James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Non-Deal Roadshow (December 2006)
62 slides from James Hardie Industries's roadshow presentation, Dec 12, 2006
Slide 1: 2006 Analyst/Investor Tour: Welcome and Update
. @ James Hardie a James Hardie 2006 Analyst/Investor Tour Louis Gries Welcome and Update 12-13 December 2006 @® James Hardie We continue to focus on: « Growing primary demand " Securing differentiated positions « Sustaining attractive margins « Long term growth perspective USA Fibre Cement 2
Slide 2: Transitioning into three operating divisions
@® James Hardie na * Transitioning established and emerging market structure into three operating divisions: « Northern Division « Southern Division « Western Division * All divisions continue to be managed by a general manager with sales, marketing and manufacturing responsibilities » Changes desig
Slide 3: General Update
@® James Hardie General Update Continuing to increase market share through conversion of customers from alternative materials Expanding supply of ColorPlus® products into Western and Southern divisions Ramp-up of new Pulaski, Virginia plant progressing well Increased fiber cement competition: new in
Slide 4: Product transition and housing downturn response
. @ James Hardie Today Tomorrow CofosPius Next —— Generation Siding Products Hardieplank —=> Hardieplank/ ColorPlus Cemplank Cemplank Fighting Brand USA Fibre Cement 7 Be . Housing Down- « Business model adjusted down, but able to ‘flex up’ quickly * Production rescheduling to balance supply and dem
Slide 5: Not a commodity building materials player
@® James Hardie Not a commodity building materials player " Market share gains allow us to buffer loss in base demand due to the decline in housing starts » Long-term practice of value pricing means that, unlike commodity businesses that ran prices up in the boom, price reductions are not anticipate
Slide 6: Out-Performance
Out-Performance ‘emit 34 Volume “JH Revenue ~~ Housing Starts ¢ Volume {mmsf} £ Starts (000's Units} Revenue (USI 90 91 92 93 94 95 96 97 98 99 OO O01 O02 O63 04 06 Q2FYOT «Taking exterior market share from alternative siding materials, mainly wood and viryl + Early differentiated position driven by
Slide 7: Future Growth
4 Y) James Hardie Future Growth Product growth strategy « Job One: « Deliver terminal shares in current USA FC business model « Job Two: « Extend the FC business model in the US (e.g. new products, new markets) « Job Three: « Bolt-on opportunity in the US? « Technology track outside of FC? « Geograp
Slide 8: Questions and Definitions
@ James Hardie ee: Questions USA Fibre Cement 15 James Hardie Definitions Finaricia! Measures — US GAAP equivalents i - EBIT 8 defined as oporating income. EIT margin is defined as EBIT as 2 percentage of our nef sales. Wo believe EBIT ‘and EB)T margin fo bo fofovartt and usefet ixformation a tinise
Slide 9: Disclaimer
@® James Hardie Ve PO apes aimer This Menayemen! Presentalion contains forward looking etaternerts, We may fom tine fo tie make forward.iooking statements in our periudic reports fied with ar furnished fo the United States Securities and Exchange Comsnission on Forens 20-F and 8X, i our annual repor
Slide 10: Housing Market Update
James Hardie 2006 Analyst/Investor Tour Robert Russell Southern and Western Division 12-13 December 2006 4 @® James Hardie : Housing Market Update Starts expected to be down ~12% in 2007, with varying regional impact Market Conditions Impacted by: = 28 = * Lower housing affordability 2 B20 & cae > .
Slide 11: Housing Market Outlook - Demand Trends
@® James Hardie ae arket Co Top Line Growth Revenue (930%) : @® James Hardie alll, 100) “ie Housing Market Outlook — Demand Trends | ~ # New Construction Demand * Favorable long term demographics — population growth, low interest rates * Repair & Remodel Demand =» Home inventory continues to rise —
Slide 12: U.S. Market Overview
ion 0 U.S. Market Overview New Organizational Structure South Markets 2.08 O interiors JHBP USA - Total Business Mix f@ North F'Y08 Volume = 2.1 bsf 2.00 m West O South 500. og f fal Exterior Products - Siding 26 + 6 . 11.97 2 12 T° eg @ 20+ 104 nny $ 04 404 ee + au 9 2 8? aninaeponscoousicosoense i
Slide 13: Established Markets Overview - New Structure
@® James Hardie Established Markets Overview — New Structure = _ « Transitioning Established Markets and Emerging Markets into three operating divisions: « West *« South Former Established Markets « North Former Emerging Markets « Changes designed to recognise increased complexity going forward, whi
Slide 14: West - Exteriors Division Map
West - Exteriors Division Map Pacific North West RSM Gary Fauseat Southwost ASM Structure -No Cat -Socal = Donvor PNW Sw Totat Population 14.6M 53.2M 67.8M Housing Stasis 115K 397K 541K 2006 The Pacific Northwest remains structurally the same as we commence the launch of Color Plus in a heavily pene
Slide 15: Significant upside remains in the SW region
+ Significant upside remains in the SW region + Primary growth posifioned around stucco and hardboard conversions + Opportunity to convert key markets such as No Cal and Denver to Color . OTWC initiative under way + Architectural design continue to trend in our favor Current Share Terminal Share Oth
Slide 16: Southern Division Overview
Ls ae Southern Division Overvie South — Exteriors Division Map « Structure in the Southern Division remains relatively unchanged with the exception of a newly created ASM position in Atlanta reporting to the RSM. - Intended to enhance focus of our Atlanta market facing Southeast increased competitio
Slide 17: Target Hardboard, Vinyl and Stucco
@® James Hardie + Target Hardboard, Vinyl and Stucco + Specialty Products growth + Direct to block initiative underway + JH taking an Active Role in the Rebuild of the Mid South {LA, MS) « Positioned welt with regards to architectural design and durability concerns « Increased staff working al both
Slide 18: Competitor Overview
@® James Hardie Competitor Overview. IN Largest share of fiber cement panel segment in Japan Specialty siding products and trim acceris Shake, brick and stone textures U.S. distribution through Nichiha USA Inc., Atlanta GA Sells through loose dealer network. Announced First U.S. mig. plant in Macon,
Slide 19: Definitions and Disclaimer
Sates Volumes minsf — million square feet msf— thousand square feet Disclaimer This Management Presentation contuins forward-looking statements. We may fron time fo tine make forwardloaking stat our periodic reports fled with or furnishéd fo the United States Secunifies and Exchange Comsission on Fo
Slide 20: North ColorPlus: Strategy Recap
@ James Hardie James Hardie 2006 Analyst/Investor Tour Nigel Rigby North ColorPlus 12-13 December 2006 ® James Hardie Strategy Recap Reduce siding on the wall cost - closing the gap between Hardie and Vinyl — increasing available market opportunity * Increasing the value proposition to the builder,
Slide 21: ColorPlus Production Ramp-up
@ James Hardie Strategy continued « Value proposition to the builder « Re-engineer the Supply Chain « Manufacturing - technology « Speed of Execution ® James Hardie ColorPlus Production Ramp-up Aligning Production 1200 with Sales: Blandon Start Up Reno 1000 crt Laminator P V7 ‘Sart uty POO Retrofit
Slide 22: ColorPlus capacity and channel reset
; ceil @ James Hardie | Panag pacity Biandon, PA * Does not include ColorPlus Trim capacity 4 Y James Hardie * Reset the channel around the Color model November 2005 * 40% of ColorPlus is currently shipped direct to dealers * Mid and Mini penetration is 5% this quarter " Established a Base Demand sa
Slide 23: ColorPlus service levels
pegs Rist erases re Ee aE ECs ‘e a) 7 @® James Hardie Service internal standards are currently higher than the market commitment as we move through the learning curve C+ Service By Month chO8" Nev-a5 I-06 FEbYG Mor-OB API-OG May-O6 aun-08 bees scot CD Bondel Shwe, Ordor Bary Transportation owP 0 Cro
Slide 24: ColorVisualizer
4 @® James Hardie PEE i Baa Color'Visualizer ae (GB) samestardie Select a siding zune /Sicing Zone 1 | Lower Level» Select a siding yae friar Solects siding style: nk™ Siding + Setwet otkarenst Betect 3 cota @p Color info: on i os! ar... Need halp chaesing a cater? von son
Slide 25: Sales performance and market development
: , @® James Hardie bo ; q ; a ColorVisualizer ( Eaten meas x ees atershn0s ake ces @® James Hardie Continued drive on Sales performance around our market development STP Model Effectiveness and efficiency step change is our company goal EMM Conversion Trends Volume Per Rep ‘ef Conversions Par Rop e
Slide 26: ColorPlus volume and challenges
@ James Hardie ColorP : a Volume % Penetration Oa a G8 4 1 @ OQ O OO @ Q3 tama TOTAL C+ Volume —a— % North Penetration ® James Hardie lie cans Issues‘and Challenges * Balance of demand and capacity with a model that has zero buffer inventory in the channe! * Achieve service rates which enable the mo
Slide 27: Mechanics of the Color Model are in place
@® James Hardie Mechanics of the Color Model are in place = Color plant network = 20 products and 20 colors by market = Channel is reset and is developing = Base level Hardie logistics capability = Value priced Color Plus in July 2006 P @® James Hardie Go Forward * Drive the operational efficiency n
Slide 28: Disclaimer
@® James Hardie Discl This Menayemen! Presentalion contains forward looking staternerts, We may fom tine fo tie make forwardLiogking statements in our periudic reports fed with ar furnished fo the United States Secunifies and Exchange Comsoission on Forens 20-F and &-X, ins our annual reports fg sha
Slide 29: Manufacturing: Operational Advantage
@ James Hardie James Hardie 2006 Analyst/Investor Tour Robert Russell Manufacturing 12-13 December 2006 ® James Hardie ite 0) He Operational Advantage = Manufacturing " Capital Efficiency ($/sf) = Manning (sfiman) = Ability to deliver differentiated products * Aligned » Patterned » Thick » Low Densi
Slide 30: Hatschek Forming
@® James Hardie Hatschek Forming =" 1917 - First machine purchased from Swiss Eternit *" 1980's - JH standardizes around 4’wide x 2 or 3 tub machines " Mid 1980's to Present - JH pushes equipment design envelope ; @® James Hardie cobb,
Slide 31: Capacity Definitions
4 @® James Hardie oo) ans Capacity Definitions _ = Standard Foot -1 Foot x 1 Foot x 5/16” Thick = Standard Product ~— Product that dictates the design parameters of the machine. This is Cedarmiil Plank in the US = Design Capacity - The amount of standard product that can be made factoring in best pr
Slide 32: Hatschek Forming (Cont.)
@® James Hardie Hatschek Forming (Cont.) * 1999 — Hatschek Step Up Implemented in Tacoma and Cleburne. Design Capacity of machines improved by 33% * 2002 — JH announces construction of purpose built panel line at Waxahachie. Line designed to: ™ Have no product inefficiency gap " Have superior alignm
Slide 33: Engineering and new equipment ramp-up curves
. @® James Hardie « US Engineering traditionally done at the site level « Created a central engineering group in 1998. Primary focus on capital construction and major projects. « Engineering set up to drive: * Construction « Process Development and Improvement =" Next Generation Y James Hardie New E
Slide 34: Plant Design Capacity
“ad @® James Hardie a apacity Gale JH Plant Design Capacity Capacity Flat Sheet Plants, {mms Fontana, CA 180 Plant City, FL 300 Clebume. TX 400 Tacoma, WA 200 Peru, IL 400 Waxahachie, TX 360 Reno, NV 300, Pulaski. VA 600 Blandon, PA 200 Summerville, SC 190 Flat Sheet Total 3,430 Clebume. TX Trim 120
Slide 35: Lowest Cost Product and manufacturing strategy
@® James Hardie ellen Sas a eva Lowest Cost Product PRODUCTION CAPACITY PER LINE CAPITAL COST PER UNIT OF CAPACITY (USSISF} 200 MM SF é SUS) SF 00 1990 1904 1988 2001 2008 D1 E FOG EVOT FYOR FYOD F¥ON FYOY FYOZ FYOS FYOS FYO8 FYO? @® James Hardie ) aay rd Strategy On Manufacturing. = Transition from
Slide 36: Shift Reductions
@® James Hardie 2 A Shift Reductions * Shift reductions announced on 27 November 2006 across 5 plants = Headcount reduction of approximately 100 employees ™ Reductions based upon delivered cash cost (cash production cost plus freight) to the market in order to match supply and demand * Ability to ea
Slide 37: Manufacturing performance and areas of improvement
@® James Hardie ae hs - " Tacoma and Plant City continue to operate well ahead of design =" Reno and Pulaski ramp-ups going well " ColorPlus roll-out continuing and ramping up quickly, allowing for significantly greater network flexibility and national reach " Network flexibility allowing for greate
Slide 38: Definitions and Disclaimer
Sales Volumes mmsf — million square feet msf— thousand square feet Bisf — dolar per square foot sfiman - Square foot per person ies lin. ue ie ny ; Disclaimer This Management Presentation contyins forward-looking statements. We may from time to tine make forward-looking statements in our periodic re
Slide 39: Research and Development: Technology Strategy
@ James Hardie James Hardie 2006 Analyst/Investor Tour Mark Fisher Research and Development 12-13 December 2006 @® James Hardie ie ion) Technology Strategy = Enable JH product leadership strategy « Provide sustainable advantage * Balance between Research and Development « Integration with business u
Slide 40: Research centers and product leadership
. @ James Hardie * Two research centers — Australia and US « Development - focused organization around implementing technologies « Research - core understanding of materiais and the science behind them * Resources « Knowledge management and innovation focused « Diverse organization — Building scienc
Slide 41: New Products
. @ James Hardie oe 5 0) * ae New. Products aa «Focus on enhancing core value proposition * Durability " Ease of use * Utilize portfolio of protected technologies « New revenue growth streams « Bias towards implementation and launch @® James Hardie New Pro New Products Growth Revenue ($M) %New Produ
Slide 42: Enhance Current Portfolio and Enablers
Enhance Current Portfolio «Use technology to increase customer value " Simplify or remove steps from installation process " Differentiation that drives customer preference «Examples " ColorPlus * EZ Grid A @® James Hardie ie, 20) Enablers: = Additional technologies that sustain core technologies = S
Slide 43: Platforms and Intellectual Property
~) James Hardie Platforms * Enhance efficiency and value of current platform * Develop new platforms * Examples " Scale- shift Hatschek from 100mmesf to 300mmsf / line » XLD technology platform 4 Y) James Hardie Intellectual = Create sustainable advantage by * Developing clear strategies * Patent an
Slide 44: Forward Vision
@ James Hardie aie Forward Vision = Sustain business growth via product leadership strategy « Organization aligned to deliver * Technology shifts * Product " Process « Platform * Technologies => products @® James Hardie Definitions Sates Volumes minsf — mittlion square feet msf— thousand square feet
Slide 45: Disclaimer
@® James Hardie This Menayemen! Presentalion contains forward looking staternerts, We may fom tine fo tie make forwardLiogking statements in our periudic reports fed with ar furnished fo the United States Secunifies and Exchange Comsoission on Forens 20-F and &-X, ins our annual reports fg sharebotd
Slide 46: XLD Trim: Trim Strategy
@ James Hardie James Hardie 2006 Analyst/investor Tour Mark Fisher XLD Trim 12-13 December 2006 @ James Hardie Trim’Strategy * Meet the market demand for a trim product for Hardie homes " True 1" thickness (5/4”) » Differentiated position in the market » Values of Hardie * Durability * Low maintenan
Slide 47: XLD Trim Manufacturing
@ James Hardie a Manufacturing al » Production plants « Clebume — 1° generation facility — Operational sirice 2000 « Peru — Latest generation facility — Operational since Aprii 2005 ence } » Centrally located to access market 4 @® James Hardie « XLD Key part of portfolio « Enables C+ bundle «Removes
Slide 48: Issues / Challenges and Go Forward Plan
@® James Hardie Issues / Challeng s = Platform development * Technology « Systems = Product development « Increase customer value 4 @® James Hardie Go Forward Plan « Continued growth = C+ Bundle « Platform / product evolution
Slide 49: Definitions
Definitions Sales Volumes mmsf — million square feet msf— thousand square feet This Menayemen! Presentalion contains forward looking stalerpents, We may fom tine fo tine make forwardLfooking statements ia our periodic reports fled with ar furnishéd fo the United States Securities and Exchange Comsni
Slide 50: USA Interior Products
@ James Hardie James Hardie 2006 Analyst/Investor Tour Grant Gustafson USA Interior Products 12-13 December 2006 @® James Hardie * Decade of solid, uninterrupted growth mmst FY9?7 FYSS Fy99 FYO0 FYOt FYO2 FYO3 FYO4
Slide 51: Growth By Product
@® James Hardie ile, 1 Growth By Produc * Primary product (%4”) still growing at healthy pace * %” product growing even faster . Product Life Cycle 2" Volume Growth “s" Votume Growth @® James Hardie Market Share * Growth fuelled by strong market and stronger JHBP penetration U.S. BackerBoard Market
Slide 52: Share Driver: Product Features
i, a0 Share Driver: Product Features Ye. Product (substrate for tile floors, especially in wet areas) Leading market share Greater compressive & flexural strength Cement, but lighter & easier to handle than traditional cement boards EZ Grid recessed fastener pattern Moldblock technology Ye Product (
Slide 53: Share Driver: Company-Level Competitive Advantages
@® James Hardie cil as 100) 5 ees eit eB lll “a Ae Share Driver:.Company-Level Competitive Advantages " Most innovative brand in the business « HardieBacker is the next generation cement board « Industry innovator (first %” cement board; Moidblock, EZ Grid) » Market leadership position « Brand stren
Slide 54: Strategic Direction
@® James Hardie ites Strategic Direction M » Align our Big Box and Pro Interiors sales forces under a united regional management structure JHBP Sales * Superior coordination Channels * Leverage higher level sefiing skills of pro reps with select big box installers and R&R contractors » Shift our sal
Slide 55: Disclaimer
@® James Hardie imer This Menayemen! Presentalion contains forward looking staternerts, We may fom tine fo tie make forwardLiogking statements in our periudic reports fed with ar furnished fo the United States Secunifies and Exchange Comsoission on Forens 20-F and &-X, ins our annual reports fg shar
Slide 56: Marketing and Branding
@ James Hardie James Hardie 2006 Analyst/Investor Tour Jamie Chilcoff Marketing and Branding 12-13 December 2006 @® James Hardie 1. Introduction 2. Historical Volume Growth driven by product development 3. Historical & Current Product Mix Evolution 4. Desired Product Mix §. Future Product Mix Evolut
Slide 57: Introduction and product development
@® James Hardie Introd ction * James Hardie fiber cement volume has exhibited sustained growth through strong market and product position * Continue to target strong volume growth and revenue yield « How has the product portfolio evolved over time? « What will the product portfolio look like in the
Slide 58: Product Mix Evolution and Future Product Mix
@® James Hardie pie Historical & Product Mix Evolution: * Premium product segment growth has driven ability to increase volume and enhance revenue yield. 200% 90% 80% 70% 60% 50% 40% 30% 20% 20% 0% FYSE Foz FYO6 WSiding —ggColorPlus got trier: @® James Hardie = 10 Future Product Mix * Continue to gr
Slide 59: Desired Product Mix
@® James Hardie Desired Product Mix Colorpius HardiePlank Cemplank Today * Product mix will evolve significantly in the medium term to continue to drive revenue and leverage market position. Tomorrow Next Gen Hardieplank/ ColorPlus Cemplank Fighting Brand | ® James Hardie Desired Product Mix - Next
Slide 60: Brand Strategy - New Branding
Fa . S NBtye ord. ¢ LINCOLN JAGUAR ay aL paint &. Cemboard Hardie Premium Hardie A three tiered architecture allows you to: * Target different audiences * Segment your prospective markets * Price accordingly * Penetrate varied markets effectively / @® James Hardie ss Brand Strategy ~ New Branding 7
Slide 61: Brand Video and Conclusion
@® James Hardie fooas Brand Video @® James Hardie Conciusion * Continued strong growth in core product volume and revenue yield * Product portfolio will continue to evoive... « Build brand position and consumer awareness « Grow and defend existing markets « Leverage product leadership competency to
Slide 62: Definitions
Definitions Sales Volumes mmsf — million square feet msf— thousand square feet This Menayemen! Presentalion contains forward looking stalerpents, We may fom tine fo tine make forwardLfooking statements ia our periodic reports fled with ar furnishéd fo the United States Securities and Exchange Comsni
James Hardie Industries — Non-Deal Roadshow (December 2006) on 6ix