James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (February 2004)
35 slides from James Hardie Industries's investor presentation, Feb 23, 2004
Slide 1: High Growth From Unique Technology
@) 4ames Hardie 7) James Hardie High Growth From Unique Technology February 2004
Slide 2: Focussed on Fibre Cement
@) James Hardie Focussed on Fibre Cement 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 Cellulose Fibre . Fibre a |. 7 Cement nis
Slide 4: External siding/soffit lining
@) James Hardie External siding/soffit lining Internal wail/floor wet area lining Trim and fascia Ceiling lining and flooring External/internal wall systems Partitioning Commercial facades Decorative columns Fencing Drainage pipes
Slide 5: Unique Technology and Scale
@) James Hardie Unique Technology and Scale Sustainable Competitive Advantage # Unique plant engineering and proprietary process technology and product formulations s Superior capital cost efficiency — plant capital cost less than %% that of competitors « Largest, lowest cost manufacturer — plant op
Slide 6: Creating the Future
@) James Hardie Creating the Future 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 F¥Y03 — 3% of sales = Core projects new proprietary engineered raw materials new proprietary product formulations new engi
Slide 7: Strategy
@) James Hardie 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
Slide 8: Balanced Growth Portfolio
Balanced Growth Portfolio James Hardie Business Portfolio — FY 03 GCE Sales EBIT' USA — Established high growth/high 10% 15% 89% return Asia Pacific — Established high return 21% 24% 17% Other — Emerging opportunities 9% 1% (6%) (Pipes, Roofing, Europe, Chile) Total 100% 100% 100%
Slide 9: North America Fibre Cement
@) James Hardie ‘North America Fibre Cement James Hardie is the largest lowest cost producer of fibre cement in North America ; Plant Capacity Plant Locations Flat Sheet Capacity Plants (mmsf) Fontana, California 180 Cleburne, Texas “Peru, illinois 560" Summerville, South 190 Carolina Reno, Nevada 3
Slide 10: Increased Scale
@) James Hardie Cn vee sc Increased Scale Production Capacity Per Line mmsf 7 7 Po Ge Le Bye oe Le 10
Slide 11: L y sa
L y sa 11
Slide 12: Superior Product Performance
@) James Hardie Superior Product Performance Fibre Cement is more durable than wood and engineered wood Superior Fibr men ibre Cement Durability Engineered Wood “ Moisture Resistant ? v Fire Resistant ? Weather Resistant 7? Termite Proof ? Won't Warp ? ee A Won't Crack ? v Won't Rot ? “ Holds PaintL
Slide 13: Superior Product Performance
; @ James Hardie Superior Product Performance Fibre Cement looks and performs better than vinyl Fibre Cement vw Fire Resistant ? Hail Resistant Wind Resistant Won't Warp Won't Buckle Colour Lasts Longer Vinyl we * Strong and Rigid Expands/Contracts Withstands Impact Dimensional Stability Won't Blist
Slide 14: Growth Dimension
; (@) James Hardie wey Growth Dimension Siding Growth Soffit Growth Retail Growth Z Zz 1997 1998 1999 2000 2001 2002 2003 2002 200: 1/4" Hardibacker Growth 1/2” Hardibacker Growth Fyoo FYet Fyo2 FYO3 FY97 FY98 FYSa FYOO0 FYo1 FYO2 FYO03 Fyo7 FY98 FY99 ~FYOO FYO1 FY02 FYO3 14
Slide 15: Mix Is Driving Price
Mix Is Driving Price Higher priced differentiated products are driving average price growth US$ per MSF 5005 480 5 4605 4405 420 5 4005 @) James Hardie 380 FY99 FY0O FY01 T T 1 FYQ2 FY03 YTD FY04 15
Slide 16: North America Fibre Cement
@) James Hardie North America Fibre Cement Revenue Growth Continuing to outstrip Volume Growth 1800 4 750 625 500 375 REVENUE (US$M) 9 Volume — Housing Starts wom Revenue 250 VOLUME (MMSF) and Starts (oo0's units) 125 16
Slide 17: Market Data
@) James Hardie Market Data Market Size (bsf) Product Category New Construction - Siding, Fascia & Soffits 5.9 - Trim 1.2 “Total New ee "74 ~~ “Repair &Remodeltst—<“i‘SOSSSCSCtsSCSCsCOSti‘!” ~ ~~ - Siding, Fascia & Soffits 4.5 - Trim 0.9 “Total R&R ee ~ 5.4 ~~ Grand Total 12.5 Note —- This informati
Slide 18: Stable Market Growth
@) James Hardie Stable Market Growth Market Size (bsf) 184 Markel Size osama 6 104 54 0 T FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 18
Slide 19: Sales on track to more than double
@) James Hardie oe Sales on track to more than double 02 - 07 JH Volume (bsf) 24 JH Exterior Volum FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 19
Slide 20: Share on track to more than double
@) James Hardie Share on track to more than double 02 - 07 Market Share % 157 roe ane aoe” * weer panvansnsaneeeee! 10 geste ngennscneeeenee + pbucss® Market Share 5 + 0 ; FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 20
Slide 21: James Hardie market estimate update
aq (CH) James Hardie See ® _ OD (ye) LL. ¢ ® 2 Lu > (e) a oO 2 = (2) O See (eb) =< (o) (ye) © 2007 imate Cement Updated Est Cement tor USA Inter tor USA Inter Board Market 1 Board Market 0 1bsf 97bsf s = Se we Hard je 40% Hard This information is based on the latest market survey data collected and
Slide 22: Australia/New Zealand
@) James Hardie Australia/New Zealand ? | YTD sales US$140m — up 22% « YTD EBITt up 19% « Higher value differentiated products = Lower delivered cost » Emphasise step change ® High performance culture = Increase revenue and margins 22
Slide 23: Philippines and Asia
Philippines and Asia Manufacturing plant commissioned 1999 YTD sales US$18 million up 39% EBIT' 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
@) James Hardie 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 EBIT' « Introducing differentiated products
Slide 25: Pipes
a Pipes = USA manufacturing plant commissioned 2001 = Product has advantages over reinforced steel concrete pipes — light, long, strong = Lower cost to make and install s YTD volume growth up 107% = Long term targets = national business « large share of US$2 billion market 25
Slide 26: Roofing
@) James Hardie 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 26
Slide 27: Europe
@) James Hardie 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 27
Slide 28: Results Year To Date
@) James Hardie Results Year To Date YTDO04 - 9ME Dec 03 USSMillion Sales 730.6 Up 24% Gross Profit 269.2 Up 26% EBIT' 137.4 Up 36% Operating Profit? 94.0 Up 56% 28
Slide 29: Results Year To Date
@) James Hardie Results Year To Date YTD04 - 9ME Dec 03 USA Fibre Cement USSMillion Sales 553.5 Up 22% EBIT! 152.4 Up 30% Volume 1136mmsf Up 16% EBIT Margin 27.5% Up 1.6pts 29
Slide 30: Results Year To Date
Results Year To Date YTD04 - 9ME Dec 03 Other Businesses « ANZ sales up 22%. EBIT' 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 30
Slide 31: Key Ratios
@) James Hardie TCT Key Ratios YTD ’04 FY ’03 FY ’02 EPS (Basic) 21.0¢ 18.7¢ 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% Net debt Gearing Net debt & Equity 22.9% 21.4% 44.7% Net Interest Cover 18.3x 6.6x 3.0x * Annuali
Slide 32: Long Term Financial Targets
@) James Hardie Long Term Financial Targets High Growth and Attractive Returns Targeted Target Actual FY03 Actual YTD04 Revenue Growth > 15% p.a. 32% 24% EBIT Margins‘ > 15% 16% 19% ROA > 15% 21% 22%
Slide 33: Disclaimer
@) James Hardie 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 s
Slide 34: Notes
@) James Hardie 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 fo be relevant and useful information as these are the primary measures used by our management to measure the operating profit or loss of our
Slide 35: High Growth From Unique Technology
@) 4ames Hardie 7) James Hardie High Growth From Unique Technology February 2004
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