independent Non- Independent Non-Executive Director / Independent Non-Executive Independent Non-Executive Independent Non-Executive Executive Director Chair of
Slide 6: Executive Leadership Team
Executive Leadership Team Refresh is complete now complete with six new appointments occurring throughout 2024 ANDREW REDING HAMISH MCBEATH HAYDN WONG JAMES PETERS KYLIE EAGLE Group Chief Executive Officer & Chief Executive Light Group General Counsel and Company Chief Executive Distribution Chief P
Slide 7: Reflections from the Chair
Reflections from the Chair We acknowledge past unacceptable performance and lessons have been learnt. A major turnaround is underway $700m capital raising and sale of Tradelink for ~A$170m both helped to reduce debt, improve financial 1 Balance Sheet reset resilience and also provide time for mana
Slide 8: Where are we heading?
Where are we heading? A simplified business, operating with capital and operational discipline Medium term (3-5 year) focus on manufacturing and distribution of building products and materials Business unit returns meeting or exceeding cost of capital Simple and de-centralised portfolio structure Ne
Slide 9: Introduction
Introduction Andrew Reding, Managing Director & CEO
Slide 10: Why I took the role
Why I took the role Energised by the opportunity to realise the value of the great businesses within our Group Under-appreciated assets with portfolio • There is a significant opportunity to help rejuvenate a business with substantial latent potential • The core businesses continue to perform, but t
Slide 11: Our medium term strategy
Our medium term strategy Four internal levers together with external market dynamics will drive our performance Medium term focus on manufacturing and distribution of building products and materials Focus on high Empower our Resilient Capital 1 Urgent action 2 3 4 performance leaders structure • Cle
Slide 12: How our strategy will deliver
How our strategy will deliver We have the ingredients to build on strong competitive positions with a leaner cohort of BUs, lead by focussed GMs • High performing strategic business units • Market position, operational and capital discipline and high calibre leadership A performance culture with emp
Slide 13: Immediate actions
Immediate actions Andrew Reding, Managing Director & CEO
Slide 14: Urgently moving forward with the turnaround
Urgently moving forward with the turnaround The strategic review identified immediate priorities that we are already executing on • Completed a comprehensive, in-depth review of all business unit’s performance through the cycle, and their strategic fit Strategic review • Identified business units th
Slide 15: Disestablishment of Australian Division
Disestablishment of Australian Division Organising in verticals has created significant cost synergies and will improve coordination AUSTRALIAN DIVISION EBIT MARGIN & DIVISIONAL COST FY19 – FY25, (incl. Sig Items, ex associate income), LHS % EBIT Margin, RHS $M Divisional costs, 15.0% 15.0 NZ Buildi
Slide 16: Turnaround plan
Turnaround plan Urgent priorities have been actioned decisively and there is a clear path of continuous improvement ahead Implemented Short term Medium term Australia, Steel & Corporate Finalise and implement Fully implement new restructure (~$15m saving) divisional restructure operational mod
Slide 17: Focus on high performance
Focus on high performance Andrew Reding, Managing Director & CEO
Slide 18: The current portfolio
The current portfolio Our operations span multiple verticals and a wide set of management skills are required to manage business units with differing markets and operational risks Sector / skill set Business Unit Concrete Steel Primary & Secondary Processing Wood & Panels Water Insulation New Zealan
Slide 19: A focus on high performing businesses
A focus on high performing businesses The objective of divisional and operating changes is to make our business units leaner, closer to their customers and unencumbered by corporate overhead Low Medium term earnings risk Medium term performance High 19 | Investor Day | 24 June 2025 | Fletcher Buildi
Slide 20: Building a simpler and more focused business
Building a simpler and more focused business The first step to simplifying our portfolio is reducing it to five Divisions Light Building Products Heavy Building Materials Wood & Panels Water Insulation Construction Materials Steel Distribution Residential & Development Construction 20 | Investor Day
Slide 21: Light Building Products
Light Building Products Privileged positions, with efficient low-cost manufacturing facilities DIVISIONAL VERTICAL AVERAGE EBIT CONTRIBUTION FY19 – FY24, $M (ex. Sig Items, pre divisional costs) 225 A world class plasterboard business 200 Average Max Min 175 150 Unique insulation platform with s
Slide 22: Heavy Building Materials
Heavy Building Materials A leader in New Zealand aggregates, cement, concrete and steel, with strong brands and a unique footprint DIVISIONAL VERTICAL AVERAGE EBIT CONTRIBUTION FY19 – FY24, $M (ex. Sig Items, pre divisional costs) 120.0 Network of highly profitable, strategic quarry Average Max Mi
Slide 23: Distribution
Distribution A leading national distributor of building and plumbing supplies via trusted and respected brands BUSINESS UNIT AVERAGE EBIT CONTRIBUTION FY19 – FY24, $M (ex. Sig Items, pre divisional costs) 140.0 Iconic brands with strong connection to the Average Max Min building trade for over 40
Slide 24: Residential and Development
Residential and Development The Residential and Development Division is one of the largest private sector developers of residential homes and communities in Auckland and Christchurch R&D BUSINESS UNIT AVERAGE EBIT CONTRIBUTION FY19 – FY24, $M (ex. Sig Items, pre divisional costs) Track record of h
Slide 25: Construction
Construction A leading engineering & construction platform in New Zealand with embedded sector expertise, credentials and relationships CONSTRUCTION BUSINESS UNIT AVERAGE EBIT CONTRIBUTION FY19 – FY24, $M (ex. Sig Items, pre divisional costs) Has been re-orientated towards infrastructure and 40.0
Slide 26: Expected benefits
Expected benefits The new divisional model reduces cost and improves integration by bringing similar business units together • Removes duplication and enable greater integration across similar skill sets/markets • Unifies ‘affiliate’ businesses in New Zealand and Australia (Laminex, Iplex, Insulatio
Slide 27: Empowering our operational leaders
Empowering our operational leaders Andrew Reding, Managing Director & CEO
Slide 28: Issues with a centralised operating model
Issues with a centralised operating model A centralised approach did not deliver anticipated gains and decreased the agility of business unit management • The concentration of decision-making power at the centre has resulted in less agility when Slower decision making responding to market changes, c
Slide 29: New decentralised model
New decentralised model Accountability shifts towards business units. Each management layer has designated roles and distinct capabilities Business Units Divisions Holding co. “We know our customers, own our value “We know our markets, and manage & “We provide strategic direction, manage our chains
Slide 30: A leaner operating model
A leaner operating model The move to a decentralised model has significant financial and operational benefits CENTRAL COSTS Exit FY25F1, $m (15) (10) (15) 107 229 53 189 Overheads have been reduced by c.$30m in phase one, with further reductions in line with divestments 69 30 | Investor Day | 24 Jun
Slide 31: Expected benefits
Expected benefits The new organisational model allows for faster decision making, customer centricity, role clarity and cost efficiencies • Stronger focus on core capabilities • Faster response to market opportunities • Accountability where it counts • Empowering business units and GMs • Quicker dec
Slide 32: Building a resilient capital structure
Building a resilient capital structure Will Wright, CFO
Slide 33: A clearly defined financial framework
A clearly defined financial framework Strong focus on driving financial performance and disciplined allocation of capital • Targeting a ROIC greater than WACC through the cycle Focus on Shareholder • Ensure all businesses have ROIC targets reflective of the sectors in which they operate 1 Returns •
Slide 34: Focus on Shareholder Returns
Focus on Shareholder Returns Targeting returns above cost of capital through the cycle and improved disclosure to drive accountability FY19 - FY24 Group ROIC(1) ROIC (%) and average invested capital(2) ($m) 5,425 5,305 5,127 5,748 6,220 6,440 • Business units to be assessed against industry-specific
Slide 35: Capital structure through the cycle
Capital structure through the cycle Medium term Net Debt target adjusted to $400m - $900m providing the business with a foundation to deliver long term growth, while also maintaining sufficient headroom to absorb potential market volatility NET DEBT / (CASH): FY15 TO FY25F Pre IFRS-16 as at 30 June,
Slide 36: Net Debt through time
Net Debt through time A number of items have been a drag on Fletcher Building’s balance sheet over the past 5 years but, looking forward, greater discipline, a simplified portfolio and improved operational performance should result in greater cash generation NET DEBT MOVEMENTS FY20 TO FY25F Pre IFRS
Slide 37: Balance Sheet levers
Balance Sheet levers Achieving and then maintaining Net Debt within the target range will require a combination of “one-off” capital releases and longer term capital allocation and dividend discipline • Dividend will remain suspended until net debt reaches the middle-lower end of the target range, a
Slide 38: Funding mix
Funding mix The current debt profile is overly complex and expensive for our current and future needs DEBT MATURITY PROFILE FUTURE TARGET STATE As at 31 December 2024, $M 997 • Lower Net Debt levels of $400m - $900m (pre IFRS-16) 562 • Investment grade credit metrics 957 452 325 276 • Simplified fun
Slide 39: Disciplined Capital Allocation
Disciplined Capital Allocation Capital expenditure is crucial to ongoing sustainment of earnings and growth, but is subject to well defined controls both prior to commitment and during project execution TARGET FUNDING MIX • Stay in business and growth capex (organic or Operating Property & Business
Slide 40: Disciplined Capital Allocation
Disciplined Capital Allocation Target SIB capex equal to depreciation, with major upcoming growth projects focused on key Light Building Product and Heavy Building Material assets CAPEX SPENDING AND FORECAST • Where SIB investment is required to FY19-FY24,FY25F; $m support business units with ageing
Slide 41: Working Capital Strategy
Working Capital Strategy Close management of working capital will remain a key part of the overall financial strategy CUMULATIVE AVERAGE MONTHLY ∆TRADING CASH1 (FY19 – FY24); $m • Fletcher Building operates large 50 working capital balances and over the Cumulative average (Manufacturing & Distributi
Slide 42: Key messages
Key messages Strong focus on driving financial performance and disciplined allocation of capital • Targeting ROIC greater than WACC across all business units • Transparent and consistent financials • Net Debt target - $400m to $900m • Reduce working capital cyclicality • Disciplined capital allocati
Slide 43: Macro trends & outlook
Macro trends & outlook Andrew Reding, Managing Director & CEO
Slide 44: Where in the New Zealand cycle are we?
Where in the New Zealand cycle are we? Sales volumes of key products across the portfolio provide a view of market conditions and potential outlook PRODUCT VOLUMES Rolling 12m average quarterly volumes, Q4 FY19 = 100 140 Winstone Wallboards Winstone Aggregates Golden Bay Humes PlaceMakers 130 120 11
Slide 45: Where in the Australian cycle are we?
Where in the Australian cycle are we? Sales volumes of key products across the portfolio provide a view of market conditions and potential outlook PRODUCT VOLUMES Rolling 12m average quarterly volumes, Q4 FY19 = 100 120 Laminex AU Fletcher Insulation Iplex AU Stramit 110 100 90 80 70 60 50 Q4 FY19 Q
Slide 46: Market fundamentals
Market fundamentals We operate in structurally attractive markets, with higher population growth and infrastructure deficits driving demand for infrastructure and the materials required to construct it POPULATION GROWTH INFRASTRUCTURE QUALITY INDEX 1995 = 100 2021 160 New Zealand Australia OECD memb
Slide 47: FY25F update
FY25F update Operating volumes continue to subdued, impacting operating leverage and profitability FY25F EBIT Outlook • FY25F EBIT (pre Significant Items) expected to be between $370m and $375m inclusive of the $16.4m loss incurred as a consequence of the settlement reached with NZTA in relation to
Slide 48: Closing remarks
Closing remarks Andrew Reding, Managing Director & CEO
Slide 49: What does this mean for shareholders?
What does this mean for shareholders? Fletcher Building’s new strategic direction will lead to a leaner more focused organisation • Heavy Building Materials – a leader in New Zealand aggregates, cement, concrete and steel, with strong brands and footprint Strong core ❶ portfolio • Light Building Pro
Slide 50: Appendix
Appendix
Slide 51: ROIC framework
ROIC framework A disciplined capital allocation framework driving investment decisions, performance accountability and sustainable value creation across business units Invested ROIC framework NOPAT (trailing 12-months) ÷ capital (Average month end = ROIC • ROIC serves as the primary investment decis
Slide 52: Additional financial information
Additional financial information Further financial information including: • Re-stated divisional metrics; and • Indexed volume data Is available in excel form via the Fletcher Building Investor relations website: https://fletcherbuilding.com/investor-centre/financial-results-and-announcements 52 | I