Slide 1: Half Year Results to 31 December 2013
For personal use only Half Year Results to 31 December 2013 Mark Adamson -Chief Executive Officer NickOlson -Chief Financial Officer 20 February 2014
Slide 2: Disclaimer
Disclaimer For personal use only This half year results presentation dated 20 February 2014 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 a
Slide 3: Agenda
Agenda For personal use only Results Overview Geographic & Sectoral Analysis Divisional Performances Financial Results Business Transformation Programme Outlook Appendix 3 Fletcher Building Half Year Results Presentation | © February 2014
Slide 4: Results Overview
Results Overview For personal use only CSP Pacific streetlight columns, Auckland
Slide 5: Results Overview Snapshot
Results Overview For personal use only Snapshot $4,273 million $ million REVENUES down 2% 18c NET EARNINGS up 5% DIVIDEND PER SHARE up 6% $ OPERATING EARNINGS UP 7% million 22.4c EARNINGS PER SHARE up 5% 5 Fletcher Building Half Year Results Presentation | © February 2014
Slide 6: Results Summary
Results Summary For personal use only 7 % increase in operating earnings Dec 2012 Dec 2013 NZ$m 6 months 6 months %∆ Sales 4,380 4,273 -2 EBITDA 374 385 +3 EBIT 262 281 +7 Net earnings 146 154 +5 EPS - cps 21.3 22.4 +5 Dividend - cps 17.0 18.0 +6 6 Fletcher Building Half Year Results Presentation |
Slide 7: Earnings commentary
Earnings commentary For personal use only Net earnings up 5% at $154 million Operating earnings (EBIT) 7% higher at $281 million Adjusting for foreign currency translation, EBIT would have been up 13% New Zealand earnings up 35% driven by strong demand across all sectors Australia earnings impacted
Slide 8: Revenue and EBIT reported to underlying bridge
For personal use only 8 December 2012 Reported 4380 Foreign currency FX NZ$million translations (206) December 2012 Adjusted 4174 Underlying 2% 99 Growth Revenue (6 months ended 31 Dec) December 2013 Reported Fletcher Building Half Year Results Presentation | © February 2014 4273 2% and 18% respecti
Slide 9: Geographic & Sectoral Analysis
Geographic & Sectoral For personal use only Analysis Winstone Wallboards, Opawa, Christchurch 9
Slide 10: Sectoral exposure
Sectoral exposure For personal use only Exposures based on revenues Residential Commercial & Infrastructure (New/A&A)* Government (Rural/Mining) Geographical Exposure by Sector¹ New Zealand 46% 38% 16% Australia 52% 27% 21% Rest of World 40% 59% 1% Total 47% 39% 14% 1. Excludes NZ and Australian Dis
Slide 11: Geographic earnings mix reflects economic performance of key markets
Geographic earnings mix reflects economic For personal use only performance of key markets • Revenues EBIT (6 months to Dec 2013) (6 months to Dec 2013) 13% 13% 47% 28% 59% 40% New Zealand Australia Rest of World New Zealand Australia Rest of World 11 Fletcher Building Half Year Results Presentation
Slide 12: Growth in New Zealand operating earnings, Australian earnings impacted by strong NZ$/A$
Growth in New Zealand operating earnings, For personal use only Australian earnings impacted by strong NZ$/A$ EBIT NZ$million 167 124 106 77 32 37 New Zealand Australia Rest of the World 6 months to Dec 12 6 months to Dec 13 12 Fletcher Building Half Year Results Presentation | © February 2014
Slide 13: New Zealand residential consents up 26% to highest level since 2008
New Zealand residential consents up 26% to For personal use only highest level since 2008 Total residential consents 12 month rolling – New Zealand 22,000 Long term average (2001-2013) Auckland and Christchurch: 21,000 58% of total consents 25,000 20,000 19,000 20,000 18,000 15,000 17,000 16,000 10,
Slide 14: Australian residential consents up 16%, driven by multi-unit dwellings
Australian residential consents up 16%, driven by For personal use only increase in multi-unit dwellings Total residential consents 12 month rolling – Australia 200,000 Dec 2012 Dec 2013 %∆ 12 mths 12 mths 160,000 Stand- 90,107 99,365 +10 alone 120,000 Other 64,030 78,921 +23 dwellings 80,000 Total
Slide 15: Strong growth in NSW, improvements in QLD and WA, Victoria weaker
Strong growth in NSW, and improvements in QLD For personal use only and WA, while Victoria weaker Change in housing approvals – by state Housing approvals – by state Year ended December 2013 vs 2012 Year ended December 40% 37% 30,000 35% 33% 25,000 30% 28% 25% 22% 21% 20,000 20% 16% 15% 15,000 10% 1
Slide 16: Divisional Performances
Divisional For personal use only Performances Fletcher Residential, Auckland
Slide 17: Divisional operating earnings overview
Divisional operating earnings overview For personal use only EBIT NZ$million 102 96 61 56 53 56 51 37 33 23 Infrastructure Building Products Laminates & Distribution Construction Products Panels 6 months to Dec 12 6 months to Dec 13 17 Fletcher Building Half Year Results Presentation | © February 20
Slide 18: Infrastructure Products
Infrastructure Products For personal use only Result Dec 2012 Dec 2013 $6 million negative foreign currency NZ$M 6 months 6 months %∆ translation impact on operating earnings Sales 1,052 1,044 -1 Cement, Concrete & Aggregates New Zealand volumes improved: EBITDA 149 139 -7 - Cement volumes up 23% -
Slide 19: Building Products
Building Products For personal use only Result Dec 2012 Dec 2013 Plasterboard NZ$M 6 months 6 months %∆ Volumes up due to strong New Zealand market Sales 701 657 -6 $3m cost related to temporary closure of EBITDA 76 77 +1 Christchurch plant Insulation EBIT 56 61 +9 Operating earnings declined across
Slide 20: Laminates & Panels
Laminates & Panels For personal use only Result Dec 2012 Dec 2013 Formica NZ$M 6 months 6 months %∆ Earnings up 9% at $25 million Sales 881 866 -2 Revenue up 5% driven by volume growth out of Asia and North America EBITDA 81 83 2 Volumes in the USA continued to EBIT improve, with earnings growth dri
Slide 21: Formica: continued growth in North America, Asia impacted by start-up costs
Formica: continued growth in North America, Asia For personal use only impacted by start-up costs of new China plant Dec 2012 Dec 2013 EBIT NZ$m 6 months 6 months %∆ Asia 21 18 -14 North America 14 17 +21 Europe (6) (1) +83 Corporate (6) (9) -50 Total EBIT 23 25 +9 21 Fletcher Building Half Year Res
Slide 22: Distribution
Distribution For personal use only Result Dec 2012 Dec 2013 New Zealand NZ$M 6 months 6 months %∆ Revenues down due to sale of Corys Sales: 1,133 1,058 -7 Electrical in FY13 New Zealand 606 582 -4 PlaceMakers: Australia 527 476 -10 Revenues up 10% with ongoing EBITDA 35 42 +20 improvement in trading
Slide 23: Construction
Construction For personal use only Result Dec 2012 Dec 2013 Overall market conditions positive, NZ$M 6 months 6 months %∆ particularly residential activity in Auckland and Christchurch Sales 613 648 +6 Residential earnings slightly ahead of HY13 EBITDA 41 60 +46 with increased units sold at Auckland
Slide 24: Canterbury update
Canterbury update For personal use only Fletcher EQR Increased activity level on repairs 50,000 full scope home repairs completed out of estimated 72,500 $1.3 billion of work completed Canterbury Home Repair Programme on track to be completed December 2014 SCIRT The SCIRT alliance, rebuilding
Slide 25: Health and safety injury rate continued improvement
Health and safety injury rate continued For personal use only improvement Total risk injury frequency rate* 9.4 7.3 7.5 6.0 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Prior year Current year * Total injuries per million employee and contractor hours 25 Fletch
Slide 26: Financial Results
Financial Results For personal use only Stramit Building Products, Sydney
Slide 27: Reported Results
Reported Results For personal use only Reported financial information NZ$m Dec 2012 Dec 2013 6 months 6 months %∆ Revenue 4,380 4,273 -2 EBITDA 374 385 +3 Depreciation (incl. minor amortisation) 112 104 EBIT 262 281 +7 Funding costs (75) (72) Earnings before taxation 187 209 Taxation expense (36) (5
Slide 28: Build up of earnings
Build up of earnings For personal use only Underlying NZ$ earnings by region Dec 2012 Dec 2013 NZ$m 6 months 6 months %∆ New Zealand 124 167 +35 Australia 106 77 -27 Rest of World 32 37 +16 Total NZ$m 262 281 +7 FX translation to 1H14 rates (13) - Earnings adjusted for FX 249 281 +13 Underlying earn
Slide 29: Operating cash flow
Operating cash flow For personal use only Dec 2012 Dec 2013 NZ$m 6 months 6 months Cashflow from operations before net working 217 267 capital movements Net working capital movements (13) (88) Net cash from operating activities 204 179 Major working capital variances Dec 2013 6 months Jiujiang estab
Slide 30: Net debt flat before currency impact
Net debt flat before currency impact For personal use only Dec 2013 NZ$m 6 months Opening net debt (1 July 2013) 1,776 Cash from operations (pre working capital) (267) Working capital 49 Investment in land 39 Growth capex + acquisitions 42 SIB capex 59 Divestments (9) Dividends 100 Minority distribu
Slide 31: Capital expenditure expected at bottom end of guidance range
Capital expenditure expected to be at bottom For personal use only end of guidance range ($250m to $300m) Dec 2012 Dec 2013 112 NZ$m 12 months 12 months %∆ 104 42 42 Stay-in-business 52 59 +13 Growth 31 38 +23 Acquisitions 11 4 -64 Total 94 101 +7 59 52 Depreciation 112 104 -7 1H13 1H14 Stay in Busi
Slide 32: Key ratios
Key ratios For personal use only Total Shareholder Return (TSR) Debt/Debt Plus Equity Percentage Percentage 37 34 33 33 51 27 24 14 4 Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 -27 Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 Return on Average Funds Percentage¹ 13 13 11 11 10 Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 1. Ear
Slide 33: Debt profile
Debt profile For personal use only Funding and Maturity Profile Undrawn credit lines of $617m and cash of $145m. 252 Average maturity of debt is 5 years. Approximately 62% of all borrowings have fixed interest NZ$m 350 rates. 15 430 Average interest rate on debt is 310 6.2%. 177 208 170 154 160 132
Slide 34: Gearing and dividend policy changes
Gearing and dividend policy changes For personal use only Fletcher Building will continue to target strong ‘BBB’ credit characteristics Gearing Target of Net Debt to Net Debt + Equity (including Capital Notes) of 30-40% Leverage Target Net Debt to EBITDA of 2.0 to 2.5 times It is intended that t
Slide 35: Business Transformation Programme
Business For personal use only Transformation Programme Fletcher Reinforcing, Auckland
Slide 36: Pleasing progress from first full year of FBUnite
Pleasing progress from first full year of FBUnite For personal use only Specific Workstream updates: Shared Services pilot commences 7 March Property programme now starting to deliver cost savings Manufacturing excellence programme is being piloted at seven sites Organisational Development t
Slide 37: Outlook
Outlook For personal use only Formica DecoMetal® laminate, Heathrow Airport
Slide 38: Outlook FY14: New Zealand and Australia
Outlook FY14 For personal use only New Zealand Level of house building activity expected to continue to underpin trading results Repair of houses and infrastructure in Canterbury will also boost activity levels Improved outlook for commercial construction nationally, particularly in Christchur
Slide 39: Outlook FY14: Asia, North America, Europe
Outlook FY14 For personal use only Asia Commissioning of new Formica plant in China will impact operational results for FY14, despite increased volumes Political unrest in Thailand and weak conditions in Taiwan could adversely affect revenue in 2H14 North America Increases in new housing const
Slide 40: Financial outlook FY14
Financial outlook FY14 For personal use only No change to guidance given at Annual Shareholders Meeting in October 2013 Operating earnings before significant items expected to be in the range of $610-$650m Assuming completion of the sale of Pacific Steel by 30 June 2014, a significant expense item o
Slide 41: Half Year Results to December 2013
For personal use only Half Year Results to 31 December 2013 Mark Adamson -Chief Executive Officer NickOlson -Chief Financial Officer 20 February 2014
Slide 42: Appendix: Building consent data
Appendix: Building consent data For personal use only Dec 2011 Dec 2012 Dec 2013 13/12 Building Consents 12 months 12 months 12 months % Mvmt New Zealand Residential Consents 13,662 16,929 21,300 26% Non Res WPIP ($m)* 4,521 4,732 5,154 9% Infrastructure WPIP ($m)* 6,373 6,585 8,129 23% Australia So