James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Presentation (March 2004)
38 slides from James Hardie Industries's investor presentation, Mar 24, 2004
Slide 1: High Growth From Unique Technology
i |) @)sames nardie ani ernie q James Hardie High Growth From Unique Technology March 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
@ James Hardie First to Develop Fibre Cement James Hardie pioneered development of fibre cement technology in the 1980s Fibre Cement Cellulose Fibre Portland Cement
Slide 4: Fibre cement applications
@ James Hardie * External siding/soffit lining » — Internal wall/floor wet area lining «Trim and fascia * — Geiling 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 ope
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 engin
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
@ James Hardie 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
_. North America Fi James Hardie is the largest lowest cost producer of fibre cement in North America oo. Plant Capacity Plant Locations Flat Sheet Capacity L Plants (mmsf) Fontana, California 180 Q Plant City, Florida 300 / Cleburne, Texas 500 , Tacoma, Washington 200 Peru, Illinois 560" » a Waxaha
Slide 10: Increased Scale
@ James Hardie Increased Scale mmsf Production Capacity Per Line 300 200 150 100 1990 1994 1998 2001 2003 10
Slide 11: Lower Capital Cost
@ James Hardie Lower Capital Cost Capital Cost/Unit of Capacity USDIsf 1990 1995 1997 1998 2000 2004 11
Slide 12: Superior Product Performance
Superior Product Performance Fibre Cement is more durable than wood and engineered wood Fibre Cement vw ms a 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 i ee ed yoy ap Engineered Wood 12
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 Blister
Slide 14: Numerous Growth Dimensions
@ James Hardie Numerous Growth Dimensions Siding Growth | Soffit i| Retail Growth | 1997 1998 1999 2000 2001 2002 2003 1997 1998 1999 2000 2001 2002 2003 FY00 FYO4 Fyo2 FY03 Trim Growth 1/4" Hardibacker Growth 1/2” Hardibacker Growth Fyoo FYet Fyo2 FYO3 FY97 FY98 FYSa FYOO0 FYo1 FYO2 FYO03 Fyo7 FY98
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 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$M) 7m Volume — Housing Starts == Revenue - 250 125 VOLUME (MMSF) and Starts (ooo's units) 16
Slide 17: USA Fibre Cement
@ James Hardie USA Fibre Cement EBIT and EBIT Margin’ 507 HM EBIT“* EBIT/Sales y 30 N OT EBIT US$M a EBIT MARGIN % = oO 0 FY99 FYOO FY01 FY02 FY03 YTD FY04 *Excludes restructuring and other operating expenses 17
Slide 18: Market Data — Exterior Products
@ James Hardie Market Data — Exterior Products Market Size (bsf) Product Category New Construction - Siding, Fascia & Soffits 5.9 - Trim 1.2 Total New ee 7.1 ~ Repair & Remodel re ~ - Siding, Fascia & Soffits 4.5 - Trim 0.9 Total R&R eee 5A ~ Grand Total 12.5 Note —- This information is based cn the
Slide 19: Exteriors volume on track to more than double 02-07
@ James Hardie Exteriors-volume on track to more than double 02-07 Volume (mmsf) 1976 Actual Compound Annual Growth Rate 24% 998 FY02 FY03 FY04 FY05 FY06 FY07 FY04 Volume = YTD December FY04 Annualised 19
Slide 20: Exteriors revenue on track to more than double 02-07
@ James Hardie emacs Exteriors-revenue on track to more than double 02-07 USSM 890 Actual Compound Annual Growth Rate 28% 445 FY02 FY03 FY04 FY05 FY06 FYO7 FY04 Revenue = YTD December FY04 Annualised 20
Slide 21: Exteriors — Growth Potential
@ James Hardie Exteriors — Growth Potential Market Share 36 - Potential 40% 20% 1% 1990 2002 2007 2025 21
Slide 22: Stable US Housing Market
Stable US Housing Market s Positive demographic factors # Immigration » Internal migration » Household formation « Low mortgage rates s Strong house prices * Low inventories = Improving economy 22
Slide 23: Backer Could Grow Even More
Backer Could Grow Even Updated Estimate 2007 USA Interior Cement USA Interior Cement Board Board : Market 0.97bsf Market 1.1bsf i James : Hardie 27% | James NT WU wit Note -- This information is based cn the latest market survey data collected and analysed by James Hardie and is based on source maie
Slide 24: Australia/New Zealand
| @ sames Hardie Australia/New Zealand \ , YTD sales US$140m — up 22% * YTD EBIT' up 19% « Higher value differentiated products = Lower delivered cost » Emphasise step change ® High performance culture = Increase revenue and margins 24
Slide 25: 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 26: 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 27: Pipes
: @ James Hardie 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 27
Slide 28: 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$12m pilot plant commissioned 28
Slide 29: Europe
Europe * Initially pursuing a low cost, low risk strategy « Differentiated products imported from US # G2 Backer ® XLD Trim ® ColorPlus Siding » Focussed market development UK and France = JH business model differentiated from current industry approach 29
Slide 30: Results Year To Date
Results Year To Date YTDO04 - 9ME Dec 03 Sales Gross Profit EBIT" Operating Profit? USS$Million 730.6 269.2 137.4 94.0 24% 26% 36% 56% 30
Slide 31: Results Year To Date — USA Fibre Cement
@ 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 31
Slide 32: Results Year To Date — Other Businesses
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 32
Slide 33: 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% Net debt Gearing Net debt & Equity 22.9% 21.4% 44.7% Net Interest Cover 18.3x 6.6x 3.0x * Annualised 33
Slide 34: 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 35: Foundation Inquiry
Foundation Inquiry : Inquiry into establishment of Medical Research and Compensation Foundation announced by NSW Government Findings to be reported by 30 June 2004 Inquiry welcomed — provides forum to address misconceptions JHI NV legal and financial position unchanged ® No obligation on JHI NV to p
Slide 36: 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 st
Slide 37: 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 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 business. EBIT
Slide 38: High Growth From Unique Technology
i |) @)sames nardie ani ernie q James Hardie High Growth From Unique Technology March 2004
James Hardie Industries — Investor Presentation (March 2004) on 6ix