James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — FY2004 Earnings Presentation
53 slides from James Hardie Industries's earnings presentation, May 14, 2004
Slide 1: 4th Quarter and Full Year Results
4th Quarter and Full Year Results 13 May 2004 Unless otherwise stated, results are for continuing operations only and comparisons are of the 4th quarter of the current fiscal year versus the 4th quarter of the prior fiscal year.
Slide 2: Agenda
Overview - Peter Macdonald, CEO Financial Review - Phillip Morley, CFO Operating Review - Peter Macdonald, CEO Questions and Answers Agenda
Slide 3: Strong Performance 4th Quarter and FY04
* Includes discontinued operations and profit on sale of Gypsum land in FY'03 Strong Performance 4th Quarter and FY04 Q4'04 % FY'04 % Net Sales up 29 up 25 Gross Profit up 16 up 23 EBIT2 up 25 up 34 Operating Profit5 up 35 up 50 Net Operating Profit*,6 down (41) down (24)
Slide 4: Highlights 4th Quarter
Highlights 4th Quarter USA Fibre Cement EBIT2 up 14% Australia and New Zealand Fibre Cement EBIT2 up 57% in A$ Philippines - positive EBIT2 Chile - positive EBIT2
Slide 5: Highlights Full Year
Highlights Full Year USA Fibre Cement EBIT2 up 26% Australia New Zealand Fibre Cement EBIT2 up 5% in A$ Philippines - positive EBIT2 Chile - first full year positive EBIT2
Slide 6: Exceeding Targets
Exceeding Targets Long Term Target p.a. FY'94 Actual Revenue Growth >15% 25% EBIT2/Sales >15% 18% ROA (EBIT2/GCE) >15% 23%
Slide 7: Dividend and Capital Management
Dividend and Capital Management Final dividend of US 3.0 cents a share Paid in July 2004 Commitment to efficient capital management Cash flows exceeding capital requirements Gearing ratio below target Interest cover 17x Further capital returns from Gypsum proceeds less advantaged Decision deferred
Slide 8: Financial Review
Financial Review Phillip Morley, CFO
Slide 9: Results - Q4
US$ Million Q4 '04 Q4 '03 % Change Net Sales 251.3 194.3 29 Gross Profit 89.7 77.1 16 SG&A (46.3) (43.7) 6 Research & Development Expenses (6.5) (5.5) 18 Other Operating Expense (2.1) - - EBIT2 34.8 27.9 25 Net Interest Expense (2.5) (2.1) 19 Other Income, Net 6.9 0.6 - Income Tax Expense (7.9) (3.3
Slide 10: Results - Full Year
Results - Full Year US$ Million FY '04 FY '03 % Change Net Sales 981.9 783.6 25 Gross Profit 358.9 290.8 23 SG&A (162.0) (144.9) 12 Research & Development Expenses (22.6) (18.1) 25 Other Operating Expense (2.1) 1.0 - EBIT2 172.2 128.8 34 Net Interest Expense (10.0) (19.9) (50) Other Income, Net 3.5
Slide 11: Segment Net Sales - Q4
Segment Net Sales - Q4 US$ Million Q4 '04 Q4 '03 % Change USA Fibre Cement 185.1 146.2 27 Asia Pacific Fibre Cement 59.0 44.3 33 Other Fibre Cement 7.2 3.8 90 Total 251.3 194.3 29
Slide 12: Segment Net Sales - Full Year
Segment Net Sales - Full Year US$ Million FY '04 FY '03 % Change USA Fibre Cement 738.6 599.7 23 Asia Pacific Fibre Cement 219.8 174.3 26 Other Fibre Cement 23.5 9.6 145 Total 981.9 783.6 25
Slide 13: Segment EBIT - Q4
Segment EBIT2 - Q4 US$ Million Q4 '04 Q4'03 % Change USA Fibre Cement 43.2 37.8 14 Asia Pacific Fibre Cement 8.3 4.4 89 Other Fibre Cement (4.1) (2.5) (64) R & D (5.6) (4.1) (37) Total Segment EBIT 41.8 35.6 17 Corporate Costs (7.0) (7.7) (9) Total EBIT 34.8 27.9 25 Note: R&D includes "core" R&D exp
Slide 14: Segment EBIT - Full Year
Segment EBIT2 - Full Year US$ Million FY '04 FY'03 % Change USA Fibre Cement 195.6 155.1 26 Asia Pacific Fibre Cement 37.6 27.3 38 Other Fibre Cement (15.9) (10.7) (49) R & D (17.6) (13.0) (35) Total Segment EBIT 199.7 158.7 26 Corporate Costs (27.5) (29.9) (8) Total EBIT 172.2 128.8 34 Note: R&D in
Slide 15: Corporate Costs
Corporate Costs US$ Million Q4'04 Q4'03 FY'04 FY'03 Economic Profit Compensation Expense 1.3 2.7 3.2 7.1 Fixed Stock Option Expense 1.3 1.7 3.2 1.7 Corporate Costs 4.4 3.3 21.1 21.1 Total 7.0 7.7 27.5 29.9
Slide 16: Net Interest Expense
Net Interest Expense US$ Million Q4'04 Q4'03 % Change Net Interest Expense (2.5) (2.1) 19 FY'04 YTD'03 % Change Net Interest Expense (10.0) (19.9) (a) (50) (a) Includes US$9.9 million long-term debt prepayment penalty
Slide 17: Income Tax Expense
Income Tax Expense US$ Million Q4'04 Q4'03 % Change Income Tax Expense (7.9) (3.3) 139 Rate 20.2% 12.5% FY'04 FY'03 % Change Income Tax Expense (40.4) (26.1) 55 Rate 24.4% 23.8%
Slide 18: EBITDA - Q4
EBITDA3 - Q4 Q4'04 Q4'03 % Change EBIT2 USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement R & D Corporate 43.2 8.3 (4.1) (5.6) (7.0) 37.8 4.4 (2.5) (4.1) (7.7) 14 89 (64) (37) 9 Depreciation and Amortisation USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement 6.8 2.7 0.7 4.5 2.
Slide 19: EBITDA - Full Year
EBITDA3 - Full Year FY'04 FY'03 % Change EBIT2 USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement R & D Corporate 195.6 37.6 (15.9) (17.6) (27.5) 155.1 27.3 (10.7) (13.0) (29.9) 26 38 (49) (35) (8) Depreciation and Amortisation USA Fibre Cement Asia Pacific Fibre Cement Other Fibre Cement
Slide 20: Capital Expenditure - Full Year
Capital Expenditure - Full Year Capital Expenditure Capital Expenditure Depreciation Depreciation US$ Million FY '04 FY '03 FY '04 FY '03 USA Fibre Cement 56.2 81.0 24.6 18.0 Asia Pacific Fibre Cement 8.4 6.6 9.7 8.7 Other Segments 10.2 2.6 1.6 0.6 Total Segments 74.8 90.2 35.9 27.3 Note: Capital Ex
Slide 21: Operating Review
Operating Review Peter Macdonald, CEO
Slide 22: Photo Photo Photo
USA Fibre Cement Photo Photo Photo
Slide 23: 4th Quarter Result - Strong Sales Growth
4th Quarter Result - Strong Sales Growth Net Sales up 27% to US$185.1 million Sales Volume up 29% to 383.6 mmsf Average Price down 2% to US$483 per msf EBIT2 up 14% to US$43.2 million EBIT Margin2 down 2.6 pts to 23.3% USA Fibre Cement
Slide 24: Full Year Result
USA Fibre Cement Full Year Result Net Sales up 23% to US$738.6 million Sales Volume up 19% to 1519.9 msf Average Price up 3% to US$486 per msf EBIT2 up 26% to US$195.6 million EBIT Margin2 up 0.6 pt to 26.5%
Slide 25: 4th Quarter Trading Conditions
USA Fibre Cement 4th Quarter Trading Conditions Housing construction activity remained buoyant: Low interest rates Strong house prices Low inventories of houses for sale Strengthening domestic economy Consumer confidence Repair and remodel activity remained healthy
Slide 26: Key Points
USA Fibre Cement Key Points Continued growth in demand for fibre cement Strong sales performance Growth rate significantly ahead of housing construction Increased penetration in emerging and established markets Share gains in interior and exterior product categories Increased growth in lower priced
Slide 27: Margin
USA Fibre Cement Margin Pricing strategy unchanged Higher costs pulp ramp up - Blandon, Waxahachie and Peru freight Investment in infrastructure to support future growth (58 staff added in Q4, 267 for year - mainly sales and marketing)
Slide 28: Revenue Growth Continuing to Outstrip Volume Growth
USA Fibre Cement Revenue Growth Continuing to Outstrip Volume Growth 0 200 400 600 800 1000 1200 1400 1600 1800 2000 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 Volume (MMSF) / Starts (000's Units) $0 $125 $250 $375 $500 $625 $750 Revenue (USDM) Volume Revenue Housing Starts (12mo Avg)
Slide 29: Average Selling Price
USA Fibre Cement Average Selling Price 380 400 420 440 460 480 500 FY99 FY00 FY01 FY02 FY03 FY04 US$ per MSF
Slide 30: EBIT and EBIT Margin
USA Fibre Cement *Excludes restructuring and other operating expenses EBIT MARGIN % EBIT and EBIT Margin*,4 0 10 20 30 40 50 60 FY99 FY00 FY01 FY02 FY03 FY04 EBIT US$M 0 5 10 15 20 25 30 35 EBIT EBIT/Sales
Slide 31: Strategy
USA Fibre Cement Strategy Aggressively grow market for fibre cement Grow our overall market position while defending our share in existing market segments Offer products with superior value to that of our competitors, introducing differentiated products to reduce direct price competition
Slide 32: Outlook
USA Fibre Cement Outlook Continued strong demand for fibre cement Bouyant housing market to continue over short to medium term Low interest rates, house prices strong, recovering domestic economy Approvals strong, low inventories, large order backlogs Further share gains in emerging and established
Slide 33: Asia Pacific Fibre Cement
Asia Pacific Fibre Cement Photo Photo Photo
Slide 34: Asia Pacific Fibre Cement 4th Quarter Result
Asia Pacific Fibre Cement 4th Quarter Result Net Sales up 3% to A$77.0 million Sales Volume up 10% to 101.1 mmsf EBIT2 up 48% to A$10.5 million EBIT Margin2 up 4.2 pts to 14.1%
Slide 35: Asia Pacific Fibre Cement Full Year Result
Asia Pacific Fibre Cement Full Year Result Net Sales up 2% to A$316.9 million Sales Volume up 9% to 402.1 mmsf EBIT2 up 12% to A$54.2 million EBIT Margin2 up 1.4 pts to 17.1%
Slide 36: Strategy
Strategy Grow primary demand for fibre cement Vigorously protect and grow category share in existing market segments Leverage our superior technology to offer differentiated products and systems with superior value to those of competitors Ongoing manufacturing improvements to further lower cost of p
Slide 37: Australia and New Zealand - Key Points
Australia and New Zealand - Key Points Significant positive exchange rate impact Australian new housing weaker, but renovations and commercial buoyant New Zealand housing healthy Net sales up 34% - up 4% in A$ Volumes up 1% - stronger domestic demand - weaker exports Average selling price up 3% EBIT
Slide 38: Australia and New Zealand - Outlook
Asia Pacific Fibre Cement Australia and New Zealand - Outlook Positive exchange rate impacts may not continue New housing in Australia to further soften, but renovations and commercial to remain healthy short term New housing and renovations in New Zealand to remain bouyant short term New products M
Slide 39: Philippines - Key Points
Asia Pacific Fibre Cement Philippines - Key Points Stronger demand for fibre cement Net sales up 29% in local currency Average price lower due to sales mix Manufacturing cost savings Positive EBIT2 for quarter and full year
Slide 40: Philippines - Outlook
Asia Pacific Fibre Cement Philippines - Outlook Increased building and construction activity Stronger demand for fibre cement More cost savings and EBIT2 improvement
Slide 41: Chile Fibre Cement - Key Points
Other Fibre Cement Chile Fibre Cement - Key Points Net sales up 44% in local currency Further lift in domestic construction activity Further penetration of domestic market Lower average selling prices in local currency - mix changes Another quarterly positive EBIT2 - first full year positive EBIT2
Slide 42: Chile Fibre Cement - Outlook
Other Fibre Cement Chile Fibre Cement - Outlook Entering seasonal slow-down period Improved domestic construction activity Further market penetration and share growth Increased domestic sales of higher-priced, differentiated products Domestic competition to remain intense
Slide 43: USA Hardie Pipe - Key Points
Other Fibre Cement USA Hardie(r) Pipe - Key Points Sales up 70% from increased penetration of SE market Further manufacturing performance and cost improvements - but costs still above target Average prices up slightly vs Q3, but still low due to competition
Slide 44: USA Hardie Pipe - Outlook
Other Fibre Cement USA Hardie(r) Pipe - Outlook Continued market penetration and share growth Improved plant operating efficiency and more manufacturing cost savings Competitive pressure remains intense - Florida prices still well below national averages
Slide 45: Europe
Europe Demand continues to grow as awareness increases among distributors, builders and contractors Significant sales growth - but off low base More distribution outlets added - UK / France
Slide 46: Artisan Roofing
Artisan Roofing Further production trials and commissioning work More sales of new shake product in 1st quarter Target market interest remains strong
Slide 47: Research and Development
Research and Development Key driver of growth Core projects engineered raw materials product formulations engineering and process technologies lightweight and durable products for all climates Sustainable competitive advantage continuing to be built
Slide 48: Inquiry Update
Inquiry Update NSW Special Commission of Inquiry report due 30 June 2004 oral evidence scheduled to conclude 31 May written submissions in June NSW Government then considers recommendations No change to our stated legal position
Slide 49: Outlook
Outlook Growth momentum continuing into 1st quarter Another good year is in prospect Continued strong cash flow
Slide 50: Disclaimer
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 stat
Slide 51: Notes
Notes This Management Presentation forms part of a package of information about the company's results. It should be read in conjunction with the other parts of this package, including Management's Discussion and Analysis (MD&A), a Media Release, a Financial Report and Results at a Glance document. E
Slide 52: Notes cont...
Notes cont... 3. EBITDA is not a measure of financial performance under US GAAP and should not be considered as an alternative to, or more meaningful than, income from operations, net income or cash flows as defined by US GAAP or as a measure of our profitability or liquidity. All companies do not c
Slide 53: 4th Quarter and Full Year Results
4th Quarter and Full Year Results 13 May 2004 Unless otherwise stated, results are for continuing operations only and comparisons are of the 4th quarter of the current fiscal year versus the 4th quarter of the prior fiscal year. James Hardie Industries N.V. and Subsidiaries Financial Report 31 March
Hardie James Industries — FY2004 Earnings Presentation on 6ix