Fletcher Building Limited · NZX:FBU
Fletcher Building — Investor Presentation (September 2011)
116 slides from Fletcher Building's investor presentation, Sep 19, 2011
Slide 1: Formica Group Laminate 101 Analysts Presentation
For personal use only Formica Group Laminate 101 Analysts Presentation September 19, 2011 Cincinnati, OH
Slide 2: Analysts Meeting Agenda
Analysts Meeting Agenda September 19, 2011 For personal use only Welcome & Introduction Mark Adamson Formica Performance Mark Adamson Laminate 101 Dave Pallas Innovation and Design Renee Hytry Formica Global Overview Sustainability Gavin Todd Formica Asia Fred Wang Formica Europe Richard Pollington
Slide 3: Performance
For personal use only Performance Mark Adamson
Slide 4: Significant improvement in earnings despite headwinds
Despite significant headwinds that have curtailed top line growth, Formica has recently posted significant improvement in earnings For personal use only Revenue EBIT ROFE 1200 60 8.00% 1000 7.00% 50 6.00% 800 40 5.00% 600 30 4.00% 400 3.00% 20 2.00% 200 10 1.00% 0 0 0.00% FY08 FY09 FY10 FY11 FY08 FY
Slide 5: Positive results in 2011 with Asia revenue growth
Positive results achieved in 2011 with Revenue growth in Asia, and continued initiatives in NA and Europe helping offset volume shortfalls in both Europe and North America. For personal use only Asia Europe Nth America 3 18 18 4 34 28 2 5 29 9 15 9 5 5 Inflation Market Vol Market Vol Initiatives & M
Slide 6: Outlook uncertain; difficult in Europe and North America
Outlook is some what uncertain with recent economic events, although near term conditions are expected to remain difficult in Europe and North America, while Asia is expected to remain firm. For personal use only Europe and North America. Residential and commercial markets continues to exhibit lit
Slide 7: Challenging year; focus on improvement across regions
FY 12 looks to be another challenging year and the focus across all regions will be on all elements of the business to drive improvement. For personal use only REVENUE GROWTH RISK MITIGATION - Share gain, - Avoid Projects/ initiatives with high risk of failure - Opportunistic or one off Deals, - Vig
Slide 8: Focus on cash generation as well as EBIT
FY 12 Focus also needs to be on cash generation as well as EBIT For personal use only WORKING CAPITAL MANAGEMENT AND FOCUS Continue with rigorous management of Finished Goods inventory and disposal of remaining obsolete and excess Ensure Procurement achieves best price but not simply through vol
Slide 9: Pursuing NZ$100m EBIT target
Beyond the current year Formica is pursuing $NZ100m EBIT target and without favourable economics and currencies a number of strategies are being pursued. For personal use only 1. Asia has an aggressive target to grow revenue in double digits, and does have economic conditions and outlook more favour
Slide 10: Journey from recovery to sustainable growth
Formica is on a journey from recovery to sustainable growth, and although we have ―turned the corner‖ there is still a long way to go For personal use only We are here Incremental Adapt to World Consolidate & Growth & Supply Industry Post GFC Reset Chain Rationalization Optimization Leading Create R
Slide 11: Key areas of focus and investment by region
As we pivoted from Reset to a Growth orientation, each region identified key areas of focus and investment to support growth… For personal use only Group Asia Human Capital Grow Share Organization Capabilities HPL Capacity Deal negotiation LPL Entry Business integration Geographic Ex
Slide 12: Key elements of an effective business strategy
A truly effective business strategy requires 4 key elements For personal use only 1. a SYSTEM of… 2. genuinely DIFFERENTIATED CAPABILITIES that create… 3. …demonstrable COMPETITIVE ADVANTAGE that is… 4. …SUSTAINABLE over a meaningful period of time The resulting SYSTEM is not one thing…rather it is
Slide 13: Laminate 101
For personal use only Laminate 101 Laminate 101 David Pallas
Slide 14: What is HPL?
What is HPL? For personal use only High Pressure Laminate (HPL) is made out of layers of paper coated in ―resin‖ (uncured liquid plastic) Surface papers treated with Melamine resin, and core kraft papers treated with phenolic resin Which are pressed under high temperature ~140 degrees C and pr
Slide 15: Building Blocks of Laminate
Building Blocks of Laminate For personal use only Two Key HPL Components Décor Surface paper: Solid or Print with translucent overlay Gives Color and design pattern to laminate Treated with Melamine Resin to provide protective scratch and mar resistant properties with good clarity and color st
Slide 16: Two Types of Treating
Building Blocks of Laminate For personal use only Two Types of Treating Melamine Treating: Coat decorative or light overlay papers Provides the surface scratch & mar resistance Reacts to Temperature and Humidity (areas environmentally controlled) Phenolic Treating Coat grades of saturating k
Slide 17: HPL Manufacturing Process
HPL Manufacturing Process For personal use only HPL Manufacturing Process Treats surface papers Surface Treaters Collation Press Finishing Provides Trims rough Raw Materials Assembles temperature, sheets to the different pressure and market sheets to time for dimensions create runs reaction to take
Slide 18: High Pressure Laminate Build
High Pressure Laminate Build For personal use only HPL ―In the Press‖ HPL is pressed in sets called ―doubles‖. Each double has a surface facing each plate and ARC sheets in the middle so that after pressing, they can be separated into 2 laminates The surface texture of the laminate is formed f
Slide 19: High Pressure Laminate Pressing Process
High Pressure Laminate Pressing Process For personal use only Laminate is made when 1300 psi is applied to the treated sheets at approximately 134-147 oC for approximately 1 hour Top Temperature and Time are controlled to develop the laminate properties. Curing the melamine resin makes the surface
Slide 20: What a Customer wants in a HPLaminate: appearance
What a Customer wants in a HPLaminate For personal use only Enormous Flexibility in Appearance Color (Surface Décor) Finish (Surface Texture) Solid (color throughout surface paper) Determined by plate type pressed against Print (printed on color paper) Finish-Description 42 Sparkle LX Luxe 43 Artisa
Slide 21: What a Customer wants in a HPLaminate: grade and size
What a Customer wants in a HPLaminate For personal use only Sheets Optimized to End Use Application Grade (Thickness) Grade 10 = 1.2 mm (horizontal grade) Grade 12 = 1.0 mm (post-forming grade) Grade 20 = 0.7 mm (vertical grade) Size (Width & Length) 3‘x7‘ 3‘x8‘ 3‘x10‘ 3‘x12‘ 4‘x8‘ 4‘x10‘ 4‘x12‘
Slide 22: What Customer does with Formica Laminate: panel assembly
What Customer does with Formica Laminate For personal use only Panel Assembly: Laminates are bonded to particle board, or other substrates like MDF to make flat panels, cabinets, commercial fixtures or other similar items Cross Section View of Laminated Panel Applied with Adhesive Under Pressure Lam
Slide 23: What Customer does with Formica Laminate: post forming
What Customer does with Formica Laminate For personal use only Post Forming Countertop or Doors: The laminate is again bonded to suitable substrates, then heated, and formed to shape Cross Section View of Postformed Top 22
Slide 24: LP composition (Melamine boards)
LP composition (Called Melamine boards) For personal use only Substrate included in the production 23
Slide 25: LP production lay-out
LP production lay-out For personal use only 24
Slide 26: Formica Group Procurement
For personal use only Formica Group Procurement Jeff Coe
Slide 27: Formica Group Procurement Agenda
Formica Group Procurement Agenda For personal use only Overview of key laminate raw material spend categories Review of underlying cost driver trends Formica‘s approach to managing volatility and inflation 26
Slide 28: HPL Raw Material Cost Breakdown
High Pressure Laminate Raw Material Cost Breakdown For personal use only 8% 29% Total Formica Group Other Category Includes: 35% Chipboard Films Foils Resin additives 28% Kraft Décor Paper Resins Other North America Europe Asia 3% 11% 11% 31% 27% 34% 30% 34% 37% 28% 22% 32% 27
Slide 29: Laminate Bill of Material & Underlying Cost Drivers
Laminate Bill of Material & Underlying Cost Drivers Bill of Material use only % of Product Category Cost - HPL Key Cost Drivers Current Trend Decorative NBSK 1 Paper 2.1 to 18.4 % TiO2 Stable Kraft Linerboard 2 Paper 17.3 to 32.2% OCC For personal Phenolic Oil 3 Variable Resin 11.5 to 28.2% Phenol O
Slide 30: Decorative Papers – Pulp and Titanium Dioxide
Decorative Papers – Pulp and Titanium Dioxide 1 For personal use only Northern Bleached Softwood Kraft Titanium Dioxide Pulp & Paper Week ICISLOR Average $1,350 $1.80 $1,300 $1.70 $1,250 $1.60 $1,200 $1,150 $1.50 $1,100 $1.40 $1,050 $1.30 $1,000 $950 $1.20 $900 $1.10 $850 $800 $1.00 USD/Tonne $750 $
Slide 31: Kraft Papers – Linerboard and Old Corrugated Containers
Kraft Papers- Linerboard and Old Corrugated Containers 2 Old Corrugated Containers For personal use only Linerboard Pulp & Paper Week Pulp & Paper Week $800 $200 $750 $190 $700 $180 $170 $650 $160 $600 $150 $550 $140 $500 $130 $120 $450 $110 $400 $100 $350 $90 $300 $80 $70 $250 $60 $200 $50 $150 $40
Slide 32: Phenolic Resin – Phenol & Brent Crude Oil
Phenolic Resin - Phenol & Brent Crude Oil 3 For personal use only 1.00 140 0.90 120 0.80 0.70 100 Brent USD/Barrel Phenol USD/Lb 0.60 80 0.50 60 0.40 0.30 40 0.20 20 0.10 0.00 0 North America Northeast Asia West Europe Crude Oil Brent 31
Slide 33: Varying degrees of influence in our materials markets
Varying degrees of influence in our materials markets For personal use only Decorative Papers Kraft Papers Phenolic Resin 3% 10% 19% 15% HPL 23% IP LPL Kapstone 18% 23% Film KotkaMills Foils 35% Other Edgeband 54% •Oil goes into over 6,000 different products. 3% 3% 12% 4% •Phenol is part of the arom
Slide 34: Managing commodity, volatility, and inflation
How does Formica Group manage commodity, volatility, and inflation? For personal use only • Aggressive annual continuous improvement efforts • Material usage and finished board yield improvements Manufacturing • Labor efficiencies, energy reduction Efficiencies • Design consolidation, group collabor
Slide 35: Formica Innovation and Design
For personal use only Formica Innovation and Design Renee Hytry
Slide 36: Founded in 1913, a leader in innovative surfacing
Founded in 1913, Formica is a leader in the design and manufacture of innovative surfacing products today. For personal use only 1950s 1970s 1980s EARLY 2000s 2008 2008 2009 2010 2011 Raymond First Design ColorCore Formica Group Innovation Form: 180fx® 180fx® Formica® Solid Loewy, Brooks Advisory Bo
Slide 37: Multi disciplinary processes to capture style trends
The vision of innovation continues today with multi disciplinary processes used to capture evolving customer style tastes in three continents through trend forecasting, research and prototype development For personal use only CONCEPT MARKET RESEARCH QUALITATIVE MARKET RESEARCH Every 2-4 years Innova
Slide 38: Surfaces in various colors, patterns & wood looks
Formica surfaces are produced in various colors, patterns & wood looks enhanced with textures to offer the architect, designer & consumer many style options. For personal use only ™ HIGH PRESSURE LAMINATE COMPACT LAMINATE VIVIX™ ARCHITECTURAL PANELS COLORCORE2™ CHEMTOP2™ INNOVATION WITH EXTERNAL SUP
Slide 39: Homapal metal and veneer laminates
Formica Group has sold Metal and Veneer laminates since the early 1980s for the premium surfacing category. These products produced by Homapal use a similar manufacturing process to HPL; substituting a ‗real‘ material for a printed décor paper. For personal use only HOMAPAL located in Herzberg, Germ
Slide 40: Décor sheets, veneers and metal foils manufacture
Décor sheets, veneers and metal foils are manufactured in a similar process to decorate the kraft core. All three types of laminates use texturing Press Plates that give a finish texture, realism and innovation to otherwise flat surfaces For personal use only HOMAPAL MANUFACTURES premium laminates u
Slide 41: Only laminator with in-house plate manufacturing
Formica Group is the only laminator in the world with an in-house Plate Manufacturing facility; allowing innovation in textures For personal use only 1964 1966 1973-74 1978 1982-1983 1984 199-2000 2003-today Formica France Stand alone Steel plates Design All Formica New plant is Formica brand Formic
Slide 42: International plate supply base
International Plate Supply base is small, selling to the same base of customers; Europeans most experienced with new entrants showing up in Asia For personal use only Strong Suppliers Formica Group Hueck France Germany Release Papers Sappi US High Pressure Sesa & Flai WKP Germany Italy Various Other
Slide 43: Printed paper innovation: 180fx
An example of printed paper innovation; to create 180fx®, the Formica Design team identified consumer trends, hand selected luxury granite slabs, used advance printing technology to capture every detail to achieve unmatched realism For personal use only CHANGING KITCHEN DESIGNS & CONSUMER PREFERENCE
Slide 44: 180fx collection rollout
The 180fx® collection started in North America, 2nd round is being released in Europe and Australia/NZ in 2011 and Asia is testing concept for architectural wall panels for a 2012 introduction For personal use only 43
Slide 45: Homapal flexible manufacturing base
Homapal has a highly flexible manufacturing base and skilled staff; maintains the latest technology and incorporates hand finishing which gives it the capability to develop unique visuals and to respond quickly to specialist orders For personal use only DESIGN HOMAPAL SPECIALTY OPERATIONS TRADITIONA
Slide 46: Innovation strategy for 2011-12
An innovation strategy for 2011-12 will be to release large scale Iconic DecoMetal designs to target vertical Feature Wall applications and further enhance premium positioning For personal use only HOMAPAL RESOURCES Are able to develop unique press plates for premium looks. With Homapal‘s flexibilit
Slide 47: Homapal deep texture plate technology
Homapal has the capability to use ‗deep texture‘ plate technology for innovation with woods, not possible in high pressure laminates For personal use only HOMAPAL HOLZ LAMINATES consist of reconstituted veneers. All used timber comes from lasting controlled areas of cultivable land. For the producti
Slide 48: 100-year anniversary
Formica Group will celebrate its 100-year anniversary in 2013. For personal use only 100 YEAR ANNIVERSARY A corporate milestone presents an opportunity to align our internal GLOBAL CELEBRATION resources/efforts to share & celebrate ANNIVERSARY PATTERNS COLLECTION EMPLOYEES AND CUSTOMER EVENTS with o
Slide 49: Formica – Global Overview Sustainability
For personal use only Formica – Global Overview Sustainability Gavin Todd 48
Slide 50: Sustainability Agenda
Sustainability Agenda For personal use only Initial Sustainability Inputs Initial Sustainability assessment Developed Strategies Detail of LCA Situation Assessment Communication/ Messaging Energy / Carbon status Latest Sustainability Assessment 49
Slide 51: Key inputs shaping Sustainability strategies
The key inputs that started to shape Formica Group Sustainability strategies For personal use only Formica has always maintained high Industry Legislative 1 standards of Environmental Pressure compliance Regulation Changes Building Assessment methods. Sustainable product Challenge: to evaluate the k
Slide 52: Positioned in compliance mode in 2008
Formica positioned in compliance mode, as we began to develop our Sustainability approach. use only Formica 2008 Compliance Pro-Active Risk Integrating with Integrated Follower Innovator Leader Mature Focused Based Business Strategy Stage 1 & 2 Initiatives: approach strategy Shaping maintain current
Slide 53: Prioritized Sustainability activities
Prioritized activities that address the Sustainability challenges within Formica group and the market requirements. For personal use only Initial focus to ensure inclusion of all Formica Operations and Facilities within the Group 1 to establish a common Sustainability Voice 2 Integrate and complimen
Slide 54: Life Cycle Analysis and embodied energy
Life Cycle Analysis identifies the Cumulative Embodied Energy for 1x M2 High pressure laminate. Three key areas of consumption: For personal use only Set a Life Cycle bench mark for our products 1 capturing the total Environmental Impact Cradle to Grave. Providing accurate data that we communicate t
Slide 55: Critical certification requirements
Formica identified the critical certifications requirements from the wood pulp, product emissions and carbon reduction, sectors For personal use only Sustainability Activities Certification Divisions Homapal NA EU ASIA FSC Chain of Complete Complete Complete In progress due Feb 2012 Custody FSC Prod
Slide 56: Strategic Sustainability initiatives
Sustainability Initiatives that have been identified as strategic toward business retention or growth. For personal use only Sustainability Activities Divisions NA EU ASIA 5 year Sustainability Road Three regional Sustainability Road maps Complete map Group and regional activities are currently bein
Slide 57: Six Sustainability announcements in second half of 2011
During the second half of 2011, we are releasing six significant Sustainability announcements, regarding Formica Group, Sustainability achievements. For personal use only Region Subject Press Communication NA Press release June 2011 EU FSC ― Formica Corporation can now offer HPL products with full F
Slide 58: Gross energy use reduced by 9%
Gross energy use has reduced by 9%, however lower volumes have challenged the Energy consumption per unit production. (2007 compared to 2010) Comments For personal use only Gross Volume EM2 Current Status 1 i. Volume reduction 14% 150,000,000 ii. Gross energy reduced by 9% 100,000,000 iii. Energy in
Slide 59: Moving from compliance to sustainability leader
Globally, Formica is moving from a compliance focused company into the area of sustainability leader. use only Formica 2011 Compliance Pro-Active Risk Integrating with Integrated Follower Innovator Leader Mature Focused Based Business Strategy Stage 1 & 2 Initiatives: approach strategy Shaping maint
Slide 60: Formica Asia
For personal use only Formica Asia Fred Wang
Slide 61: Asia Agenda
Asia Agenda For personal use only Overview of the Formica Asia Business Strategic Priorities Market Outlook 60
Slide 62: Formica Asia plants and markets
Formica Asia manufactures at three plants and operates in over twenty markets across the region, built around current bases in Thailand, Taiwan and China Production (M.S.F.) Distribution Ctr. For personal use only Sales Office Employees Factories Operations Profile Taiwan Taiwan (inc. Phil) 1 137 3
Slide 63: Sales concentrated in HPL near factories
The region‘s sales are concentrated in HPL, including Compact, and concentrated near our factories, as well as in Hong Kong, Singapore and Malaysia For personal use only Revenue by Country Revenue by Product Philippines, 2.1 Japan, 1.7 Vietnam, 1 Korea, 3.2 Indonesia, Other 0.7 Solid (11%) Malaysia,
Slide 64: Sales by channel and sector
Product moves both Directly and through Distribution, and is sold primarily into the commercial specification sector— new housing is about 27% of the business For personal use only Sales by Channel Sales by Sector Residential Remodel (10%) Distribution Direct Residential (55%) (45%) New (27%) Commer
Slide 65: Highly fragmented industry across Asian markets
In many markets the industry is highly fragmented—given our market share there are lots of opportunities to grow, but no one acquisition is a game changer For personal use only 100 Polyart Importer Low-end Other Other Other Other Other Maica ABC G. BoardToppal TAK Other Nihon Decoluxe Maica Ica Othe
Slide 66: Asia Agenda
Asia Agenda For personal use only Overview of the Formica Asia Business Strategic Priorities Market Outlook 65
Slide 67: Asian Overview of Key Strategic Priorities
Asian Overview of Key Strategic Priorities For personal use only Ensuring capacity to meet future growth ASEAN China Building Specification Sales and Expanding Distribution 66
Slide 68: Formica Share in China HPL Market
Formica Share in China HPL Market For personal use only High end Mid tier Low end Formica (3%) Formica (8%) Formica (33%) Other (67%) Other (92%) Other (97%) Estimates = 396.1 MSQF Estimated = 533.6 MSQF Estimates = 772.8 MSQF 2010 Management Estimates 67
Slide 69: Competition in High End and Mid Tier
Competition—Formica holds a leading position in the High End and is focused on expanding its share in the Mid-Tier For personal use only High End Share Mid Tier Share ABC Others Formica Others (Omega) (5%) (8%) (14%) (7%) Rexin Xinyi (5%) Formica (10%) Omega (33%) (5%) Zhaoyin Print Linglong (11%) (
Slide 70: Market Growth drivers
Market Growth- Growth in the surfacing market is attributable to rapid urbanization at the core, strong economic growth, and rising consumer buying power adding to demand- particularly in the high end For personal use only Drivers of Demand Growth in the surfacing market can be seen to This dema
Slide 71: China HPL market growth 2010-2015
Market Growth—Overall the Laminate market in China is expected to grow modestly, but that masks what is expected to be significant growth in the High and Mid-Tier For personal use only China High End HPL Market: 2010-2015 China Mid End HPL Market: 2010-2015 560 240 516 520 212 92 480 200 440 Million
Slide 72: Demand shifting up or moving to LPL
China Market Growth—This is because existing Commodity and Low End demand is shifting up to higher value HPL or moving to lower cost LPL Lower End Demand Shifting Up… …Or Moving To LPL For personal use only 3,000 35,000 2,500 30,000 Volume (square feet in millions) Volume (square feet in millions) 2
Slide 73: China Market Sector Strategy
China Market Sector Strategy—As a result, Formica‘s strategy is to focus on growing share in the High and Mid-Tier sectors For personal use only Market Sector Strategy Overview These sectors are the most attractive Attractive profit margins… With the highest projected growth over the next 5 ye
Slide 74: Target Growth Strategies
Target Growth Strategies—We will continue to drive this value proposition into the market, through targeted strategies aimed at key market segments For personal use only Build Distribution Capability to capture incremental share of the commercial market Drive Specification Sales to support first b
Slide 75: Capacity Utilization and new China plant
Capacity Utilization—In light of increased volumes driven by market growth and share gain, current press capacity is projected to be fully utilized by FY13 For personal use only Press Capacity Utilization China Production Demand vs. Press Capacity Demand on the current China factory will exceed no
Slide 76: Proposed Jiujiang plant site
The Site – The proposed plant in Jiujiang will more economically service South China, where robust growth is demonstrated. It will improve market access to the growing Central region. 15-20% lower logistic costs are expected over Shanghai. For personal use only Future Logistics Model Jiujiang 75
Slide 77: Formica Asia Strategic Development
Formica Asia Strategic Development For personal use only Specification Distribution Direct Accounts × ○ △ Product portfolio, ie FR, Ability to serve, Cost, properties, Product new designs, New precinct to markets applications Development textures, Veneer and and customers metal laminates, SSM × ○ △
Slide 78: Asia Agenda
Asia Agenda For personal use only Overview of the Formica North American Business Strategic Priorities Market Outlook 77
Slide 79: Formica Asia Economic Outlook
Formica Asia Economic Outlook: Outlook for Asia is expected to remain firm. For personal use only China – GDP forecast to continue to grow strongly, Commercial markets continues to grow Hong Kong – Government promoting new housing policy but general economy is relatively flat and stable. Taiwan – Ac
Slide 80: Formica Europe
For personal use only Formica Europe Richard Pollington 79
Slide 81: Europe Agenda
Europe Agenda For personal use only Overview of the Formica European Business Strategic Priorities Market Outlook 80
Slide 82: European HPL Market Structure
The European High Pressure Laminate Market Structure use only European Market Sizes and Formica Shares 40 European HPL Market ~200m SQM 30 For personal millions SQM Other Share 20 Formica Share 10 0 Germany Italy Russia UK France Spain Benelux Scand. Poland Turkey Note: Arrows indicate market size t
Slide 83: Fragmented European HPL market
The European HPL market is highly fragmented with a number of producers spread across the continent giving rise to high levels of competition For personal use only 100% 100% Others Abet Duropal Puricelli Egger 75% 75% Sonae Sonae Sonae Wilson Duropal Abet Art Abet Abet Duropal Wilson 50% 50% Arpa Sl
Slide 84: European manufacturing facilities and operations
Formica Europe operates 5 HPL manufacturing facilities and operates across Europe, India & the Middle East For personal use only Europe Middle East and India Kolho, Finland Dubai, UAE Helsingborg, Sweden Perstorp, Sweden North Shields, UK Pune, India Newton Aycliffe, UK Amsterdam, Warsaw, Poland Hol
Slide 85: Balanced spread across channel, end use and sector
There is a reasonably balanced spread between channel, end use and sector across the region For personal use only Revenue % by Channel Revenue % by Sector 40% 45% Direct 45% Residential 60% 55% Distribution Commercial Distributor Profile Direct/OEM Profile Residential Commercial Third party, multi
Slide 86: Europe Agenda
Europe Agenda For personal use only Overview of the Formica European Business Strategic Priorities Market Outlook 85
Slide 87: Formica EU Strategic Priorities
Formica EU Strategic Priorities For personal use only Internal Cost/Efficiencies A. Warehouse Efficiency & Downsizing Opportunities B. Bonded Manufacturing Consolidation C. Back Office Centralisation & Efficiency (customer service & logistics) D. Further Width, Finish & Décor Rationalisation E. Manu
Slide 88: Russian Market
A Russian Market: Russia is an attractive market due to its size and forecast growth rates over the next 5 years For personal use only Russian Market Fundamentals Background • Russian population around 140 million Compact, • Economy growing around 4% pa 10% • Over 60% of economic growth centered in
Slide 89: African Markets
B African Markets: The African market provides a good opportunity given its size and growth potential For personal use only African Market Fundamentals Africa Background • Population 1bn • 54 countries • GDP Growth in 2010 of 5% and forecast 5% in 2011 Other Southern Africa Formica Initiatives in Af
Slide 90: Germany Market
C Germany Market: We will expand our presence in Germany during FY12 through in country stock & an expanded sales force via our partner Homatrade For personal use only German Market Fundamentals Background • Population of over 80 million • Economy is the strongest in Western Europe growing at 2% (Q1
Slide 91: Indian Market
D Indian Market: The Indian laminate market is the 2nd biggest global market behind China and forecast to double in the next 10 years For personal use only Indian Market Fundamentals Background • Indian market split between organised players (15-20) and unorganised (+100) • Organised market – good d
Slide 92: Europe Agenda
Europe Agenda For personal use only Overview of the Formica European Business Strategic Priorities Market Outlook 91
Slide 93: Economic effect on Formica Europe revenue
If Formica Europe‘s revenue is forecast from a mix of construction & residential growth rates, pro rated by country, the outcome is a slow recovery For personal use only Economic Effect on Formica Europe 120 110 100 Index, 2005=100 90 80 70 60 Forecast 50 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 94: Current Outlook on EU HPL Markets
Current Outlook on EU HPL Markets For personal use only Given the state of the European economies there is great uncertainty around market recovery: Unemployment in the EC is forecast to grow into FY13 with public sector spending reduced Issues persist around Southern European sovereign debt & th
Slide 95: Formica North America
For personal use only Formica North America Mitch Quint
Slide 96: North America Agenda
North America Agenda For personal use only Overview of the Formica North American Business Strategic Priorities Market Outlook 95
Slide 97: North American HPL Market Structure
The North American High Pressure Laminate Market Structure For personal use only FY 2010 Industry Volume by Country Mexico Metrics USA Canada Mexico 8% Canada GDP per $46,400 $38,600 $13,600 13% person (US$) Laminate 600 100 60 Volume (msf) United States Population 307 33 111 79% (million) HPL Sq Ft
Slide 98: NA market well structured with few competitors
The NA market is well structured and rational, with significantly fewer competitors than Europe/Asia For personal use only N.A. FY 2011 Share by Manufacturer Others Market Strengths Player PANOLAM INDUSTRIES Rexcell Canada market Formica Brand recognition Design innovation Market Share USA m
Slide 99: NA manufacturing and warehouse footprint
Formica North America operates 2 HPL manufacturing facilities and 8 internal warehouses For personal use only North America Manufacturing and Warehouse Footprint Vancouver Montreal, Canada Mt. Bethel Indianapolis Bakersfield Evendale Atlanta Dallas Mexico City Puerto Rico 98
Slide 100: Balance between Commercial and Residential markets
The business is well balanced between Commercial and Residential markets, as well as Direct and Distributor customers For personal use only End Market Segmentation Channel Segmentation Residential Remodel 30% Direct / OEM Commercial Distribution 45% 55% 55% Residential New 15% Residential Commercial
Slide 101: Product Applications - Commercial
Product Applications - Commercial For personal use only • Commercial Furniture – Laboratory Tops – Bartops – Game Tables – Salad Bars – Buffet Countertops – Cabinets – Workstations • Commercial Construction – Doors – Millwork – Walls – Countertops – Desk / Serving Tops • Store Fixtures – Store Fixtu
Slide 102: Product Application - Residential
Product Application – Residential For personal use only • Kitchen & Bath – Countertops – Cabinets – Backsplashes – Shower / Tub Surround • Residential Furniture – Tabletops – Bedroom Suites – Entertainment Centers – Home Office Furniture – Night Stands 101
Slide 103: North America Agenda
North America Agenda For personal use only Overview of the Formica North American Business Strategic Priorities Market Outlook 102
Slide 104: Formica NA Strategic Priorities
Formica NA Strategic Priorities only Channel to Market/Market Segment Direct Distribution use Residential Commercial Commercial Residential Strategic Priorities For personal Distribution Optimization Core Market Share Gain Service Alignment Product Innovation Mexico Market Focus 103
Slide 105: Distribution Optimization
Distribution Optimization: Over 50% of Formica NA‘s volume flows through 3rd party distribution – targeting smaller, extremely-regional end-users For personal use only Network of 100+ Locations across North America Formica NA Distribution 100+ locations across US, Canada, Mexico, a mix of: – Indep
Slide 106: Service Alignment: lean manufacturing
Service Alignment: Lean manufacturing methodologies have increased flexibility in manufacturing processes For personal use only Manufacturing Process Flow (Key Flexibility Work Centers Highlighted) Kraft Treaters/ Cutting Collation Press Finishing • Press flexibility/ change-overs Raw Materials Surf
Slide 107: Service Alignment: make to stock and make to order
Service Alignment: Formica is committed to further enhancing service capabilities aligned to the variability and time demands of end customers For personal use only Make to Stock Make to Order Stocked items: Unique Color/Grade/Size/Finish Combos: Available on “next truck” Lead time: “faster” • Stand
Slide 108: Formica Recent Innovation Timeline
Product Innovation: Formica ‗Recent‘ Innovation Timeline For personal use only Butterum Granite Golden Mascarello Large Scale Granite 2001 2003 2004 2007/8 2009 2010 2011 • Popular • Formica • Formica • Formica introduces • Formica • VIVIX – • Formica – residential introduces introduces Radiance – c
Slide 109: Product Innovation: FY2012 portfolio
Product Innovation: In FY2012, Formica NA will continue to enhance its product portfolio For personal use only FY2012 New Product Summary 180FX Refresh Metal Launch – Continue design leadership in large – ‗Iconic‘ panel designs – extends scale format large scale concept to metal – Promote at 201
Slide 110: Product Innovation: 180fx launch
Product Innovation: The recent 180fx launch introduces new designs and expands the category to the Commercial sector For personal use only Formica has led the HPL industry with innovative designs and sampling of large scale patterns Formica will continue to leverage this product with the 2011 la
Slide 111: Product Innovation: VIVIX Exterior Compact
Product Innovation: VIVIX – Exterior Compact extends the scope of laminate applications to a growing high volume, high value market For personal use only Exterior compact technology allows laminate product to be applied to outdoor conditions Brings wide-ranging design flexibility inherent in lam
Slide 112: Mexico Market Focus
Mexico Market Focus: Mexico is an attractive market due to its inherent demographic and economic fundamentals For personal use only Mexico Market Fundamentals Background • Mexico has 110 million people • Economy is growing at 5% per annum • HPL penetration is still relatively Local/ Premium Imports
Slide 113: North America Agenda
North America Agenda For personal use only Overview of the Formica North American Business Strategic Priorities Market Outlook 112
Slide 114: NA HPL market forecast growth vs actual
As of April 2011, forecasts of the NA HPL market predicted growth of 6% in FY2012, however, the input data has been systematically ―biased‖ in recent years For personal use only HPL Market Forecasted Growth vs. Actual FY2009-FY2012 10% As of April 2011 0% ?? FY2009 FY2010 FY2011 FY2012 -10% Forecast
Slide 115: Current State of Markets
Current State of Markets For personal use only Residential Market: • Long term demand: Census Bureau says population will grow by 3.2 million per year and they will need to live somewhere; however, recovery will require: Recovery Timeline Job Housing Demand Rents and Construction Growth Vacancies Ex
Slide 116: NA HPL Market Outlook
NA HPL Market Outlook For personal use only • The HPL category will return to nearly 1 billion sq ft market in time • Cautious regarding 6-12 month outlook • Economic optimism seen in March-May has tempered (similar pattern 2 years in a row) • Current feedback from customers - Large degree of uncert
Fletcher Building — Investor Presentation (September 2011) on 6ix