Boral — H1 FY2000 Earnings Presentation
26 slides from Boral's earnings presentation, February 2000
Slide 1: Boral Limited 1999/2000 Interim Profit Announcement
Boral Limited 1999/2000 Interim Profit Announcement Presentation Outline • Overview of results & key financials • Building and Construction Materials (new Boral) • Energy (Origin Energy) • The past six years – a retrospective 1
Slide 2: Financial Highlights
Financial Highlights • Sales up 5% to $2.6 billion • Operating profit up 11% to $240.9 million • Profit after tax up 15% to $124.9 million • Significant cash flow improvements • Earnings per share is 11.0 cents, up 15% • Interim dividend unchanged at 7.5 cents (paid on 9 Feb) Profit after tax of $12
Slide 3: Initiatives continue to be a focus
Initiatives continue to be a focus • Exit loss making and non-core businesses – European bricks – European quarry – Queensland Hardwood – Tyres – Ceramics • PEP savings of $62m • Pursue rationalisation opportunities – JV Softwoods • Sell surplus land – profit of $3.5 million • Focus on cash flow Sig
Slide 4: Tight controls on capital expenditure; net debt to equity within target
Tight controls on capital expenditure are in place 300 250 200 150 $m 100 50 0 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Net debt: equity is back within the target range Net debt:equity Interest Cover 53.3% 4.1 times 70 5 60 4 50 3 times 40 % 30 2 20 1 10 0 0 J 98 D 98 J 99 D 99 J 98 D 98 J 99 D 99 4
Slide 5: New Boral - Rod Pearse
Abnormals after tax Profit on the sale of investments $7.2 m Change in tax rate (after OEI) $22.5 m Provision for write down of assets ($21.7) m GST implementation costs ($2.7) m Total $5.3 m New Boral - Rod Pearse New ASX ticker “BLD” BLD” Sales up 2% Operating profit up 9% 5
Slide 6: Highlights of the first half / Segment analysis
Highlights of the first half • Sales revenue up 2% • Operating profits up 9% • Return on sales up to 9.7% • Return on net assets up • Solid performance from Building Products • PEP and productivity improvements going well • Net capital expenditure reduced by 56% • Divestment program on track • Debt
Slide 7: Segment analysis - Building Products
Segment analysis - Building Products – Housing starts buoyant – Sales up 10% – Operating profit up 49% – Cost reductions positively affected profit – Margin improved from 7% to 10% on corresponding period – Roofing and Masonry delivered strongest results ever Sales x ROS% = Operating Profit 800 12 7
Slide 8: BBP Capex reduced / Segment analysis - Construction Materials
BBP Capital Expenditure has significantly reduced 90 80 70 60 $A ‘m 50 40 Full year 30 forecast 20 Actual 10 Dec-99 0 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 (f) Segment analysis - Construction Materials – Sales down 2% – Operating profit down 15% – Capex down 48% Sales x ROS% = Operating Profit 1
Slide 9: Regional businesses improved; CMG productivity improves
Regional businesses improved, Cement, Contracting, CRB declined CMG Operating Profit A$ ‘m 110 100 90 80 70 60 Favourable 50 Unfavourable 40 lt t t s 7 8 9 g 0 B ad te en or ha rrie 6/9 7/9 8/9 9/0 tin CR cre sp he m c p a 9 9 9 9 tra As Ce n an er Qu H1 H1 H1 Co H1 n Ov Tr Co G CM CMG productivity
Slide 10: CMG Capital Expenditure reduced / Segment analysis - USA
CMG Capital Expenditure has significantly reduced 200 180 160 140 $A ‘m 120 100 80 Full year forecast 60 40 Actual 20 Dec-99 0 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 (f) Segment analysis - USA – Sales down 4% (+2% in USD) – Operating profit up 16% (+25% in USD) – Margin improved from 13% to 16% f
Slide 11: USA Operating profit increased / Segment analysis - Asia
USA Operating profit increased again USA Operating Profit A$ ‘m 55 50 45 40 35 30 25 20 Favourable 15 Unfavourable 10 5 0 H1 97/98 H1 98/99 Bricks Tiles BMTI Overhead H1 99/00 Segment analysis - Asia – Sales up 91% – Operating loss reduced from -$12m to -$9m – Asian economies recovering – Exports as
Slide 12: Asia appears to have bottomed out / Strategic intent
Asia appears to have bottomed out • Indonesia Concrete – Move from loss to profit • Indonesia Plasterboard – Volumes climbing, prices improving • Malaysia Plasterboard – Should breakeven this year • China Plasterboard – Slow to recover • Sustained overcapacity in the region, new solutions are needed
Slide 13: Flatter Structures / Lower Overheads; Operational improvement
Flatter Structures / Lower Overheads • Smaller head office • Divisional GMs & teams to be based outside CBD • Shared facilities / services with Origin Energy • Internal audit Outsourced • Procurement and IT co-located and centralising • Increased centralisation of transaction processing • Move towar
Slide 14: Value driven growth initiatives; divestments and restructuring
Value driven growth initiatives will be our focus • Leading market positions • “Bolt on” acquisitions in Australia • Leverage existing capabilities/positions offshore, eg: – Bricks USA – Construction Materials USA – Plasterboard Asia – Quarry end use We are making good progress with divestments and
Slide 15: BCM's gearing reducing; on the way to full year forecast
BCM’s gearing is reducing Debt / Equity June 30, 1999 Proforma 75% December, 1999 Proforma 65% We are on the way to achieving our full year forecast • First half profit 9% above previous corresponding period • Second half dependent on; – GST “pull forward” demand remaining high – USA housing market
Slide 16: Origin Energy – Grant King
Origin Energy – Grant King New ASX ticker “ORG” Sales up 19% Operating profit up 21% Reported operating profit up 21% with sales up 19% Sales Revenue Operating Profit Dec 98 Dec 99 % change Dec 98 Dec 99 % change Exploration & Production 98.2 131.8 34 28.6 46.1 61 Retail & Trading 374.5 426.2 23 7.2
Slide 17: Half yearly profit and EBITDA improve
Half yearly profit continues to improve… Increase of 26% on corresponding period Operating Profit* 70 60 50 40 $m 30 20 10 0 Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 * Operating profit excludes corporate costs … with greater improvement in EBITDA Increase of 38% on EBITDA* corresponding period 120 100 80
Slide 18: Capital expenditure; Exploration and Production
Capital expenditure 120 Growth 100 SIB 80 60 $m 40 20 0 Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Exploration and Production Oil Price ($US) • Sales increased 34% to $132 m 30 Average price received • Operating profit up 61% to $46.1m 25 • Benefited from higher oil price • Increased contribution from 20 –
Slide 19: Retail & Trading; Generation
Retail & Trading 500 • Sales up 14% to $426 m 400 Propane Price ($A) • Operating profit down $13 m to a loss of $6.0 300 m due to: 200 – Margin impact of LPG cost ($7 m) 100 – Redundancies & restructuring costs ($6 m) 0 – Additional amortisation charge ($7 m) Jan-98 Dec-98 Jun-99 Dec-99 • Warm winte
Slide 20: Networks; strong cash flow and net debt
Networks • EBIT increased nearly 4 times to $9 million reflecting – increased investment in Envestra – Management fee for operation and maintenance of Stratus • Completed the Envestra owned gas transmission pipelines between: – Berri and Mildura (170 km) – Gladstone and Wide Bay (270 km) Strong cash
Slide 21: On track to achieve full year profit within range
On track to achieve full year profit within range stated in Explanatory Statement • Expect second half to continue improvement on previous corresponding period – Oil price remains strong – Roma and Ladbroke Grove performing well – Recovery of LPG margins – SA natural gas tariff increase – Assume nor
Slide 22: Major capital projects coming to completion; Origin Energy listing
Major capital projects are coming to completion • Ladbroke Grove gas field on line in October 1999 • Peat CSM project commences in April 2000 • Moura CSM project begins in March 2000 • First stage of Ladbroke Grove power project commissioned in February 2000 – second stage due for completion in July
Slide 23: The past 6 years: A retrospective - Tony Berg
The past 6 years A retrospective Tony Berg Development of two strong business groups • Significantly reshaped the building and construction materials businesses – No 1 or 2 in our markets • Developed and grown an energy business which has strong leading market positions – Sold Envestra – Purchased E
Slide 24: Boral refocused; Enormous change in 6 years
Boral refocused Isenhour & Bickerstaff Bricks, SAGASCO US; Plywood Qld Rocla, Qld, Monex NSW (100%) ENERGY 21 Malliss Bricks Europe; Monex (30%); Malaysia Malaysia Concrete Plasterboard 1994 1995 1996 1997 1998 1999 2000 Asphalt , Flyash, Quarries, Lytag, Wholesale Timber, Europe Briar Tyres Malaysi
Slide 25: Productivity and safety performance improved
Productivity has consistently improved Sales/Employee (‘000) 300 270 • Between 1993 & 1999 – Sales increased 16% 240 – Employees reduced by 210 20% 180 – Sales/employee increased 150 by 46% 93 94 95 96 97 98 99 Safety performance has consistently improved LTIFR 30 • Between 1993 & 1999 20 – Lost tim
Slide 26: Boral is more innovative; the demerger is a positive step
Boral is a more innovative company • Pastelcote • Decorative cornices & other value adding plaster products • Claymax • LiCon, Asia • Research on epilift solar technology • Alternative fuels & waste management • Redcliffe Hospital • E-Commerce, www exposure (eg. Plasterboard) • 108 patents registere