James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Shareholder Meeting (September 2006)
37 slides from James Hardie Industries's shareholder meeting presentation, Sep 22, 2006
Slide 1: Annual Information Meeting CEO's Address
Annual Information Meeting CEO’s Address Louis Gries
Slide 2: Results FY06
Results FY06 Unless otherwise stated, results are for continuing operations only, and comparisons are for fiscal year 2006 versus the prior fiscal year .
Slide 3: Highlights - FY06
Highlights- FY06 Strong results Net sales up 23% to US$1,488.5 million Gross profit up 29% to US$550.8 million Bottom line affected by recording of asbestos provision USA Fibre Cement sales up 30% to US$1,218.4 million USA Fibre Cement EBIT up 42% to US$342.6 million Significant capacity expansion 3
Slide 4: Exceeding Targets
Exceeding Targets FY06 Long Term Actual Target Revenue Growth 23% >15% pa EBIT 1 /Sales 21% >15% pa Return on Assets 2 17% >15% pa 1 Excludes asbestos provision, SCI and other related expenses and impairment charge. 2 Net income (excluding asbestos provision, SCI and other related expenses, and writ
Slide 5: USA Fibre Cement - FY06 Full Year
USA Fibre Cement – FY06 Full Year – very strong sales & EBIT growth Net Sales up 30% to US$1,218.4 million Sales Volume up 18% to 2,182.8 mmsf Average Price up 10% to US$558 per msf EBIT up 42% to US$342.6 million EBIT Margin up 2.4 pts to 28.1% 5
Slide 6: USA Fibre Cement Top-Line Growth
USA Fibre Cement Top-Line Growth 3000 $1,300 2800 $1,200 2600 JH Volume JH Revenue Housing Starts $1,100 2400 $1,000 2200 $900 2000 $800 1800 (US$M) Starts (000s Units) 1600 $700 / Revenue (mmsf) 1400 $600 1200 $500 Volume 1000 $400 800 $300 600 $200 400 200 $100 0 $0 90 91 92 93 94 95 96 97 98 99 0
Slide 7: USA Fibre Cement Key Points
USA Fibre Cement Key Points Continuing sales growth in both emerging and established markets Sales of both interior and exterior products growing strongly Continued market penetration against alternative materials Sales growth in higher-priced differentiated products ColorPlus TM strategy continuing
Slide 8: Asia Pacific Fibre Cement - FY06 Full Year Results
Asia Pacific Fibre Cement – FY06 Full Year Results Net Sales up 2% to US$241.8 million Sales Volume down 2% to 368.3 mmsf EBIT down 11% to US$41.7 million EBIT Margin down 2.6 pts to 17.2% 8
Slide 9: Asia Pacific Fibre Cement - FY06 Philippines Key Points
Asia Pacific Fibre Cement – FY06 Philippines — Key Points Domestic demand affected by weaker economic conditions and slowdown in building construction activity Net sales down 9% full year EBIT positive for the year 10
Slide 10: Other - FY06 USA Hardie Pipe Key Points
Other – FY06 USA Hardie Pipe — Key Points Both residential and non-residential construction activity remained buoyant in Florida Market share gains Manufacturing performance improvements Reduced EBIT loss 11
Slide 11: Other - FY06 Europe Fibre Cement
Other – FY06 Europe Fibre Cement Sales building steadily Continuing to expand distribution channels Artisan™ Roofing Ceased market development initiatives Review of market testing results concluded greater shareholder value created by focusing investment elsewhere Pilot plant closed – asset impairme
Slide 12: Key Ratios - Full Year
Key Ratios – Full Year FY06 FY06 FY05 FY04 EPS (Diluted) 1 44.9c 27.7c 27.2c Dividend paid per share 10.0c 3.0c 5.0c Return on Shareholders’ Funds 1 29.6% 22.4% 27.6% Return on Capital Employed 1 32.1% 23.6% 23.4% EBIT/ Sales (EBIT margin) 20.9% 16.2% 17.5% Gearing Ratio (1.6)% 6.8% 17.0% Net Intere
Slide 13: Results Q1 FY07
Results Q1 FY07 Unless otherwise stated, results are for continuing operations only, and comparisons are for the fiscal year 2006 versus the prior fiscal year.
Slide 14: Overview - Q1 FY07 Operating Results
Overview — Q1 FY07 Operating Results USA Fibre Cement – strong sales and EBIT growth Asia Pacific Fibre Cement Australia and New Zealand – volumes up slightly despite weaker market, but EBIT down Philippines – EBIT positive USA Hardie Pipe – first quarterly positive EBIT result Strong cashflow gener
Slide 15: Results - Q1 FY07
Results – Q1 FY07 US$Million Net Sales 415.5 Up 16% Gross Profit 157.7 Up 9% EBIT* 96.1 Up 11% Operating Profit * 62.7 Up 12% * Excludes effect of foreign exchange on asbestos provision. 16
Slide 16: Results - Q1 FY07 USA Fibre Cement
Results – Q1 FY07 USA Fibre Cement US$Million Net Sales 348.9 Up 21% EBIT 103.3 Up 10% Volume 605.7 mmsf Up 16% EBIT Margin 29.6% Down 3.1pts 17
Slide 17: USA Fibre Cement EBIT and EBIT Margin
USA Fibre Cement EBIT and EBIT Margin* 120 EBIT EBIT/Sales 35 30 100 25 80 % MARGIN 20 60 EBIT US$M 15 EBIT 40 10 20 5 0 0 FY01 FY02 FY03 FY04 FY05 FY06 Q1 FY07 *Excludes restructuring and other operating expenses of US$12.6 million in Q3 FY02 Note: dotted lines indicate EBIT margin long-term target
Slide 18: USA Fibre Cement New housing slow-down
USA Fibre Cement New housing slow-down Key sales determinants: Level of new housing construction activity Level of repair and remodel activity Market development program effectiveness Price improvement New housing construction segment currently accounts for approx. 70% of total sales (approx. 30% re
Slide 19: USA Fibre Cement New housing slow-down (continued)
USA Fibre Cement New housing slow-down (continued) Largest sales regions: South Central, South East and Pacific North West Business considerations: timing of capacity expansion, cost containment and efficiency improvements 20
Slide 20: Results - Q1 FY07 Other Businesses
Results – Q1 FY07 Other Businesses ANZ volumes slightly up, EBIT margin 16.7% Philippines sales up 2%, EBIT positive USA Hardie Pipe – first EBIT positive quarter Europe – EBIT negative, as expected 21
Slide 21: Outlook
Outlook USA Fibre Cement New housing construction to continue to slow Q1 revenue and volumes very strong, but housing slow-down expected to impact Q2 volumes – this is happening Expect to continue outperforming housing market Repair and remodelling activity to remain stable No change to earnings gui
Slide 22: Outlook (continued)
Outlook (continued) Asia Pacific Fibre Cement No material improvement to market conditions in Asia Pacific businesses expected in short-term Company SCI and other related expenses to continue until FFA finalised Future reported earnings subject to volatility related impact of currency exchange fluct
Slide 23: Understanding our Sustainable Competitive Advantage
Understanding our Sustainable Competitive Advantage
Slide 24: Unique Technology and Scale
Unique Technology and Scale Unique plant engineering and proprietary process technology and product formulations – significant investment in R&D Superior capital cost efficiency Low cost manufacturer Only national producer of fibre cement in each key market Excellent plant economies of scale – plant
Slide 25: Focus Industry Leadership and Profitable Growth
Focus 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 26
Slide 26: Largest Fibre Cement Producer in North America
Largest Fibre Cement Producer in North America Plant Locations JH Plant Design Capacity Flat Sheet Capacity Plants(mmsf) Fontana, California 180 z Tacoma, WA Plant City, Florida 300 Cleburne, Texas 500 Blandon, PA Tacoma, Washington 200 z z Peru, IL Peru, Illinois 560 Waxahachie, Texas 360 z Reno, N
Slide 27: Revenue Growth Streams
Revenue Growth Streams Exterior products Siding Soffit Fascia Trim Interior products 1 / 4 inch backerboard Hardibacker 500 ® Total sales compound annual growth rate of 27% (FY02 – FY06) USA Fibre Cement 28
Slide 28: Growth In Revenue Per Employee
Growth In Revenue Per Employee $552 $495 $413 $381 $367 $354 $329 $326 $298 $251 $250 $166 $153 $115 $48 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Revenue # of Employees Revenue Per Employee 29
Slide 29: Long Term Financial Targets
Long Term Financial Targets Target 1 Actual Actual Actual FY06 FY05 FY04 Revenue Growth > 15% p.a. 23% 23% 25% EBIT Margin > 15% p.a 19%* 16% 18% Return On Capital > 15% p.a 29%* 24% 23% Employed 1 Long term target excludes asbestos-related expenses * Excludes asbestos charge of US$716 million assoc
Slide 30: Asbestos-related compensation progress
Annual Information Meeting Asbestos-related compensation progress
Slide 31: Asbestos Update
Asbestos Update Progress made but slower than expected All proven claims continue to be paid by MRCF Company recorded a net provision of US$716m (A$1 billion) at 31 March 2006 – “probable and estimable” under US GAAP (provision based on KPMG Actuaries’ estimate) Net provision adjusted to US$742m (A$
Slide 32: Asbestos Update (continued)
Asbestos Update (continued) There have been ongoing discussions with ATO and NSW Government on tax treatment of SPF since adverse ATO decision in June Currently discussing potential and limited amendments to FFA with NSW Government – objective is satisfactory outcome for all stakeholders to FFA Requ
Slide 33: Summary
Summary We have a strong, well-established, high-growth and high-return business We have sustainable competitive advantage Our model for continued growth is based on: Large market opportunity Superior value proposition Proprietary and/or protected technology Large upsides due to current R&D investme
Slide 34: James Hardie Annual Information Meeting
James Hardie Annual Information Meeting
Slide 35: Endnotes: Definitions
Endnotes DEFINITIONS Financial Measures – US GAAP equivalents EBIT and EBIT margin – EBIT is equivalent to the US GAAP measure of operating income. EBIT margin is defined as EBIT as a percentage of net sales. James Hardie believes EBIT and EBIT margin to be relevant and useful information as these a
Slide 36: Non-US GAAP Financial Measures
NON-US GAAP FINANCIAL MEASURES EBIT and EBIT margin excluding asbestos – EBIT and EBIT margin excluding asbestos are not measures of financial performance under US GAAP and should not be considered to be more meaningful than EBIT and EBIT margin. James Hardie has included these financial measures to
Slide 37: Disclaimer
Disclaimer This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in the annual reports to shar
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