Slide 1: Annual Results to June 2008
Fletcher Building Limited For personal use only Annual Results to June 2008 13 August 2008
Slide 2: Disclaimer
2 Disclaimer For personal use only This annual results presentation dated 13 August 2008 provides additional comment on the media release of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions, earnings and
Slide 3: Agenda
3 Agenda For personal use only Introduction Chairman Company and Market Reviews Divisional Performance Financial Results Strategy Outlook Annual Results – August 2008
Slide 4: Highlights
4 Highlights For personal use only Record $NZ768 million operating earnings Net earnings $NZ467 million EPS 93.2 cps Final 24.5 cps Dividend making total for year 48.5 cps Annual Results – August 2008
Slide 5: Company & Market Overview
5 COMPANY & MARKET OVERVIEW For personal use only Formica exterior façade compact structural laminate Puente AnnualdeResults la Salve–Bridge August‐ Spain 2008
Slide 6: Further improvement in earnings pre unusuals
6 Further improvement in earnings pre unusuals For personal use only Overview Proforma Reported 3 Jun 2008 Jun 2007 Jun 2007 NZ$m 12 months 12 months %Δ 12 months Performance Divisional Sales 7091 5926 +20 5926 EBITDA 966 854 +13 859 Financial Results 1 EBIT 768 698 +10 703 2 Net earnings 467 399 +1
Slide 7: Diversification of sales continues to improve
7 Diversification of sales continues to improve For personal use only Overview External Revenue by Region Percentage 60 51 Performance Divisional 35 Financial Results 30 Strategy 7 6 3 2 3 1 0 1 Outlook NZ Australia Nth America Europe Asia Other Jun‐08 Jun‐07 Annual Results – August 2008
Slide 8: New Zealand residential exposure is reducing
8 New Zealand residential exposure is reducing For personal use only Overview EBITDA NZ Res. NZ Non‐Res. Non‐NZ NZ$m % % % Infrastructure 376 26 54 20 Performance Divisional Building Products 171 40 26 34 Financial Results Steel 123 8 44 48 Distribution 82 75 25 ‐ Strategy Laminates & Panels 214 7 7
Slide 9: New Zealand markets – residential declining with non residential and infrastructure steady
9 New Zealand markets – residential declining with non residential and infrastructure steady For personal use only Overview Annual percentage changes in quarterly data Jun 08 Sep 07 Dec 07 Mar 08 Forecast Performance Divisional Residential Consents Numbers ‐7 ‐7 ‐17 ‐14 Additions & alterations value
Slide 10: Margins have held up well but slowdown now evident in some businesses
10 Margins have held up well but slowdown now evident in some businesses For personal use only Overview 6 Mths 6 Mths 12 Mths Dec 2007 Jun 2008 Jun 2008 EBITDA/Sales % EBITDA/Sales % EBITDA/Sales % Performance Divisional Building Products 19.6 20.3 19.9 Steel 8.6 8.7 8.7 Distribution 7.7 6.7 7.2 Fin
Slide 11: Formica reconciliations
11 Formica reconciliations For personal use only Overview May 2007 Actual 1. Evendale Improvements Investor Jun • Key issue is timing and execution. US$m Presentation 2008 Note • Not achieved this period but still considered very achievable. Normalised EBITDA • All improvements are based on metrics
Slide 12: Property activities – quarry end use, residential and surplus assets
12 Property activities – quarry end use, residential and surplus assets For personal use only Overview NZ$m 2004 2005 2006 2007 2008 Quarry end use 6 42 Performance Residential 19 22 25 34 19 Divisional Surplus assets 9 10 9 19 Total 19 31 35 49 80 Financial Results Property activities, be they re
Slide 13: Divisional Performance
13 DIVISIONAL PERFORMANCE For personal use only Forman ceiling – Auckland International Airport Annual Results – August 2008
Slide 14: Overall good divisional performances in difficult market conditions
14 Overall good divisional performances in difficult market conditions For personal use only Overview EBITDA NZ$million 296 283 Performance Divisional 214 171 162 174 123 Financial Results 102 82 88 80 49 Strategy Building Distribution Infrastructure Property Laminates & Steel Products Panels* Outlo
Slide 15: Building Products results
15 Building Products results For personal use only Overview Building Products NZ$m 2008** 2007 %Δ EBITDA and EBITDA margin Sales 739 697 +6 Performance 180 30.0 Divisional EBITDA 171 162 +6 160 25.0 EBITDA margin (%) 140 EBITDA ($M) EBIT 148 141* +5 120 20.0 100 Financial 15.0 Results 80 Funds Emplo
Slide 16: Building Products sales levels maintained
16 Building Products sales levels maintained For personal use only Overview Gross Sales NZ$m 2008 2007 %Δ Volume Δ Price Δ EBITDA Δ New Zealand Performance Divisional ‐ Plasterboard 218 213 +2 ↓ ↑ ↓ ‐ Insulation 144* 111 +30 ↑ ↑ ↓ ‐ Metal Roof Tiles 110 104 +6 ↑ ↓ ↑ Financial Results Australia ‐ Ins
Slide 17: Building Products
17 Building Products For personal use only Overview Plasterboard Performed well with volumes slightly down on last year Strong performance board sales Performance Higher distribution costs. Divisional A new bulk warehouse and distribution centre was completed in Christchurch, strengthening
Slide 18: Building Products
18 Building Products For personal use only Overview Metal roof tiles Businesses experienced strong demand conditions with increased volumes and pricing in the USA, demonstrating the product’s Performance Divisional global niche characteristics. New Zealand export pricing was affected by advers
Slide 19: Distribution results
19 Distribution results For personal use only Overview Distribution NZ$m 2008 2007 %Δ EBITDA and EBITDA margin Sales 1083 1064 +2 Performance 100 10.0 Divisional EBITDA 82 88 ‐7 90 80 EBITDA margin (%) 70 EBITDA ($M) EBIT 73 80 ‐9 60 Financial 50 5.0 Results Funds Employed 185 163 +13 40 30 EBITDA/s
Slide 20: Distribution sales up despite increased competition in slowing market
20 Distribution sales up despite increased competition in slowing market For personal use only Overview Sales NZ$m 2008 2007 %Δ Volume Δ Price Δ EBITDA Δ New Zealand Performance ‐ Same store 1064 1056 1 ↓ ↑ ↓ Divisional ‐ Additional 10 ‐ Upgrades 9 8 Financial Total 1083 1064 1.9 Results Stores 2008
Slide 21: Distribution
21 Distribution For personal use only Overview Challenging 2nd half eroded the gains made in the 1st half. Despite the declining market, market share in core products has Performance Divisional improved. ERP system development progressing. Completion of initial system 2009. Financial Results
Slide 22: Infrastructure results
22 Infrastructure results For personal use only Overview Infrastructure NZ$m 2008 2007 %Δ EBITDA and EBITDA margin Sales 1857 1944 ‐4 Performance EBITDA 400 20.0 Divisional 350 ‐ Concrete & 296 283 +5 * EBITDA margin (%) 300 15.0 EBITDA ($M) Construction 250 ‐ Property 80 49 +63 200 10.0 Financial R
Slide 23: Infrastructure - steady sales on back of good workload
23 Infrastructure ‐ steady sales on back of good workload For personal use only Overview Gross Sales NZ$m 2008 2007 %Δ Volume Δ Price Δ EBITDA Δ New Zealand Performance Divisional ‐ NZ Concrete 741 722 +3 ↓ ↑ ↓ ‐ Construction 803 832 ‐3 ‐ ‐ ↑ Financial Results Australia Concrete 389 328 +19 ↑ ↑ ↑ St
Slide 24: Infrastructure
24 Infrastructure For personal use only Overview Construction earnings improved as a result of good project mix and outcomes. Outlook remains strong based on continued public sector investment. Performance Divisional Residential house volumes impacted by a marked 2nd half sales decline. A sign
Slide 25: Laminates & Panels results adversely affected by Formica
25 Laminates & Panels results adversely affected by Formica** For personal use only Overview Laminates & Panels NZ$m 2008 2007 %Δ EBITDA and EBITDA margin Sales 2132 1058 +102 Performance EBITDA Divisional 250 20.0 ‐ Laminex 166 174 ‐5 * 200 EBITDA margin (%) 15.0 EBITDA ($M) ‐ Formica 48 ‐ ‐ 150 Fi
Slide 26: Laminates & Panels sales increased through Formica acquisition
26 Laminates & Panels sales increased through Formica acquisition For personal use only Overview Gross Sales NZ$m 2008 2007 %Δ Volume Δ Price Δ EBITDA Δ New Zealand Performance Divisional ‐ Laminex 230 278 ‐13 ↓ ↑ ↓ Australia ‐ Laminex 890 852 +4 ↑ ↑ ↓ Financial Results Formica ‐ Asia 178 Strategy ‐
Slide 27: Laminates & Panels
27 Laminates & Panels For personal use only Overview Australian domestic decorative surfaces volumes increased marginally, with prices increasing by 2‐3%. Performance Divisional Australian volumes of commodity white and raw board products increased by 10% with prices in these products remaining
Slide 28: Laminates & Panels
28 Laminates & Panels For personal use only Overview The Papakura HPL facility ceased production as part of the strategic decision to source some of the division’s Australian and NZ HPL requirements from Formica Corporation HPL facility in China. Performance Divisional Export sales volumes of MD
Slide 29: Formica
29 Formica For personal use only Substantial restructuring of the senior management team and Mark Overview Adamson appointed CEO in May 2008. Downturn in the US building market with new residential activity significantly down YOY. Performance Divisional A slowdown in US commercial activity dur
Slide 30: Formica
30 Formica For personal use only Overview 1st Half 2nd Half Full Year Normalised EBITDA 41 32 73 Evendale – increased costs ‐13 ‐12 ‐25 Performance Divisional Trading EBITDA 28 20 48 Depreciation ‐12 ‐13 ‐25 Financial EBIT 16 7 23 Results One off costs ‐10 ‐10 Reported EBIT US$ 16 ‐3 13 Strategy NZ$
Slide 31: Steel results
31 Steel results For personal use only Overview Steel NZ$m 2008 2007 %Δ EBITDA and EBITDA margin Sales 1279 1161 +10 Performance 140 15.0 Divisional EBITDA 123 102* +21 120 EBITDA margin (%) * EBITDA ($M) 100 EBIT 101 * 80 +26 10.0 80 Financial Results Funds Employed 587 496 +18 60 5.0 40 EBITDA/sal
Slide 32: Steel revenues up on price increases and acquisitions
32 Steel revenues up on price increases and acquisitions For personal use only Overview Gross Sales NZ$m 2008 2007 %Δ Volume Δ Price Δ EBITDA Δ New Zealand Performance Divisional ‐ Long Steel 288 260 +11 ↑ ↑ ↑ ‐ Rollforming 195 198 ‐2 ↓ ↑ ↓ ‐ Distribution 299 249 +20 ↑ ↑ ↑ Financial Results Australi
Slide 33: Steel improved YOY performance in buoyant market
33 Steel improved YOY performance in buoyant market For personal use only Overview Steel and scrap prices increased across the business in 2nd half 2008. Strong export and local demand led, with emphasis from Performance Divisional Infrastructure projects. Benefits realised from FY07 restructu
Slide 34: Financial Results
34 FINANCIAL RESULTS For personal use only PlaceMakers Store ‐ Kerikeri Annual Results – August 2008
Slide 35: Net earnings – after unusuals
35 Net earnings – after unusuals For personal use only Overview Jun 2008 Jun 2007 NZ $m 12 months 12 months %Δ Performance Divisional EBIT 768 703 +9 Interest 136 87 +56 Financial Results Tax 150 113 +33 Strategy Minority Interests 15 19 ‐21 Outlook Net earnings 467 484 ‐4 Annual Results – August 20
Slide 36: Balance sheet remains strong
36 Balance sheet remains strong For personal use only Overview Jun 2008 Jun 2007 NZ $m 12 months 12 months %Δ Performance Divisional Operating Cashflow 434 483 ‐10 Net Debt (ND) 1846 654 +182 Financial Results Net Debt / Equity % 40.1 22.2 +81 Strategy Interest Cover 7.1 9.8 ‐28 Outlook Return on Fu
Slide 37: Summary balance sheet
37 Summary balance sheet For personal use only Jun Jun Overview 2008 2007 NZ$m NZ$m Assets Current Assets 2438 1742 Performance Fixed Assets 2129 1515 Divisional Intangibles & Goodwill 1256 629 Provision for Deferred Taxation ‐61 3 Investments 241 141 Total Fletcher Building Assets 6003 4030 Financi
Slide 38: Key ratios
38 Key ratios For personal use only Total Shareholder Return (TSR) Debt/Debt Plus Equity Overview Percentage Percentage 61 43.1 44.4 40.1 42 37.1 40 Performance 33 Divisional 22.2 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Financial Results ‐43 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Return on Average Equity Ret
Slide 39: Debt maturity profile
39 Debt maturity profile For personal use only Overview Funding & Maturity Performance Divisional 600 500 239 NZ$ millions 400 107 300 Financial Results 31 200 236 300 218 118 254 100 144 167 173 93 67 68 54 75 0 Strategy 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 June Years Capital
Slide 40: Net debt movement
For personal use only NZ$ m 0 400 800 1200 1600 2000 NZ$million Opening Debt 654 Cash from ops (633) Annual Results – August 2008 Working capital 199 Capex 349 Net debt movement Acquisitions 1,039 Divestments (65) Dividends 195 Min Distn 27 FX on Debt 81 Actual YTD Debt 1,846 Financial Divisional Ou
Slide 41: Asset carrying values
41 Asset carrying values For personal use only Overview A comprehensive review is undertaken prior to each reporting date to consider the carrying value of all assets. In particular, Performance with regard to residential land holding in Auckland and Divisional Queenstown, management are comfortab
Slide 42: Strategy
42 STRATEGY For personal use only Central Motorway Junction ‐ Auckland Annual Results – August 2008
Slide 43: Strategic agenda remains unchanged
43 Strategic agenda remains unchanged For personal use only Overview Earnings Reliability Performance Divisional Financial Internal Growth Results Strategy External Growth Outlook Annual Results – August 2008
Slide 44: Earnings reliability is still the over-riding strategic objective
44 Earnings reliability is still the over‐riding strategic objective For personal use only Overview Company outlook is cognisant of both product and geographic diversity. Performance Divisional For New Zealand – Infometrics July 08 estimate of total volume of work commenced. For Australia – BI
Slide 45: New Zealand volume of work commenced
45 New Zealand Volume of work commenced For personal use only NZ$ million, 1995/96 prices Forecast Overview 14000 +1% ‐2% +3% +5% ‐1% ‐3% 12000 Performance Divisional 0% +2% +3% +4% +4% Infrastructure +10% 10000 8000 Financial +2% Results ‐2% +1% Non 0% ‐2% +1% Residential 6000 ‐3% +1% 0% 0% ‐6% ‐1%
Slide 46: Australia volume of work commenced
46 Australia Volume of work commenced For personal use only Overview $b in constant 2005/06 prices 160 Engineering construction 4% 3% 140 Non‐residential 6% 6% Performance Divisional Residential 6% 120 100 6% 2% 2% 8% 9% Financial Results 80 ‐3% 60 ‐3% 10% 8% 4% 40 Strategy 20 1% 1% 9% 8% 12% 0 Outl
Slide 47: USA volume of work commenced
47 USA Volume of work commenced For personal use only Overview $b in constant 2000 prices Engineering construction 600 Non‐residential Residential Performance Divisional 500 7% ‐1% 10% 400 9% ‐16% ‐2% ‐4% 0% 3% 3% 2% Financial Results ‐2% 300 1% 4% ‐8% 1% 6% 200 ‐6% Strategy 100 ‐33% 8% 24% 18% 12%
Slide 48: Internal growth
48 Internal growth For personal use only Overview Historical capex spend * 195 NZ$million 154 Performance Divisional 150 131 122 121 116 109 105 100 Financial Results 50 Strategy 0 Jun‐05 Jun‐06 Jun‐07 Jun‐08 Outlook Stay in business Growth or Productivity * Excludes major acquisitions Annual Result
Slide 49: Growth projects
49 Growth projects For personal use only Building Products Overview New Christchurch distribution centre completed Furnace rebuild at Auckland and Dandanong glasswool plants completed Completion of Hungarian roof tile plant in 2009 Performance Divisional Distribution Upgrades to Cromwell, Ta
Slide 50: External growth opportunities
50 External growth opportunities For personal use only Overview Strong balance sheet Focus on smaller ‘bolt on’ acquisitions Performance Divisional Opportunities will emerge in the downturn Financial Results Strategy Outlook Annual Results – August 2008
Slide 51: Outlook
51 OUTLOOK For personal use only University of Auckland Business School Annual Results – August 2008
Slide 52: Outlook 2009/2010
52 Outlook 2009/2010 For personal use only Overview Good infrastructure markets in Australasia Residential Performance NZ weakening Divisional Australia could weaken US remains weak Financial Results Europe market softness partly offset by eastern Europe Asia will remain strong Strateg
Slide 53: For personal use only
For personal use only