Boral — FY2002 Earnings Presentation
31 slides from Boral's earnings presentation, Aug 21, 2002
Slide 1: 2002 Full Year Results
2002 Full Year RESULTS 21 August 2002 Boral’s underlying profit increases by 51% to $192 million Rod Pearse
Slide 2: Overview of Results Presentation
Overview of Results Presentation • Financial results • Segment overview Building Products, Australia Construction Materials, Australia USA Asia • Perform & grow strategy • Outlook FY2002
Slide 3: Financial highlights
Financial highlights • Underlying PAT (before disposal of businesses) up 51% to $192.4m • Final dividend increased to 10 cents & 75% franked • EPS up 25% to 34 cents • Result driven by cyclical recovery in Australian housing, resilience in USA and continued growth in Asia • Sales Revenue up 6% to $3
Slide 4: This performance is delivering shareholder value
This performance is delivering shareholder value • Earnings per share of 34 cents up from 27 cents • Dividend of 19.0 cents for 2002 with franking now at 75% • Dividend yield of 5.4% for FY2002 • Non-dilutive DRP • Share price up 86% to $4.24 from $2.28 at demerger • Top quartile of ASX100 Total Sha
Slide 5: Australian building and construction activity is recovering from cyclical low levels
Australian building and construction activity is recovering from cyclical low levels AUSTRALIA – TOTAL BUILDING & CONSTRUCTION ACTIVITY $50 $97/98 billion Value of Work Done $40 Roads, H’ways, Subs & Bridges $30 Non-dwellings $20 Dwellings $10 $0 1991 1998 1988 1989 1990 1992 1993 1994 1995 1996 199
Slide 6: Australian residential construction approvals rebounded strongly during FY2002
Australian residential construction approvals rebounded strongly during FY2002 Quarterly Value of Work Done (A$billion) FY2001 FY2002 Quarterly Approvals / Starts 000’s 50 12 Building Approvals 40 10 Starts 30 8 20 6 Residential VWD 4 10 0 2 Jun 98 Jun 00 Jun 01 Jun 96 Jun 97 Jun 99 Jun 02 Source: A
Slide 7: US construction demand more resilient than expected
Residential and non-residential construction demand in the US has been more resilient than expected US RESIDENTIAL & NON-RESIDENTIAL SPENDING IN BORAL “BRICK STATES”* $200 Dodge Q1 2002 Value of Work Commenced Forecast $160 $120 Actual (US$ Billion 1992) $80 $40 $0 2000 2001 1996 1990 1991 1992 1993
Slide 8: Asian construction demand continues to grow post the Asian Crisis
Asian construction demand continues to grow post the Asian “Crisis” Korea Thailand Indonesia China - Shanghai Value of construction orders Gross fixed capital Value of completion. Value of construction received. Trillion Won formation. Billion bhat Trillion Rp work done. Billion yuan 40 600 40 70 30
Slide 9: Underlying profit increases by 51% to $192m
Underlying profit increases by 51% to $192m A$ million FY2002 FY2001 % change Sales revenue 3,489 3,280 6 EBITDA* 531 451 18 EBIT* 343 262 31 Interest 63 70 (9) Profit before tax* 280 192 45 Profit on disposal of businesses - 39 - Tax 87 78 12 Profit after tax 192 153 25 Profit after tax (underlying
Slide 10: Margins are improving
Margins are improving EBITDA/Sales EBIT/Sales 16% 10% 14% 8% 12% 10% 6% 8% 6% 4% 4% 2% 2% 0% 0% FY1999 FY2000 FY2001 FY2002 FY2001 FY1997 FY1998 FY1997 FY1998 FY1999 FY2000 FY2002 Results for reported building and construction materials businesses each year Financial Results
Slide 11: EBIT has been driven by volumes, growth projects and operational improvements
EBIT has been driven by volumes, growth projects and operational improvements $343 m $262 m POSA & divestments Volume PEP Other FY2001 FY2001 POSA/divest Price Price Volume Cost escalation Cost Growth Grow th/AsiaQEUFY2002 PEP/Overheads/Turnaround increases Turnarounds FY2002 Financial Results
Slide 12: Strong cashflow generation is reducing debt
Strong cashflow generation is reducing debt FY2002 FY2001 % change Net debt $m 881 983 (10) Interest $m 63 70 (9) Debt / (Debt + Equity) % 31% 35% Debt / Equity % 45% 53% Interest cover, times 5.4 x 4.3 x Funds employed $m 2,831 2,837 ROFE % 12.1% 9.2% NTA / share $ $3.02 $2.89 4.5% Financial Result
Slide 13: All business segments are up
All business segments are up Revenue A$ million FY2002 FY2001 % change Building Products, Australia 999 955 5 Construction Materials, Australia 1,640 1,523 8 USA 793 756 5 Asia 53 38 39 Discontinued 4 8 Total 3,489 3,280 6 EBIT A$ million FY2002 FY2001 % change Building Products, Australia 85 66 30
Slide 14: Building Products, Australia
Building Products, Australia Share of 2002 Revenue • Sales up 5% to $999 million Australian Plasterboard Bricks • EBIT up 30% to $85m • EBIT/Sales margin up from 6.9% to 8.5% • EBITDA/Sales margin up from 11.5% to 12.8% Roofing • Funds employed down 4% to Timber $811m Windows Masonry • ROFE up from
Slide 15: Building Products, Australia
Building Products, Australia Revenue EBIT EBIT / Revenue A$ Million A$ Million $1,400 $140 10% $1,200 $120 8% $1,000 $100 6% $800 $80 $600 $60 4% $400 $40 2% $200 $20 $0 $0 0% FY1999 FY2000 FY2001 FY2002 FY1998 FY1999 FY2002 FY1997 FY1998 FY1997 FY2000 FY2001 FY1997 FY1998 FY1999 FY2000 FY2001 FY200
Slide 16: Building Products, Australia – stronger in second half
Building Products, Australia – stronger in second half • Strong uplift in Australian housing activity (VWD +20%) • Significant gains in bricks; unsatisfactory ROFE • Manufacturing capacity shortfalls in roofing • Masonry had a good year • Good results from plasterboard • Significant turnaround in ti
Slide 17: Construction Materials, Australia
Construction Materials, Australia Share of 2002 Revenue • Sales up 8% to $1.64 billion Quarries Cement • EBIT up 25% to $143m division* • EBIT/Sales margin up from 7.5% Contracting to 8.7% Transport • EBITDA/Sales margin up from QEU 13.7% to 14.4% • Funds employed up 4% to Asphalt Concrete $1,400m •
Slide 18: Construction Materials, Australia
Construction Materials, Australia Revenue EBIT EBIT / Revenue A$ Million A$ Million $1,800 $250 14% $1,700 12% $200 $1,600 10% $1,500 $150 8% $1,400 $100 6% $1,300 4% $1,200 $50 $1,100 2% FY1998 FY1999 FY2001 FY2002 FY1997 FY2000 FY1998 FY1999 FY2000 FY2002 FY2001 FY1997 FY1997 FY1999 FY2001 FY1998
Slide 19: Construction Materials, Australia
Construction Materials, Australia • Underlying concrete and quarry volumes up • Concrete and quarry EBIT up around 30% • Good result from Concrite & Alsafe acquisitions • Improved cement, quarry and concrete pricing • QEU contributed $28m profit • Blue Circle benefited from growth in dwellings/lime
Slide 20: Prices have improved in the fourth quarter of FY2002
Prices have improved in the fourth quarter of FY2002 AUSTRALIA – READY MIX CONCRETE PRICE INDEX ANNUALLY 1980-2002 (average) QUARTERLY 2000-02 120 120 110 110 Ready Mix Price Index 100 100 90 90 80 80 70 70 60 60 50 50 40 40 Jun-01 Mar-02 Jun-02 Sep-00 Dec-00 Mar-01 Sep-01 Dec-01 1980 1981 1982 1983
Slide 21: United States
United States • Sales up 3% to US$416m (excluding MonierLifetile JV) Share of 2002 Revenue • EBIT up 9% to US$57m Bricks • EBIT/Sales margin up from 13.1% to 13.8% • EBITDA/Sales margin up from 19.0% to 19.6% Clay Flyash & rooftiles • Funds employed up 4% to admixtures US$404m Concrete rooftiles* •
Slide 22: United States
United States Revenue EBIT EBIT / Revenue A$ Million A$ Million $800 $120 16% $700 $100 14% $600 12% $80 $500 10% $400 $60 8% $300 6% $40 $200 4% $20 $100 2% FY1998 FY1999 FY2001 FY2002 FY1997 FY2000 FY1998 FY1999 FY2000 FY2002 FY2001 FY1997 FY1997 FY1999 FY2001 FY1998 FY2002 FY2000 Segment Overview
Slide 23: United States
United States • Market resilient despite uncertainty • Price improvement in bricks, tiles, flyash • Improved results in bricks • Turnaround of BMTI business • Concrete tiles flat – restructuring costs • Clay tiles down 5% - plant upgrades • Ongoing growth focus Segment Overview
Slide 24: Asia
Asia Revenue * EBIT EBIT / Revenue* A$ Million A$ Million $250 $20 10% $200 $10 -0% $150 $0 -10% $100 -$10 -20% $50 -$20 $0 -$30 FY1999 FY2000 FY1997 FY1998 FY2001 FY2002 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 * 2001 & 2002 revenues include Boral’s share
Slide 25: Asia
Asia Asian Plasterboard JV: • Underlying volumes up 12% • Strong returns from South Korea • Full year contribution Siam Gypsum Industries • Elimination of EBITDA losses in China • Stronger prices/volumes in Indonesia • 30m m2 plant in Seoul; commissioning in August 2002 • Boral’s interest increased
Slide 26: Boral's strategy is to perform & grow around leading reserve and market positions
Boral’s strategy is to perform & grow around its leading reserve and market positions ASIA Plasterboard* Indonesia #1 Malaysia #1 China (east) #1 USA Korea #1 Thailand #1 Bricks #1 The Philippines #1 Concrete Roof tiles* #1 Indonesia concrete #1 Clay Roof tiles #1 AUSTRALIA Flyash #2 Cement #1 Concr
Slide 27: Strong capacity to fund growth
Strong capacity to fund growth Capital Expenditure (A$m) 90% $180 Net Debt / Equity (%) 80% Net Debt/Equity $150 70% $120 Target Gearing Range 60% $90 50% $60 40% $30 30% $0 Dec June Dec June Dec June 1999 2000 2000 2001 2001 2002 Growth capex SIB capex Perform & Grow
Slide 28: Over $400m allocated to growth in Australia and offshore
Over $400m allocated to growth in Australia and offshore GROWTH SINCE DEMERGER Australia Oberon Softwood JV, Koolkhan upgrade, Concrite & Alsafe Concrete, Australia Transfield Asphalt, Marulan lime A$214m upgrade, Compton Park Quarry, Go-Crete Asia Plasterboard JV (incl. Siam Gypsum), Indonesia Conc
Slide 29: Australian building and construction activity is recovering from historically low levels
Australian building and construction activity is recovering from historically low levels AUSTRALIA – TOTAL BUILDING & CONSTRUCTION ACTIVITY $50 $97/98 billion seasonally adjusted Roads, H'ways, $40 Subs & Bridges $30 Non-Dwelling Value of Work done $20 $10 Dwelling $0 Forecast 1988 1989 1990 1994 19
Slide 30: A resilient outlook is forecast for the US
A resilient outlook is forecast for the US US RESIDENTIAL & NON-RESIDENTIAL SPENDING IN BORAL “BRICK STATES”* $200 Dodge Q1 2002 Forecast Value of Work Commenced $160 $120 Actual (US$ Billion 1992) $80 $40 $0 Forecast 2000 2001 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2003 2004 2005 2006 20
Slide 31: Outlook for FY2003
Outlook for FY2003 • Aust. residential demand solid for H1; turn down in H2 • Aust. non-residential major projects stronger H2 • Uncertainty in US markets; weaker economy / confidence • Impact of changes in US exchange rate • Continued Asian growth; Korean uncertainties • Recent Australian construct