Fletcher Building Limited · NZX:FBU
Fletcher Building — Shareholder Meeting (November 2019)
36 slides from Fletcher Building's shareholder meeting presentation, Nov 28, 2019
Slide 1: 2019 Annual Shareholders' Meeting
FOCUS 2019 Annual Shareholders’ Meeting 28 November 2019 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 2: Bruce Hassall, Chair
FOCUS Bruce Hassall Chair Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 3: Directors
Directors Martin Brydon Tony Carter Barbara Chapman Peter Crowley Rob McDonald Doug McKay Cathy Quinn Steve Vamos 3 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 4: Meeting agenda
Meeting agenda Chair’s address Chief Executive Officer’s address Voting on Resolutions General Q&A Refreshments 4 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 5: FY2019 results at a glance
FY2019 results at a glance Revenue Net Earnings/(Loss) EBIT* EPS* $9,307m $164m $631m 43.0c FY2018 $9,471m FY2018 ($190m) FY2018 $50m FY2018 (8.1c) * Before significant items * Before significant items Return on Funds Cash Flow from Net debt Leverage ratio Employed operating activities $325m 0.4x 11
Slide 6: Returns to shareholders: dividend reinstated, share buyback underway
Returns to shareholders: dividend reinstated, share buyback underway • Dividend policy to pay dividends in the range of 50%-75% of net earnings before significant items Dividends Share buyback of up to and having regard to available cash flow1 23c $300m • Return of capital to shareholders via share
Slide 7: FY2019 performance – continuing operations
FY2019 performance – continuing operations External Revenue EBIT1,2 Group $8,308m $549m FY2018 $8,211m FY2018 ($28m) New Zealand $5,375m $532m Divisions FY2018 $5,239m FY2018 ($97m) Australia $2,933m $57m Division FY2018 $2,972m FY2018 $114m 7 Before significant items 1 Fletcher Building Limited Ann
Slide 8: FY2019 balanced scorecard
FY2019 balanced scorecard Safety Engagement Total Recordable Injury Frequency Rate 1 Employee Engagement Rating 70% 71% 6.7 6.9 66% 67% 5.1 5.0 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Sustainability Customer Carbon Emission Intensity 2 Net Promoter Score 3 41 149 33 143 141 24 139 FY16 FY17 FY18 FY1
Slide 9: Sustainability strategy
Sustainability strategy • Significant focus on health and safety through Protect safety reset • Diversity and inclusion • Science-based target for reducing our carbon emissions • Dow Jones Sustainability™ Australia Index inclusion 9 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 10: Governance
Governance Board Skills Matrix • Strengthened governance, including revitalised delegated financial authorities, implementation of golden rules and policy refresh • Comprehensive induction of the new Board and the re-organisation and composition of board committees Diversity Industry • Adoption of t
Slide 11: Ihumātao
Ihumātao 11 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 12: Delivering the strategy
Delivering the strategy FY2019 FY2020 FY2021–23 REFOCUS AND STABILISE PERFORMANCE GROWTH 1. Refocus on NZ Businesses NZ Businesses strong strong and growing and growing the NZ core 2. Stabilise Complete B+I projects Construction turnaround complete Construction Return division to profit 3. Strengthe
Slide 13: Ross Taylor, Chief Executive Officer
FOCUS Ross Taylor Chief Executive Officer Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 14: Firmly focused on our future
Firmly focused on our future To be the undisputed leader in New Zealand and Australian building solutions – with products and distribution at our core 14 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 15: Positions us well to drive shareholder returns into the future
Positions us well to drive shareholder returns into the future FY23 TARGETS Focus • Revenue growth above background market Consistency growth Leveraged to upside • Core business margin improvements in NZ and Australia Strong balance sheet, strong cash flows • Return on Funds Employed (ROFE) >15% Wel
Slide 16: Medium term market outlook is forecast to be supportive
Medium term market outlook is forecast to be supportive New Zealand Market Australia Market NZ Historical and Forecast Market Outlook (NZ$b)1 AU Historical and Forecast Market Outlook (AU$b) 1 300 40 CAGR CAGR 35 1.1% 9.2% 250 30 200 25 20 150 15 100 Population 10 Population growing at growing at 1.
Slide 17: Focus now on driving consistent performance and setting up for growth
Focus now on driving consistent performance and setting up for growth FY2020 FY2021–23 PERFORMANCE GROWTH Get all NZ core 1. Strengthen and grow the NZ core NZ businesses strong and growing businesses performing 2. Profitable growth in Residential and NZ businesses strong and growing Development Com
Slide 18: Executive Team well positioned to drive and lift performance
Executive Team well positioned to drive and lift performance Operational Heads HAMISH BRUCE IAN STEVE PETER DEAN MCBEATH McEWEN JONES EVANS REIDY FRADGLEY Chief Executive Chief Executive Chief Executive Chief Executive Chief Executive Chief Executive Building Products Distribution Concrete Residenti
Slide 19: NZ core has good market positions, but margins under pressure
NZ core has good market positions, but margins under pressure Gross Revenue And Margin FY14-FY19 Current Position Building • #1 or #2 position in all businesses Products 5,000 12.0% Distribution 10.0% • Revenue has grown in good market 4,000 conditions 8.0% Concrete 3,000 • Margin compression throug
Slide 20: Positioning the NZ core for margin improvement and growth
Positioning the NZ core for margin improvement and growth Key Focus Areas What We Are Doing 1 Operational excellence 2 Product innovation 3 E-commerce, digitisation and automation 4 Logical adjacencies and opportunities 20 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 21: Highly successful Residential and Development division
Highly successful Residential and Development division Residential Units Sold FY14-FY19 Current position Residential and • #2 house builder in New Zealand Development 800 • New home sales mainly priced $600- 700 900k 600 500 • 755 residential units sold in FY19 400 • Strong operating disciplines 300
Slide 22: Ability to scale Residential further
Ability to scale Residential further Key Focus Areas What We Are Doing 1 Grow to 1,000 units pa 2 Land Dev continues at $25m pa 3 Clever Core panelisation plant drives speed and quality 4 Scale our apartment business 22 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 23: Pivoting Construction to a more balanced portfolio
Pivoting Construction to a more balanced portfolio Revenue By Project Type (NZ$m) Current position Construction • The leading contractor in NZ and the South Pacific $2,000m $2bn • c10% market share $1,500m $1.5bn • Strong positions in roading, infrastructure $1,000m $1bn • Focused re-commitment to v
Slide 24: Growing Construction in profitable sectors
Growing Construction in profitable sectors Key Focus Areas What We Are Doing 1 Rebuild talent and skills 2 Improved operating disciplines and governance 3 Winning the right work with the right customers 4 Complete legacy projects within provisions 24 Fletcher Building Limited Annual Shareholders’ Me
Slide 25: Update on NZICC
Update on NZICC • Fire at NZICC construction site in October • All staff and subcontractors on site evacuated safely • Extremely grateful to the Fire and Emergency teams • We remain committed to delivering a world-class convention centre for Auckland and New Zealand • Plan to restart the project as
Slide 26: Intervened in Australia and dealing with market downturn
Intervened in Australia and dealing with market downturn AU Historical and Forecast Market Outlook Current Position Australia • #1 or #2 position in all businesses Residential Approvals (#) 241k • 54% exposed to Residential market 232k (c30%) 215k • Decline in Residential market, higher input costs,
Slide 27: Australia cost out and growth investment progressing well
Australia cost out and growth investment progressing well Key Focus Areas What We Are Doing 1 Operational excellence, complete final stage of cost out programmes 2 Product innovation 3 Ecommerce, digitisation and automation 4 Logical adjacencies and opportunities 27 Fletcher Building Limited Annual
Slide 28: Continued focus on our key enablers to drive performance
Continued focus on our key enablers to drive performance Engaged and Fit for purpose Strong safety capable people, systems, next culture lean operating generation digital model capabilities Leading innovation High level of Disciplined and local customer intimacy performance adaptation built through
Slide 29: Market and trading update – New Zealand
Market and trading update – New Zealand New Zealand Trading Update New Zealand Market FY20 Outlook • Core divisions – Building Products, Distribution, Concrete: • Residential activity to ease slightly off peaks, with • Finishing trade volumes remain strong, supporting good continued trend to higher
Slide 30: Market and trading update – Australia
Market and trading update – Australia Australia Trading Update Australia Market FY20 Outlook • Cost-out programme progressing to plan • Residential contraction expected to bottom in FY20 • Good turnaround momentum in Laminex, Fletcher Insulation in line with prior expectations (c150k-160k housing ap
Slide 31: FY20 outlook
FY20 outlook • FY20 EBIT before significant items expected to be in the range of $515 million to $565 million • New Zealand core: earnings solid overall; Steel impacted by ongoing high competitive intensity • Residential & Land Development: Residential earnings to grow slightly on prior period; Land
Slide 32: Resolutions and Voting
FOCUS Resolutions and Voting Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 33: Resolutions
Resolutions Ordinary Resolutions • Resolution 1 – Election of Peter Crowley • Resolution 2 – Auditor fees and expenses Special Resolution • Resolution 3 – To adopt a new Constitution 33 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 34: Appendix
FOCUS Appendix Fletcher Building Limited Annual Shareholders’ Meeting 2019
Slide 35: Summary of FY20 metrics already communicated
Summary of FY20 metrics already communicated Land Development • Land Development earnings to return to medium term average of c $25m p.a. (c$30m lower than FY19) • Targeting $100m gross annual cost-out benefit by FY21; expect c$15m of this to flow to net EBIT benefit in FY20 Australia and c$50m in F
Slide 36: Important Information
Important Information This presentation dated 28 November 2019 should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions, earnings and activities given in the 2019 Annual Report and management commentary published on 21 August 2019. In cert
Fletcher Building — Shareholder Meeting (November 2019) on 6ix