James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — CSFB Asian Investment Conference 2005
47 slides from James Hardie Industries's conference presentation, Mar 17, 2005
Slide 1: Building On Proven Performance
@) James Hardie James Hardie Building On Proven Performance CSFB Asian Investment Conference Mr Louis Gries — CEO March 2005
Slide 2: A Growth Focussed Company
i) James Hardie’ ar A Growth Focussed Company Annual net sales US$982m Total assets US$971m Operations in North America, South America, Asia Pacific and Europe 3000 employees Market cap US$2.2 billion ASX S&P 50 company Note: Net sales and total assets are at 31 March 2004
Slide 3: | James Hardie
| James Hardie » High growth Unique proprietary technology » Sustainabie competitive advantage » Strong cashflows and balance sheet » Growth not reliant on strong housing market
Slide 4: ®) James Hardie
®) James Hardie
Slide 5: Agenda
| James Hardie 1. Business overview » Product applications = Sustainable competitive advantage * R&D is a key driver of growth > Strategy 2. Operations overview » USA Fibre Cement » Asia Pacific Fibre Cement » Other Fibre Cement 3. Financials 4. Asbestos related progress
Slide 6: Business Overview
i) James Hardie Business Overview
Slide 7: Product applications
nt i James Hardie External siding/soffit lining Internal wail/floor wet area lining Trim and fascia Ceiling lining and flooring External/internal wall systems Commercial facades Drainage pipes Roofing
Slide 8: Sustainable competitive advantage
a) James Hardie’ Unique plant engineering and proprietary process technology and product formulations Superior capital cost efficiency — plant capital cost less than ’%% that of competitors Largest, lowest cost manufacturer — plant operating cost 20-30% lower than competitors Only national producer
Slide 9: R&D capabilities and resources
i) James Hardie Capabilities and resources 110 scientists, engineers and technicians 25% increase in spend to US$26 million in FY04 — 2.7% of net sales Core projects new proprietary engineered raw materials = new proprietary product formulations new engineering and proprietary process technologies l
Slide 10: Strategy
f)|/ James Hardie = Aggressively grow the market Secure differentiated position Generate strong top line growth Win high shares of large segments » Sustain attractive margins 10
Slide 11: Operations Overview
i) James Hardie Operations Overview 11
Slide 12: James Hardie Business Portfolio
@) James Hardie James Hardie Business Portfolio — FY 04 Total Identifiable Sales EBIT'# Assets’ USA — Established high growth/high 69% 15% 90% return Asia Pacific — Established high return 22% 22% 17% Other — Potential growth opportunities 9% 3% (7%) (Pipes, Roofing, Europe, Chile) * Excludes genera
Slide 13: Fibre cement plants in North America
ll : li ene : i a ee Dw lf ii ik S nt iL oo fibre cement in North America JH Plant Design Capacity Flat Sheet Capacity Plants (mmsf?)} * Fontana, California 480 Plant City, Florida 300 Cleburne, Texas es _ Tacoma, Washington Peru, Iilinois® Waxahachie, Texas eee Ce : ee Blandon, Pennsylvania 200 Sum
Slide 14: Production Capacity Per Line
i dames Hardie’ Production Capacity Per Line 300 200 mmsf! 150 100 1990 1994 1998 2001 2004 14
Slide 15: Capital Cost/Unit of Capacity
i) James Hardie Capital Cost/Unit of Capacity USD/Isf' 1990 1995 1997 1998 2000 2004 15
Slide 16: Fibre cement more durable than wood and engineered wood
i) James Hardie ihr Fibre Cement is more durable than wood and engineered wood Superior Fibre Cement Durability Engineered Wood Moisture Resistant vw Fire Resistant ms «Weather Resistant a Termite Proof a Won't Warp a Won't Crack 4 Won't Rot Holds Paint Longer 16
Slide 17: Fibre cement attributes
@ James Hardie Fibre Cement ¥ Fire Resistant v Hail Resistant 7 wv Won't Warp P wv Won't Buckle : ~“ Colour Lasts Longer ¥ Dimensional Stability “Can Be Repainted 17
Slide 18: Product volume growth
i James Hardie Siding Growth a Soffit Growth 1997 1998 1999 2000 2001 2002 2003 2004 1998 1999 2000 2001 2002 2003 2004 FY00 FYO1 FYO02 FYO3 FYO4 Trim Growth | 1/4" Hardibacker Volume Growth 1/2” Hardibacker Volume Growth | . Ea | FY97 FY98 FYO9 FYO0 FY01 FY02 FY03 FY04 18 1998 1898 2000 2001 2002 2
Slide 19: Average price growth
i James Hardie’ Average price growth driven by mix and market price increases 520 - : canon : wo 460 - 440 - 420-0 eee 400 - 380 - 360 FY99 FY00 FY01 FY02 FY03 FY04 YTDOS US$ per MSF* 19
Slide 20: Top Line Growth
i James Hardie a UU | Top Line Growth $800 $700 $600 $500 $400 Wm JH Volume * JH Revenue Revenue (USDM) $300 —v- Housing Starts $200 Volume (mmsf) / Starts (000's Units) $100 $0 90 «(91 92 93 4 95 96 97 98 $99 OO 01 02 03 04 20
Slide 21: EBIT growth and margin
i) James Hardie’ EBIT’ Compound Annual Growth Rate FY99 — FY04 30% Gl EBIT EBIT/Sales EBIT US$M EBIT MARGIN’ % FY99 FYOO FYO1 FY02 FY03 FY04 FYOS 3 *Excludes US$12.6m restructuring and other operating expenses incurred in FY02 21
Slide 22: Estimated Market Size
eh) James Hardie Estimated Market Size (bsf‘) Product Category New Construction - Siding, Fascia & Soffits 5.4 - Trim 0.8 “Total New ~ a 6.2 ~ “Repair & Remodel ~ — ~ - Siding, Fascia & Soffits 6.2 - Trim 0.2 “Total R&R 7 a 6.4 _ Grand Total 12.6 Source: National Association of Home Builders — Build
Slide 23: Revenue growth
i James Hardie US$M Actual Compound Annual Growth Rate 27 ¥ nual Growth FY02 FY03 FY04 FY05 FY06 FYO7 FY05 Revenue = YTD December FY05 Annualised 23
Slide 24: Positive demographic factors
i James Hardie NN « Positive demographic factors * Immigration Internal migration Household formation Low mortgage rates Strong house prices Growing economy 24
Slide 25: USA Interior Cement Board Market
i James Hardie’ USA Interior Cement Board Market . (est. 1bsf') » Net sales growing strongly — James Hard ames Hardie CAGR* 31% (FY01-FY04) 25% - 30% = Leading position in 1/4” market — technology advantage for floor applications * Hardibacker 500 is driving penetration on wall applications Growing
Slide 26: Asia Pacific Fibre Cement
cy James Hardie’ YTD net sales US$159m —up 12% YTD EBIT' up 13% Higher value differentiated products Lower delivered cost Shift to growth model 26
Slide 27: Philippines
Manufacturing plant commissioned 1999 YTD net sales US$19 million up 19% EBIT' positive Fibre cement as substitute for plywood Established low cost regional manufacturing hub Low GDP per capita is an obstacle for generating unique financial returns @) James Hardie’ 27
Slide 28: Chile
ic) James Hardie icc in il, Ti ' ne "0 Chile » Manufacturing plant commissioned 2001 = Low cost manufacturing, rapid market penetration, strong growth © Positive EBIT! a ‘ » Differentiated products introduced » Limited scale opportunity 28
Slide 29: USA Pipes
@ James Hardie’ USA manufacturing plant commissioned 2001 Market recognises product has advantages over reinforced steel concrete pipes in mid- diameters — light, long, strong Lower cost to make and install Manufacturing targets not met but progress being made Approaching cash breakeven 29
Slide 30: Artisan Roofing
i) James Hardie icc in il, Ti ' ne "0 Artisan Roofing US$15M USA pilot plant commissioned FY04 Proving scalability of roofing technology Product design Product performance Manufacturing capability Market positioning 30
Slide 31: Europe Market Development
i James Hardie AN Europe Market Development = Initially pursuing a low cost, low risk strategy » Differentiated products imported from US » G2 Backer * XLD Trim * ColorPlus Siding Focussed market development UK and France » JH business model differentiated from current industry approach 31
Slide 32: Financials
@) James Hardie Financials 32
Slide 33: YTD05 results
ic James Hardie’ YTDO5 - 9ME Dec 04 USSMillion Net Sales 894.0 Up 22% Gross Profit 305.1 Up 13% EBIT'* 131.6 Down 4% Operating Profit" 81.6 Down 13% * Excluding costs related to NSW Government Special Commission of Inquiry of US$24.4m EBIT increased 14% to US$156.0m and operating profit increased 8%
Slide 34: USA Fibre Cement
ts Y YTD05 - 9ME Dec 04 USA Fibre Cement USSMillion Net Sales 692.0 EBIT! 164.4 Volume 1382mmsf! EBIT Margin‘ 23.8% @ James Hardie’ 25% 8% 22% 3.7pts 34
Slide 35: Other Businesses
i James Hardie’ YTDO5 - 9ME Dec 04 Other Businesses ANZ net sales up 12%. EBIT' up 13% Philippines sales up 19%. EBIT' positive USA Pipes nearing cashflow breakdown Chile — EBIT' positive Europe — EBIT' negative, as expected 35
Slide 36: Key financial ratios
@ James Hardie’ YTD 05 FY 04 FY ’03 EPS (Diluted) 17.7¢ 27 .2¢ 18.2¢ Return on Shareholders Funds*# 19.8% 27.6% 42.3% Return on Capital Employed” 21.5% 23.4% 20.9% EBIT‘/Sales 14.7% 17.5% 16.4% Gearing’ 13.0% 17.0% 21.4% Net Interest Cover 29.0x 17.2x 6.5x “Annualised # Total Compan’ pany 36
Slide 37: High Growth and Attractive Returns Targeted
io) James Hardie Lo od it HY al High Growth and Attractive Returns Targeted Target Actual FY04 Actual YTDO5 Revenue Growth > 15% p.a. 25% 22% EBIT Margin! > 15% 18% 15%* Return On Capital > 15% 23% 22% Employed * Excluding costs related to the SCI and associated developments YTD FY05 EBIT margin is
Slide 38: Asbestos Related Progress
i) James Hardie Asbestos Related Progress 38
Slide 39: Background
Background inquiry into establishment of Medical Research and Compensation Foundation (MRCF) announced by NSW Government — February 2004 Inquiry report released September 2004: * Establishment of MRCF legally effective » No legal liability for MRCF funding shortfall » Risk of adverse legislative, re
Slide 40: Heads of Agreement
es hh Heads of Agreement Non-binding agreement signed with NSW Government, union and claimants representatives — December 2004 « Funding arrangement intended to allow James Hardie to remain profitable, financially strong and to fund growth 40
Slide 41: Key Elements
@) James Hardie’ Key Elements = Special Purpose Fund (SPF) to be established — James Hardie to appoint majority of Board Initial funding based on KPMG Actuaries updated report— discounted central estimate A$1.5bn at 30 June 2004 Annual contribution to SPF based on annual actuarial assessments = A ro
Slide 42: Estimated Timing
io) James Hardie’ Estimated Timing » Completion of NSW Government Review of Legal and Administrative costs = Reforms announced 8 March 2005 — good progress Remaining issues (2) the subject of meeting 21 March » Release of draft regulations for comment April 2005 » NSW Government anticipates commence
Slide 43: Recent Australian Media
| James Hardie Recent Australian Media » Has suggested claims outside Australia (New Zealand, Asia and USA) could jeopardise SPF » SPF only available to Australian-based personal injury claims against former Australia James Hardie subsidiaries In New Zealand — compensation paid by Accident Compensat
Slide 44: Summary
he) James Hardie’ « We have a strong, well established, high growth and return business We have sustainable competitive advantage Our model for continued strong growth is based on: * Large market opportunity » Superior value proposition * Proprietary and/or protected technology » Large upsides due t
Slide 45: Forward-looking statements
i James Hardie’ This Presentation contains forward-looking statements. We may from time to time make forward-jooking statements in our periodic reports filed with the Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectus
Slide 46: Notes
ae il Notes oe oe EBIT and EBIT Margin ~ EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We belfeve EBIT and EBIT EBIT and EBIT margin, as used in this document, are equivalent to the US GAAP measures of operating income and operating income marg
Slide 47: Building On Proven Performance
@) James Hardie James Hardie Building On Proven Performance CSFB Asian Investment Conference Mr Louis Gries — CEO March 2005
James Hardie Industries — CSFB Asian Investment Conference 2005 on 6ix