Fletcher Building Limited · NZX:FBU
Fletcher Building — FY2004 Earnings Presentation
47 slides from Fletcher Building's earnings presentation, Aug 11, 2004
Slide 1: Fletcher Building Limited Annual Results 2004
Fletcher Building Limited Annual Results 2004 11 August 2004 Ralph Waters 11 August 2004 Chief Executive Officer
Slide 2: This Annual Results presentation dated 11 August 2004 provides additional comment on the media
This Annual Results presentation dated 11 August 2004 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 activities given in that release. Ral
Slide 3: Highlights
3 Highlights Strong Earnings Net profit up 43% to $240 million Growth Of this, $108 million + tax credits Increasing Returns will be distributed to shareholders. To Shareholders TSR of 33% Further 25 million new shares issued at Equity Raising at a discount of 4% Acquisition of Tasman Building Growt
Slide 4: Summary of Results
4 Summary of Results Jun Jun % 2004 2003 YOY $m 12 Mths 12 Mths Change Revenue 3958 3221 +23 EBITDA 582 429 +36 EBITA 471 338 +39 EBIT 460 331 +39 Net Earnings 240 168 +43 EPS (cents) 55.7 43.4 +28 Dividend cps 25.0 19.0 +32 Annual Results 2004
Slide 5: Financial Performance Improved Across All Segments
5 Financial Performance Improved Across All Segments EBIT $m 61% 230 180 164 76% 16% 24% 130 102 24% 94 95 81 80 73 59 54 42 34 30 -20 Building Products Distribution Concrete Construction Laminates & Panels June 2003 June 2004 Annual Results 2004
Slide 6: Building Products Results
6 Building Products Results Jun** Jun* % 2004 2003 YOY $m 12 Mths 12 Mths Change Revenue 927 638 +45 EBIT 164 102 +61 Margin 17.7% 16.0% +11 Funds 560 296 +89 Return on Funds 31%*** 34% -9 * Restated to transfer FWP & SPH to Laminates & Panels ** Includes 9 months of Tasman *** Proforma return based
Slide 7: Building Products: Tasman
7 Building Products Tasman Acquired for NZ$272 million in September 2003 9 months earnings: EBIT $31m, EBITDA $42m with record sales levels in insulation, sink ware and roofing Synergies identified, achieved and exceeded Significant growth opportunities Annual Results 2004
Slide 8: Building Products: Winstone Wallboards
8 Building Products Winstone Wallboards Record domestic volumes from strong market Held NZ market share at 93-94% Record earnings Annual Results 2004
Slide 9: Building Products: Fletcher Aluminium
9 Building Products Fletcher Aluminium Greatly improved margins and earnings Operational improvements achieved Regained some market share New products launched Annual Results 2004
Slide 10: Building Products: Steel Manufacturing
10 Building Products Sims HMS Standard Scrap Price 5 Year Trend by Quarter 350 300 Steel Manufacturing 250 200 US$/t 230,000 tonnes made, an 150 increase of 20% 100 50 Sales price up reflecting 0 Se 9 Se 0 Se 1 Se 2 Se 3 04 Ju 9 99 M 9 Ju 0 00 M 0 Ju 1 01 M 1 Ju 2 02 M 2 Ju 3 03 M 3 Ju 4 9 0 0 0
Slide 11: Building Products: Steel Processing and Distribution
11 Building Products Steel Processing and Distribution Significant operational improvements benefited margin and earnings at EasySteel Steady performance at Dimond with improving earnings Record volumes at PCC with earnings up both domestic and export Annual Results 2004
Slide 12: Distribution Results
12 Distribution Results Jun Jun* % 2004 2003 YOY $m 12 Mths 12 Mths Change Gross Revenue 863 744 +16 EBIT 73 59 +24 Margin 8.5% 7.9% +7.6 Funds 106 92 +15 Return on Funds 68.9% 64.1% +7 * Restated to transfer discontinued operations to corporate Annual Results 2004
Slide 13: Distribution
13 Distribution Revenue up 16% on last year and earnings 24% Product highlights: Frames & Trusses up 25% Insulation up 25% Kitchens & Bathrooms up 35% Opened new New Lynn branch. Commenced construction on Riccarton, Mt Wellington and Queenstown Acquired Builders Hardware Company Annual
Slide 14: Concrete Results
14 Concrete Results Jun Jun* % 2004 2003 YOY $m 12 Mths 12 Mths Change Revenue 518 487 +6 EBIT 94 81 +16 Margin 18.1% 16.6% +9 Funds 410 400 +2 Return on Funds 22.9% 20.3% +13 * Restated to transfer discontinued operations to corporate Annual Results 2004
Slide 15: Concrete: Golden Bay Cement
15 Concrete Golden Bay Cement 52% share of a 1.3 million tonne market Highest ever New Zealand sales Export sales reduced because of high New Zealand demand Accelerated capital plan will lift capacity to 840,000 tonnes Annual Results 2004
Slide 16: Concrete: Firth
16 Concrete Firth Ready mix exceeded 1 million m3 – a record Ready mix sales up 7% by volume Concrete block sales up 11% by volume Margins improved across the business Annual Results 2004
Slide 17: Concrete: Winstone Aggregates
17 Concrete Winstone Aggregates Plant rationalisation impacted volumes by 3% but earnings up 17% Average selling price increased 8.5%, partly through better mix Cleanfill revenues on the increase Auckland infrastructure spend underpins growth Annual Results 2004
Slide 18: Concrete: Humes
18 Concrete Humes Price leadership position impacted on market share Margins and earnings well up on 2003 Working capital/sales ratio improved Annual Results 2004
Slide 19: Concrete: Stresscrete
19 Concrete Stresscrete Revenues up 14% Internal improvements resulted in earnings up 64% Backlog up 30% Penetration in infrastructure market improving Annual Results 2004
Slide 20: Concrete: International
20 Concrete International Fiji Earnings improved and outlook good on back of uplift in construction activity Peru Positive earnings and US$1m cash repatriated Further improvements expected in 2005 Annual Results 2004
Slide 21: Construction Results
21 Construction Results Jun Jun % 2004 2003 YOY $m 12 Mths 12 Mths Change Revenue 643 618 +4 EBIT 42 34 +24 Funds -46 -62 +26 Annual Results 2004
Slide 22: Construction: Commercial Building & Engineering
22 Construction Commercial Building & Engineering Earnings up 8% Auckland Hospital and Grafton Gully completed Spaghetti Junction (JV) and Ferguson Wharf commenced Backlog now $600 million – all time high Annual Results 2004
Slide 23: Construction: Residential
23 Construction Residential Record earnings up 54% Future land holdings a key Auckland Schnapper Rock Beachlands Wattle Cove Howick Lunn Ave Queenstown Jacks Point – sections purchased Annual Results 2004
Slide 24: Laminates & Panels Results
24 Laminates & Panels Results Jun % 2004 Jun* YOY $m 12 Mths 2003 Change Revenue 994 659 +51 EBIT 95 54 +76 Margin 9.6% 8.2% +17 Funds 789 862 -8 Return on Funds 12% 10.1%** +19 * Laminex Acquired on 13 November 2002 and now restated to include FWP & SPH ** Estimated return based on full 12 months o
Slide 25: Laminates & Panels
25 Laminates & Panels Performance exceeded expectations for first full year All domestic sectors were buoyant Export earnings impacted by lift in currencies vs US$ FWP and SPH successfully integrated Annual Results 2004
Slide 26: Laminates & Panels
26 Laminates & Panels Formica and Formex brands consolidated Warehouse consolidation in Sydney and Adelaide, with Brisbane underway Western Australian JV’s performed well Annual Results 2004
Slide 27: Profit After Tax
27 Profit After Tax Jun Dec Jun 2004 2003 2003 $m 12 Mths 6 Mths 12 Mths EBIT 460 216 331 Interest -75 -36 -59 Tax -124 -58 -85 Minority Interests -21 -11 -19 Profit After Tax 240 111 168 Annual Results 2004
Slide 28: Simplified Balance Sheet
28 Simplified Balance Sheet Jun Jun 2004 2003 NZ$m NZ$m Assets Current Assets 1022 919 Fixed Assets 1023 972 Intangibles & Goodwill 342 195 Provision for Deferred Taxation 86 104 Investments 159 155 Total Fletcher Building Assets 2632 2345 Liabilities Current Liabilities 666 627 Net Debt 448 502 Cap
Slide 29: Key Ratios: Total Shareholder Return
29 Key Ratios Total Shareholder Return (TSR)** 50% 43 40% 33 30% 24 20% 6 10% 0% Jun 01* Jun 02 Jun 03 Jun 04 * June 01 is the return for the 3 months from separation date ** TSR calculated ((Gross Dividend Paid + Movement in Share Price)/Opening Share Price) Annual Results 2004
Slide 30: Key Ratios: Debt/Debt Plus Equity
30 Key Ratios Debt/Debt Plus Equity % 80 70 53.2 60 49.2 49.9 47.2 48.4 50 40.2 43.1 40 30 20 10 0 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Annual Results 2004
Slide 31: Key Ratios: Return on Average Equity
31 Key Ratios Return on Average Equity* % 24.3 23.0 30 16.9 20 10 0 -10 -20 -30 -43.8 -40 -50 Jun 01 Jun 02 Jun 03 Jun 04 * Net earnings after capital notes interest/shareholders funds Annual Results 2004
Slide 32: Key Ratios: Return on Average Funds
32 Key Ratios Return on Average Funds* % 23.1 24.4 24.7 25 20 15 10 5 0 -8.6 -5 -10 Jun 01 Jun 02 Jun 03 Jun 04 * EBIT/(Average net debt+equity+capital notes) - deferred tax asset Annual Results 2004
Slide 33: Key Ratios: Interest Cover
33 Key Ratios Interest Cover* 12 8.8 10 7.6 7.8 7.3 8 5.8 (times) 6 4.6 3.1 4 2 0 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 * EBITDA pre unusuals/interest paid including capital note interest Annual Results 2004
Slide 34: Net Debt Movement
NZ$ Millions 200 400 600 800 Opening Debt 502 Tasman 272 Annual Results 2004 Cash from ops (411) Working capital (13) 137 Capex Acquis/Divest 22 Dividends 69 29 Min Distn Net Term Debt Movement Cap Notes/Equity (144) FX on debt (15) Closing debt 448 34
Slide 35: Operational & Strategic Update
Operational & Strategic Update Ralph Waters 11 August 2004 Chief Executive Officer
Slide 36: Strategic Agenda
36 Strategic Agenda Earnings Reliability Internal Growth External Growth Annual Results 2004
Slide 37: Earnings Reliability
37 Earnings Reliability Cycle not just residential but total construction including non-residential and infrastructure Indicators that will influence total work put in place GBC estimates of projects over 1000 ton cement Fletcher Construction estimates of construction jobs over $25 million
Slide 38: Earnings Reliability
38 Earnings Reliability Infrastructural projects will deliver growth.. Building Consents Measured, WIP Forecast 14,000 GBC Major Project Analysis F03 What's On - Major Projects Forecast Industry Redline Project Est Cement Project Timing Est Cement 12,000 Measured Britomart 10,000 Fergusson Wharf 200
Slide 39: Earnings Reliability: Total Construction Work (NZ)
39 Earnings Reliability Total Construction Work (NZ) New Zealand Value of Work Completed Forecast NZ$ million 14000 +5% +17% -5% +10% +10% 12000 +18% Infrastructure 10000 +10% +14% 8000 Non +8% Residential +22% +5% 6000 -7% A&A 4000 +25% -3% -24% Residential 2000 0 97 98 99 00 01 02 03 04 05 06 Sour
Slide 40: Earnings Reliability: Sales by Market Segment, Australia
40 Earnings Reliability Sales by Market Segment – Australia 2003/04 Export Australian cycle 7% Alterations & Residential Low new Additions 30% 26% residential bias A&A Commercial Commercial 37% Annual Results 2004
Slide 41: Earnings Reliability: Total Construction Work (Aus)
41 Earnings Reliability Total Construction Work (Aus) A$Billion Australia Value of Work Completed 60 Forecast 50 40 -3.2% 4.8% 20.6% 2.9% -24.9% -16.3% 30 20 10 3.3% -0.4% -1.7% -15.5% -6.4% 11.7% 0 2005f 2004f 2009f 2006f 2007f 2008f 1999 2000 2001 2002 2003 1998 1997 1996 1995 Non -Dwelling Dwelli
Slide 42: Internal Growth Opportunities
42 Internal Growth Opportunities Expect to invest up to $100 million more than depreciation in 04/05 Building Products AHI Roofing expansion Insulation expansion Concrete Golden Bay expansion Whitehall quarry Annual Results 2004
Slide 43: Internal Growth Opportunities
43 Internal Growth Opportunities Construction Auckland land Queenstown land Laminates & Panels Resin Joint Venture Asian distribution Annual Results 2004
Slide 44: Internal Growth Opportunities
44 Internal Growth Opportunities Distribution The following new stores are under construction Riccarton (due to open Oct 04) Mt Wellington (due to open Nov 04) Queenstown (due to open Dec 04) With eight others to be upgraded Annual Results 2004
Slide 45: External Growth Opportunities
45 External Growth Opportunities We have the financial capacity Limited opportunities in total Our acquisition criteria narrows that further We continue to seek and evaluate options to find the right opportunity Annual Results 2004
Slide 46: Outlook
46 Outlook NZ and Australia residential markets will soften this year, but off record high levels We expect A&A to strengthen Non–residential outlook is strong for next two to three years in New Zealand Infrastructure spend will also be strong for at least the next three years On balance –
Slide 47: Ralph Waters Chief Executive Officer
Ralph Waters 11 August 2004 Chief Executive Officer