James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Shareholder Meeting (August 2003)
45 slides from James Hardie Industries's shareholder meeting presentation, Aug 18, 2003
Slide 1: Australian Information Meeting 13 August 2003
Exhibit 99.1 Australian Information Meeting 13 August 2003
Slide 2: Transformation into a focussed fibre cement company
Australian Information Meeting 13 August 2003 Last year on this occasion, I described the transformation that had occurred at James Hardie over the preceding 10 years. That was designed as a landmark speech to summarise our evolution into a focussed fibre cement company with strong growth prospects.
Slide 3: Long Term Growth Targets
Long Term Growth Targets Revenue Growth > 15% Profit Margins (EBIT)3 > 15% Return on Assets > 15% The company uses a range of targets against which it measures growth and returns. Three of these targets are that, on average, over the long term • revenue growth will exceed 15% a year • profit margins
Slide 4: Long Term Growth Targets vs FY03 Actual
Long Term Growth Targets Target Target FY03 Actual Revenue Growth > 15% 32% Profit Margins (EBIT) 3 > 15% 16% Return on Assets > 15% 21% In the past year, these targets have been exceeded, in some cases quite handsomely, as you can see on this slide. I cannot promise you that each of these targets w
Slide 5: Strong Performance - FY03
Strong Performance - FY03 Sales up 32% US$803.7m Gross Profit up 47% US$301.8m EBIT 3 up 71% US$130.6m Operating Profit 4 up 202% US$85.4m Other features of our strong performance over the past year are shown on this slide. Gross Profit was up 47% and Earnings Before Interest and Tax3 was 71% higher
Slide 6: Strong Performance - FY03 Including Asset Sales
Strong Performance - FY03 Sales up 32% US$803.7m Gross Profit up 47% US$301.8m EBIT 3 up 71% US$130.6m Operating Profit 4 up 202% US$85.4m Net Operating Profit Including Asset Sales 5 up 454% US$170.5m The sale of the last of our gypsum assets was completed in March 2003, with the sale of the Las Ve
Slide 7: Final dividend and proposed capital return
The company’s strong operating performance allowed the Board to declare a final dividend of US 2.5 cents a share, which was paid last month. This payment brought total dividends for the year to US 5.0 cents a share. The sale of the gypsum assets has also enabled us to recommend a further return of c
Slide 8: Strong Cash Returns Since December 2001
Strong Cash Returns Since December 2001* Dividends US US 10c Capital Returns* US US 40c Total Total US 50c Cash Yield 7% *paid or announced Since December 2001, just two months after the restructuring was completed, dividends and capital returns to shareholders either paid or recommended have totall
Slide 9: Sound Financial Position
Sound Financial Position Strong growth prospects Conservatively-geared balance sheet Sufficient cashflow to fund growth The company is now in the sound position of having: • strong growth prospects • a conservatively geared balance sheet, and • sufficient cash flow to pay for its expansion without n
Slide 10: Expanded Production Capacity FY03 Investment
Expanded Production Capacity FY03 Investment in Capacity Texas US$ US$ 21.6m Illinois US$ US$ 12.5m Pennsylvania Pennsylvania US$ 7.7m US$ 41.8m We continue to invest in production capacity so we can meet rapidly growing demand. In the past year, we spent about $42 million US dollars to add capacity
Slide 11: Expanded Production Capacity FY04 Investment
Expanded Production Capacity FY04 Investment in Capacity Sacramento, California US$ US$ 47.5m Peru, Illinois Peru, Illinois US$ 49.9m Fontana, California Fontana, California US$ 2.8m US$ 100.2m The latest of our major growth projects were announced about two weeks ago and involve investment of an ad
Slide 12: Expanded Production Capacity - Plant Locations
Expanded Production Capacity Tacoma, WA Fontana, CA Plant City, FL Waxahachie, TX Cleburne, TX Peru, IL Blandon, PA Summerville, SC Sacramento, CA New Trim Line New Plant JH Plant Locations These projects include: US$47.5 million to build a new plant at Sacramento in northern California which will m
Slide 13: Unique Trim Products
Unique Trim Products Sales of the company’s unique trim products — shown here — have been growing at more than 50% a year. The new production line in Illinois will allow us to pursue sales in the mid-west and northeast of the country where we see strong potential for Harditrim®. The new trim line wi
Slide 14: Increased Scale
Increased Scale 1990 1994 1998 2001 2003 mmsf 60 100 150 200 300 Production Capacity Per Line The new plant at Sacramento will have 50% more capacity than our next largest line, but cost only fractionally more to build. This has been made possible by further advances in plant design and production t
Slide 15: Lower Capital Cost
Lower Capital Cost 1990 1995 1997 1998 2000 2003 USD/sf Capital Cost/Unit of Capacity The capital cost of each unit of capacity at this new plant will be one third lower than was the case for the last plant we built. And, as you can see, this continues a strong trend over 10 years in which the unit
Slide 16: Summary: strong financial position and growth
In summary, your company is in a strong financial position, and is pursuing high rates of growth and above-average returns on invested capital. At the same time, it is working hard to ensure the safety of its workers, train and develop the next generation of managers, and manage the company with hon
Slide 17: Competitive Advantages
Competitive Advantages Plants built to James Hardie's own design Engineering and process technology unique to James Hardie Key aspects of technology are patented or have intellectual property protection Unique, differentiated products others can't make Our fibre cement manufacturing plants are built
Slide 18: USA Market Share - Exterior Products
USA Market Share 2007 USA Exterior Products Market 11.0 bsf James Hardie 20% Other 80% 2002 USA Exterior Products Market 10.2 bsf James Hardie 11% Other 89% Our share of the 10 billion square feet USA exterior products market is now above 11%. By 2007, we believe the total market will have grown to
Slide 19: USA Market Share - Interior Cement Board
USA Market Share 2002 USA Interior Cement Board Market 0.95bsf 2007 USA Interior Cement Board Market 1.1bsf James Hardie 40% Other 60% James Hardie 20% Other 80% The market for backer boards could grow even faster. In 2002, we held a 20% share of this market, estimated to be almost 1 billion square
Slide 20: Further Growth Potential
Further Growth Potential We also see significant further growth potential in Australia and New Zealand as we introduce new products that have been proven in the United States. Our investment in research and development allows us to develop products with improved durability and aesthetics, and for ne
Slide 21: Ezi-Grid Tile Backer
Ezi-Grid? Tile Backer We have recently launched new tile backer boards under the brand name Ezi-Grid™ in the USA and Australia and expect these to increase sales further by making it easier for tilers to complete installations. A grid embossed into the sheet surface helps tilers estimate straight ed
Slide 22: Linea Weatherboards
Linea(r) Weatherboards In New Zealand, our new low-density Linea® brand weatherboards have been more successful than even our most optimistic targets and we plan to launch similar products in other markets. Linea® also has patent protection.
Slide 23: Exo-Tec Facade Panel
Exo-Tec(tm) Facade Panel Australia is also the site of an exciting development in commercial facade products, with the launch of the more durable ExoTec™ Facade Panel. Patent protection is pending on several aspects of the technology used in the ExoTec™ Facade Panel.
Slide 24: Artisan Roofing
Artisan Roofing We have just completed a new US$12.5 million pilot plant in California to trial a new roofing production technology and a new and extremely durable roofing product, both developed by our in-house R&D team. A prototype of the new roof product is shown here. If successful, we will be a
Slide 25: Europe
Europe As well as expanding into new product areas, we have also expanded geographically. In February we began selling backer and siding products manufactured in the USA, to the UK and France. These are the first steps in testing the viability of further expansion into Europe, a market that could of
Slide 26: Thanks to the company's people
All that I have described depends, of course, on the company’s people. They are one of its greatest assets and we are proud of their achievements. On your behalf, I thank all the company’s management and employees for their efforts.
Slide 27: Corporate Governance
Corporate Governance The subject of corporate governance has been covered extensively in the annual report. Clearly, this is an area of considerable interest for investors, and there is a demand for companies to publicly address the issues it raises. I believe this company has sound and well-proven
Slide 28: Corporate Governance - Board's Role
Corporate Governance The Board’s role is to create the conditions that encourage this to occur. This will be most effectively achieved where the Board is a strong, high-performing team that operates in a climate of openness, trust and candour and where respectful dissent and rigorous debate routinel
Slide 29: Corporate Governance - Board Experience
Corporate Governance In the past year, the Board has met in the USA, Australia, New Zealand and Europe — all territories where we have either large business interests or emerging opportunities. Three Board meetings included extended visits to our operations and meetings with employees and customers
Slide 30: New Board Candidates
Corporate Governance To that end, I am pleased to be introducing to you today, two new candidates for the Board who, if elected by shareholders, will become independent non-executive directors. These gentlemen are Mr Peter Cameron and Mr Donald McGauchie. Both have earned strong reputations and have
Slide 31: Board Candidate Mr Cameron
Corporate Governance As you will be aware from your Notice of Meeting, Mr Cameron has a distinguished background in financial services and the law. He is Chairman of Investment Banking in Australia and a Managing Director of Credit Suisse First Boston. He was formerly a partner and Head of Mergers a
Slide 32: Board Candidate Mr McGauchie
Corporate Governance Mr McGauchie is a Director of The Reserve Bank of Australia, Telstra Corporation Limited and National Foods Limited and Chairman of the Rural Finance Corporation of Victoria and Deputy Chairman of Ridley Corporation and the Australian Wool Testing Authority. He has had extensive
Slide 33: Corporate Governance - Multi-national Regimes
Corporate Governance Our multi-national structure exposes James Hardie to a number of governance and regulatory regimes and requires us to comply simultaneously with rules and community expectations in several different countries. In this regard, our Australian heritage has served us well and it is
Slide 34: Corporate Governance - ASX Guidelines
Corporate Governance In March 2003, the Australian Stock Exchange Corporate Governance Council issued new guidelines that become effective this year. The guidelines provide a framework for good governance and from next year, companies are obliged to explain if and why they do not comply with any of
Slide 35: Corporate Governance - Sarbanes-Oxley
Corporate Governance In 2002 the US Congress introduced new laws and regulations related to governance, disclosure and accountability standards in that country. In all material respects, James Hardie was already being governed in the manner prescribed in the new laws, including those that are still
Slide 36: Corporate Governance - Transparency and Accountability
Corporate Governance The company’s practise accords with the new initiatives of regulators and others to ensure that equity markets operate within robust and credible governance frameworks. We will continue to emphasise transparency, through full and meaningful disclosure; sustained accountability;
Slide 37: Q1 FY04 Results Summary
Q1 FY04 Results Summary Sales increased 24% to US$241.5 EBIT 3 up 38% to US$48.3 Operating Profit 4 up 47% to US$32.9 Finally, I will close with some comments about current trading performance. Yesterday, the company announced its first quarter results for its fiscal year 04 for the three months end
Slide 38: USA Fibre Cement Q1 Results
USA Fibre Cement Net Sales up 22% to US$186.8 EBIT 3 up 39% to US$54.1 Our largest business, the USA fibre cement operation, generated a 22% increase in sales due to higher volumes and a higher average selling price. Market share increased in all major product categories and in all parts of the coun
Slide 39: Outlook
Outlook The outlook for the balance of the year is positive. Demand from our end markets, particularly in the USA, remains at high levels and we are confident of achieving or exceeding the targets I described earlier, for both the USA fibre cement business and the company overall. As the first quart
Slide 40: Resolutions
Resolutions 1. Reports and accounts for the year ended 31 March 2003 That the annual accounts of the Company for the financial year ended 31 March 2003 be received and adopted and published in the English language Election of members to the Supervisory and Joint Boards To re-elect Ms M Hellicar To r
Slide 41: Resolutions (continued)
Resolutions Supervisory Board Share Plan participation To approve Messrs Cameron and McGauchie as participants in the Supervisory Board Share Plan Managing Board To elect Mr F Zwinkels as a member of the Managing Board Renewal of authority for acquisition by the Company of its own shares Increase in
Slide 42: 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 43: Notes
Notes Unless otherwise stated, results are for continuing operations only and comparisons are of the 1st quarter of the current fiscal year versus the 1st quarter of the prior fiscal year. This Management Presentation forms part of a package of information about the company's results. It should be r
Slide 44: Notes Cont...
Notes Cont... 4. Operating profit from continuing operations before income taxes is equivalent to the US GAAP measure of income from continuing operations before income taxes. Net operating profit including asset sales is equivalent to the US GAAP measure of net income. Total accounting profit is eq
Slide 45: Australian Information Meeting 13 August 2003
Australian Information Meeting 13 August 2003
Hardie James Industries — Shareholder Meeting (August 2003) on 6ix