Boral — FY2022 Earnings Presentation
39 slides from Boral's earnings presentation, Aug 23, 2022
Slide 1: FY22 results
FY22 results For the year ended 30 June 2022 Reshaping our future 23 August 2022
Slide 2: Agenda
Agenda 01 Overview and highlights 03 Property Framework Zlatko Todorcevski, CEO & MD Jared Gashel, Acting CFO 02 Financial results and 04 1H FY23 priorities and FY23 outlook capital management Jared Gashel, Acting CFO Zlatko Todorcevski, CEO & MD 2
Slide 3: FY22 overview
FY22 overview Continuing operations EBIT, excluding Property, of $107m in line with revised 18 May 2022 earnings guidance Challenging external operating environment Responding to challenges Stronger underlying construction demand, but Pricing actions implemented announced to one-off and continui
Slide 4: FY22 financial summary
FY22 financial summary Benefits of revenue growth and transformation initiatives on continuing operations EBIT more than offset by impact of several challenges Continuing operations Group Revenue $2,956m 1%, and up 3% on a Statutory NPAT $961m comparable basis1 EBITDA2 $330m 19% NPAT2 $150m EBIT2 ex
Slide 5: FY22 challenges
FY22 challenges Combined $78m adverse EBIT impact from exceptional rainfall and construction shutdowns Unprecedented rainfall Cumulative Sydney rainfall – working days1 millilitres $45m adverse EBIT impact from extreme levels of rainfall across key regions in NSW and Qld, particularly 1,800 Sydney
Slide 6: FY22 challenges
FY22 challenges $58m EBIT impact from energy cost increases, and significant inflation in cartage costs Energy costs $m, unhedged Energy costs up $48m after year-on-year hedging benefit of $35m o Newcastle coal index A$ average price up 235% in FY221 200 o Singapore gasoil index A$ average price u
Slide 7: Responding to challenges
Responding to challenges Pricing actions implemented Accelerated overhead review Out-of-cycle January/February price increases to Implemented simplified corporate organisational offset energy price increases in 1H, with realised structure in June 2022 price gains in 2H above our expectations o S
Slide 8: Market activity
Market activity Construction activity grew in 9 months to March-22 YTD Mar-22 value of work done (VWD)1,2 YTD Mar-22 end-market activity vs pcp1,2 FY22 revenue by segment o up 4% across our end-market segments, with residential activity, including total dwellings and RHS&B 43% 14% A&A, up 2% o up
Slide 9: Major projects and pipeline
Major projects and pipeline Prioritising projects that complement our network Pipeline – select projects Volume4 FY22 FY23 FY24 FY25 Major projects1 contributed ∼10% of revenue, steady on FY21 Execution o Major project VWD materials intensity was 3.4%, West Gate Tunnel, Vic 400km3 compared to 3.1%
Slide 10: Executing on our strategic priorities
Executing on our strategic priorities FOCUS pillar completed with divestment of non-core assets Pivot away from EXTEND to focus on core Construction Materials and Property segments B POSITION our core business in Australia C REDEFINE to become a leader in decarbonisation Delivered net transformati
Slide 11: Committed to sustainability
Committed to sustainability Our People Our Products Our Operations3 increase in lower carbon 11.8 recordable injury frequency rate, up from 11.51 >135% concrete volumes FY30 emissions reduction targets approved by SBTi LCC launched across SEQ, NSW Country/ACT, WA, Tas 0.4 actual serious harm inciden
Slide 12: Zero Harm outcomes
Zero Harm outcomes Further work to do to improve outcomes – refreshing approach in FY23, including more visible leadership Recordable injury Actual serious harm incident frequency rate (RIFR)1 frequency rate (ASHIFR)2 MTIFR RIFR1 of 11.8, with increase driven by low severity sprains and strains LT
Slide 13: Financial results and capital management
02 Financial results and capital management Heritage Lanes, Suncorp’s new headquarters built by Mirvac using ENVISIA®
Slide 14: Summary of financials
Summary of financials A$m Group results reflect completion of divestments and (figures may not add due to rounding) FY22 FY21 external operating challenges in Australia Total operations basis Part-year contribution from North American Building Revenue 3,908 5,346 Products, Fly Ash, and Meridian Br
Slide 15: Continuing operations
Continuing operations A$m FY22 FY21 Var % Benefits of revenue growth and Transformation initiatives more than offset by impact of energy cost inflation, Revenue 2,956 2,924 1 exceptional rainfall, and construction shutdowns EBITDA1 330 406 (19) 1 Reported revenue up 1%, comparable revenue up 3%3 EBI
Slide 16: EBIT drivers – continuing operations
EBIT drivers – continuing operations FY22 vs FY211,2 Net Transformation $42m Net of energy +$26m price 56 hedging -$43m mix / 98 24 margin -$3m net one-off impacts4 A$m -$2m JV impacts 33 17 58 -$1m ventures 6 67 6 45 181 157 107 112 FY21 FY21 FY22 FY22 ex energy Inflation Price / mix / margin Energ
Slide 17: Cash flow
Cash flow A$m (figures may not add due to rounding) FY22 FY21 Free cash flow significantly higher following receipt of EBITDA1 481 882 divestment proceeds, but lower operating cash flow Change in working capital and other 26 (10) primarily reflecting EBITDA decrease Interest and tax (162) (141) Op
Slide 18: Capital expenditure
Capital expenditure Continuing operations Capex of $313m, up 70% Depreciation & amortisation Capex Includes o Acquisition of Hillview Sands for $30m 239 o Strategic land purchases, including Badgerys 225 201 218 Creek, Dunmore, Peats Ridge and Dunnstown for 191 total of >$50m o Geelong Cement cl
Slide 19: Capital management
Capital management Strong balance sheet with significant flexibility Targeting net debt/EBITDA of 2.0−2.5x1 Debt maturity profile (A$m) 30 June 2022 FY22 FY21 Gross debt1,2 $m 1,584 1,803 Net debt1 $m 476 899 435 Repaid 11 Jul-22 Net debt / EBITDA3 times 1.4x na 75 Net gearing % 20%4 17% 326 281 (ne
Slide 20: Property Framework
03 Property Framework Montrose Quarry, Vic
Slide 21: Property Framework: Maximise value creation
Property Framework: Maximise value creation from our property assets and operating property footprint With ongoing investment in our network and an Grow Optimise Repurpose extensive utilisation of property assets where there leading is a higher and better use, operational footprint, integrated opera
Slide 22: GROW: leading integrated network footprint
GROW: leading integrated network footprint To strengthen performance and profitability, and position for long term success FY22 highlights Acquired Hillview Sands, Vic – 519 ha site between Acquire Melbourne and Geelong, in strong growth corridor strategic land Fill identified gaps in our >$80m
Slide 23: OPTIMISE: utilisation of operating property footprint
OPTIMISE: utilisation of operating property footprint To deliver increased recurring earnings Office footprint Consolidated Sydney offices optimisation Optimising office space in Brisbane, Melbourne and Perth Initiatives underway1 ‘Earth Exchange’ Creates long-term recurring revenue stream and
Slide 24: REPURPOSE: maximise surplus property value
REPURPOSE: maximise surplus property value Current portfolio of ∼30 surplus properties – totalling ∼3,800ha – valued at >$1.0b1 >$1.0b Current surplus property assets NPV Sites with industrial, commercial or tourism $m potential in metro or growth region Contracted Uncontracted Develop and Part
Slide 25: 1H FY23 priorities and FY23 outlook
04 1H FY23 priorities and FY23 outlook Enfield Concrete plant, NSW
Slide 26: 1H FY23 priorities
1H FY23 priorities B POSITION C REDEFINE Strong price discipline to optimise realisation of Further increase penetration of lower carbon announced pricing actions concrete product offering Deliver performance improvement initiatives o Launch product suite in Sydney metro, Vic and SA1 o Benefit
Slide 27: FY23 outlook
FY23 outlook Expect higher earnings In FY23, Boral expects: revenue to be higher than FY22, driven by strong price growth and increased volumes, with volumes to benefit from less disruption, including no construction shutdowns and higher construction demand stronger infrastructure demand, includ
Slide 28: Supplementary information
05 Supplementary information Pacific Highway Upgrade, Brisbane
Slide 29: Boral's portfolio of upstream and downstream assets
Boral’s portfolio of upstream and downstream assets Geographically diversified network of construction materials sites across Australia Combination of upstream assets with location and Boral’s construction materials network service reach of downstream assets provides attractive vertically integrated
Slide 30: Major surplus properties
Major surplus properties Donnybrook, Vic Scoresby, Vic (also known as Wantirna South) 338ha 171 ha 25 km south east of Melbourne’s CBD 30 km north of Melbourne’s CBD 20 year development agreement with 20 year development agreement with Mirvac signed in 2018 Mirvac signed in 2019 Will support ~
Slide 31: Major surplus properties
Major surplus properties Waurn Ponds, Vic Penrith Lakes, NSW 1,030 ha 330ha 12 km south west of Geelong 52km west of Sydney’s CBD Cement operations ceased in March 2022 40% owned, in JV with Holcim and Hanson Rehabilitation underway via Boral’s Earth Exchange program Rezoning of Stage 1 (~10
Slide 32: Construction materials end-market activity
2. 1. - 5 10 15 20 25 30 - 20 40 60 80 - 10 20 30 40 50 60 FY06 FY06 FY06 FY07 FY07 FY07 FY08 FY08 FY08 FY09 FY09 FY09 FY10 FY10 FY10 RHS&B1,2, VWD $b FY11 FY11 FY11 FY12 FY12 FY12 FY13 FY13 FY13 Roads, highways, subdivisions and bridges. Non-residential2, VWD $b FY14 FY14 FY14 Other engineering2, V
Slide 33: Strong transport infrastructure pipeline
Strong transport infrastructure pipeline Major transport infrastructure projects1 Concrete volumes from major transport construction1 (m3) (Value of work done by calendar year, $b) $bn 26 Runways Forecasts Various States 25 24 NSW 23 Rail Inland Rail VIC 22 21 QLD 20 RHS&B SA 19 Bruce Highway 18 WA
Slide 34: Selection of major project work & potential pipeline
Selection of major project work & potential pipeline Selection of project work1,2 Selection of projects tendering and pre-tendering1,2 Volume3 Estimated Tendering completion Volume3 Armadale road WA Completed 1H22 Inland Rail Project Qld, NSW, Vic 300km3 New M12 Motorway NSW 90kt Sydney Metro Linewi
Slide 35: FY22 segment revenue, EBITDA and EBIT
FY22 segment revenue, EBITDA and EBIT External revenue, A$m EBITDA1, A$m EBIT1, A$m Figures may not add due to rounding FY22 FY21 FY22 FY21 FY22 FY21 Construction Materials 2,949 2,920 345 413 128 190 Property 1 1 6 24 6 24 Unallocated (incl. corporate) 5 3 (20) (32) (22) (33) Total continuing opera
Slide 36: Non-IFRS information
Non-IFRS information Boral Limited’s statutory results are reported under International Financial Reporting Standards. Earnings before significant items is a non-IFRS measure reported to provide a greater understanding of the underlying business performance of the Group. Significant items are detail
Slide 37: Non-IFRS information (continued)
Non-IFRS information (continued) Before Significant After significant A$m Significant items Items items This table provides a Sales revenue Continuing operations 2,955.9 - 2,955.9 reconciliation of Discontinuing operations Total 952.3 3,908.2 - - 952.3 3,908.2 non-IFRS measures to EBITDA reported st
Slide 38: Funds employed – continuing operations
Funds employed – continuing operations Continuing operations funds employed as at 30 June 22 Funds employed Funds employed Actual A$m (figures may not add due to rounding) (ex surplus property) (incl. surplus property) Cash 1,107 - - Receivables 537 514 537 Inventories 235 223 235 Financial assets 3
Slide 39: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 23 August 2022. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic rep