Fletcher Building Limited · NZX:FBU
Fletcher Building — Investor Presentation (October 2009)
19 slides from Fletcher Building's investor presentation, Oct 14, 2009
Slide 1: Steel Investor Presentation October 2009
For personal use only Steel Investor Presentation October 2009 Paul Zuckerman, Chief Executive Steel
Slide 2: Disclaimer
2 Disclaimer This presentation contains not only a review of operations, but also some forward looking statements about Fletcher Building and the For personal use only environment in which the company operates. Because these statements are forward looking, Fletcher Building’s actual results could di
Slide 3: The Steel Division's breadth of operations is unique
The Steel Division’s breadth of operations is unique 3 Long Steel Coated Steel Steel Distribution For personal use only Companies Sims JV Pacific Coilcoaters Fletcher Easysteel Pacific Steel Group Dimond CSP Coating Systems Fiji Rolling Stramit Fletcher Reinforcing Operations Scrap collection Paints
Slide 4: Long Steel making has taken place in NZ since 1962
Long Steel making has taken place in NZ since 1962 4 For personal use only • Rod Mill established in 1962 at Pacific Steel site • Wire mill added in 1968 • Electric Arc Furnace installed 1972 • Sims scrap JV commenced 1992 on adjacent site with the existing Fletcher shredder • In 1977 the old 1962 r
Slide 5: Steel Division operates in locations across Australasia
For personal use only Steel Division operates in 40 locations across Australasia 5 Steel Flows ● Dimond ● Pacific Steel ● Cyclone ● CSP Coating Systems ● Pacific Wire ● Sims ● Fletcher Easysteel ● Fletcher Reinforcing ● Stramit Steel Analyst Presentation – October 2009
Slide 6: …with a diversified geographic revenue stream
…with a diversified geographic revenue stream 6 For personal use only Steel Division F04 Revenue Source Steel Division F09 Revenue Source Pacific and Other Pacific and Other Australia 3% 6% 8% New Zealand 36% Australia 61% New Zealand 86% Source : Management Estimates Steel Analyst Presentation – Oc
Slide 7: …and a diversified demand-side
…and a diversified demand-side Steel Division Australasian Demand-side share (%) For personal use only 37 27 17 12 7 Residential Infrastructure Building Manufacturing Rural Construction Source : Management Estimates Steel Analyst Presentation – October 2009
Slide 8: The steel industry underwent a huge shock
8 The steel industry underwent a huge shock For personal use only World New Zealand’s Steel Pricing total steel imports (US$/tonne) (tonnes p.a.) 1200 600,000 1000 500,000 800 400,000 600 300,000 400 200,000 200 100,000 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004 2
Slide 9: Domestic steel demand has fallen accordingly
9 Domestic steel demand has fallen accordingly New Zealand Australian housing consents non-res work done For personal use only (Years ending March) NZ Housing Consents (yrs ending March) (2007 prices A$b) Australian Non-res Work Done ('07 prices A$b) 35000 35 30000 30 25000 25 20000 20 15000 15 1000
Slide 10: What did this mean for the industry?
10 What did this mean for the industry? For personal use only • Stock overhang • Reduced production capacity • Inventory write-downs and losses • Job losses • …although surprisingly very little industry rationalisation Steel Analyst Presentation – October 2009
Slide 11: What did this mean for Fletcher Steel?
11 What did this mean for Fletcher Steel? • Peak to trough volume declines of ~20% For personal use only • Some restructuring required: - Previous restructuring (since 07) helped - Since 07 workforce declined by 11% - Three branch closures - Reduced capacity through shift reductions and longer shuts
Slide 12: Global steel production is on the rise, while demand is still uncertain
Global steel production is on the rise, while demand is 12 still uncertain World Crude Steel Production For personal use only (million tonnes) 107.9 106.5 103.9 98.9 98.7 95.7 92.1 87.3 86.7 89.0 85.2 81.9 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Source: II
Slide 13: In any case, we have gone back to core principles
In any case, we have gone back to core principles For personal use only • We have reduced our cost base • We have invested • We are listening to our customers • We are seeking out growth Steel Analyst Presentation – October 2009
Slide 14: Our cost structure has been reduced and 'right sized' where required
Our cost structure has been reduced and 14 ‘right sized’ where required For personal use only Savings realised Labour cost reduction (% production cost reduction relative to 2007) ($m) 6.1 13.2 4.5 10.1 Pre Restructuring Base Post Restructuring F08 F09 • Across the board procurement • Focused branch
Slide 15: We have continued to invest for the future
15 We have continued to invest for the future For personal use only Knoxfield T-Bay Crane • 20,000 m2 facility – Stramit’s largest • New Rolling Mill Crane • Consolidated four previous locations • Improves productivity • Environmentally friendly • Reduced dispatch time Steel Analyst Presentation – O
Slide 16: We are improving our product offering
We are improving our product offering For personal use only DGL Freight System Bar Counting • Purpose-built trailers • Improves yield • Optimised to carry Dimond goods • What customers want • Can carry other FB products • Less rework Steel Analyst Presentation – October 2009
Slide 17: We are growing our existing businesses
17 We are growing our existing businesses For personal use only Picture goes in here Expand Value Add Expanded Placing • Steel processing capability • Successfully launched at New Lynn • “Components” not just steel • Has application at large infrastructure projects Steel Analyst Presentation – Octob
Slide 18: We are targeting new opportunities
18 We are targeting new opportunities For personal use only Home Improvement New Substrate and Coating • Alteration and Additions, Outdoor Options living area, Pergola’s, Carports. • Further substrate differentiation • Significant market opportunity • Improved product performance • Complementary to
Slide 19: Steel Division – Summary
Steel Division – Summary 19 For personal use only • We managed the downturn − Quickly reduced our costs − Managed our inventory • We are looking towards the future − Lower fixed cost base − Improving our customer relationships − Seeking out growth Steel Analyst Presentation – October 2009
Fletcher Building — Investor Presentation (October 2009) on 6ix