Fletcher Building Limited · NZX:FBU
Fletcher Building — ABN AMRO New Zealand Day 2009
45 slides from Fletcher Building's conference presentation, Mar 6, 2009
Slide 1: ABN AMRO New Zealand Day
1 For personal use only ABN AMRO New Zealand Day 6 March 2009 Bill Roest Chief Financial Officer ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 2: Disclaimer
2 For personal use only Disclaimer This presentation contains not only a review of operations, but also some forward looking statements about Fletcher Building and the environment in which the company operates. Because these statements are forward looking, Fletcher Building’s actual results could di
Slide 3: Agenda
3 For personal use only Agenda • Introduction • Company and Market Overviews • Divisional Performances • Financial Results • Outlook ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 4: Company & Market Overviews
4 COMPANY & MARKET OVERVIEWS For personal use only Since 1909, the Fletcher group of companies has contributed to New Zealand’s industrial and cultural prosperity, and enhanced our built environment. In 2009 we celebrate 100 years of heritage as we look forward to a new century of supporting the dev
Slide 5: Fletcher Building at a glance
5 For personal use only Fletcher Building at a glance • Revenue: NZ$7,091M Year to 30 June 2008 • Net Earnings: NZ$467M • Market Capitalisation: NZ$2.7 billion Ranked # 3 on NZX #60 on ASX • Employees: 18,500 • Listed on NZ and Australian Stock Exchanges • Shareholders: New Zealand 22% Australia 35%
Slide 6: Market leading businesses
6 For personal use only Market leading businesses Laminates Building Products Distribution Infrastructure Steel & Panels Revenue ‐ 11%* Revenue ‐ 13%* Revenue ‐ 27%* Revenue ‐ 28%* Revenue ‐ 21%* Plasterboard Building Materials Construction The Laminex Group Rollforming Insulation Distribution Concr
Slide 7: Strategic agenda
7 For personal use only Strategic agenda • Earnings reliability still the over‐riding strategic objective. Earnings • Company outlook is cognisant of both product and Reliability geographic diversity. • Investment focused on priority areas with strongest Internal strategic linkages and best returns.
Slide 8: Half year financial performance: Good result in challenging times
8 Half year financial performance: For personal use only Good result in challenging times Reported Dec 2008 Dec 2007 Jun 2008 NZ$m 6 months 6 months %∆ 12 months Sales 3757 3547 +6 7091 EBITDA 409 490 ‐17 966 EBIT 303 394 ‐23 768 Net earnings 172 235 ‐27 467 EPS – cps 34.1 47.0 ‐27 93.2 Dividend ‐ c
Slide 9: Fletcher Building has a vertically integrated value chain
9 Fletcher Building has a vertically integrated value For personal use only chain Laminates & Building Steel Other Concrete Panels Products Manufacturers Dedicated Shared Other Distribution Distribution Construction Distribution Markets ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 10: Residential construction activity has continued to slow
10 Residential construction activity has continued to For personal use only slow Dec 2008 Dec 2007 Dec 2006 07/08 Building Consents 6 months 6 months 6 months Mvmt % New Zealand 7866 12671 13619 ‐38 Australia 67700 85185 79197 ‐21 US (‘000) 389.3 623.3 816.0 ‐38 UK 38977 93933 ‐59 Spain (‘000) 115.8
Slide 11: Divisional Performances
11 DIVISIONAL PERFORMANCES For personal use only ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 12: Strong performance in Steel, while other divisions experienced lower volumes and margins
12 Strong performance in Steel, while other divisions For personal use only experienced lower volumes and margins EBITDA NZ$million 146 127 128 108 86 80 67 59 45 30 23 10 Building Distribution Infrastructure Property Laminates & Steel Products Panels Dec 2008 Dec 2007 ABN AMRO New Zealand Day ‐ Syd
Slide 13: Building Products
13 For personal use only Building Products Plasterboard • Leading NZ market position. Insulation • No.1 in Australasia with 55% of Australian and 70% of NZ bulk glass wool insulation market. Metal Roof Tiles • Leading manufacturer of steel roof tiles worldwide. Other • Fletcher Aluminium • Tasman Si
Slide 14: Building Products strategy
14 For personal use only Building Products strategy Plasterboard • Current NZ housing downturn impacting volumes and revenues: – production output has been scaled back. • Strategy is to maintain market share and pursue volume growth: – product differentiation – performance boards – superior distribu
Slide 15: Building Products results
15 For personal use only Building Products results Dec 08 Dec 07 Building Products NZ$m 6 mths 6 mths % ∆ EBITDA and EBITDA margin * Sales 412 376 +10 180 30.0 EBITDA 67 86 ‐22 160 25.0 EBITDA margin (%) 140 EBITDA ($M) EBIT 55 74 ‐26 120 20.0 100 15.0 Funds Employed 655 572 +15 80 60 10.0 40 EBITDA
Slide 16: Building Products: lower volume levels but improved prices
16 Building Products: lower volume levels but improved For personal use only prices Gross Sales Dec 08 Dec 07 NZ$m 6 mths 6 mths₁ % ∆ Volume ∆ Price ∆ EBITDA ∆ New Zealand ‐ Plasterboard 115 110 +5 ‐ Insulation₂ 82 78 +5 ‐ Metal Roof Tiles₃ 107 84 +27 Australia ‐ Insulation 106 103 +3 ‐ Sinkware 18
Slide 17: Distribution - PlaceMakers
17 For personal use only Distribution ‐ PlaceMakers • 64 outlets across New Zealand principally trading as PlaceMakers. • 34% market share of the core building materials sectors. • No.1 in key building materials. • Trade focus: 85% of sales. • 50 of the 64 outlets operate as joint ventures rather th
Slide 18: Distribution strategy
18 For personal use only Distribution strategy • Slowdown in NZ residential construction activity has impacted performance in the current year. • Refined focus on key customer segments – Trade customers will continue to be a priority – DIY the other key segment – Pull through of Fletcher Building pr
Slide 19: Distribution results
19 For personal use only Distribution results Dec 08 Dec 07 Distribution NZ$m 6 mths 6 mths % ∆ EBITDA and EBITDA margin * Sales 481 565 ‐15 100 10.0 EBITDA 23 45 ‐49 90 EBITDA margin (%) 80 EBIT 18 42 ‐57 70 EBITDA ($M) 60 50 5.0 Funds Employed 188 167 +13 40 30 EBITDA/sales % 4.8 8.0 ‐40 20 10 ‐ ‐
Slide 20: Infrastructure
20 For personal use only Infrastructure Concrete • 25% of NZ aggregates markets. • 50% of NZ cement market. • 33% of NZ readymix concrete market. • 35% of Australian concrete pipe market. • 55% of NZ pre‐cast and concrete pipe market. Construction • New Zealand’s leading construction company. • Comm
Slide 21: Infrastructure strategy
21 For personal use only Infrastructure strategy Concrete New Zealand • Margin maintenance through price increases and cost reductions. Australia • Growth in volumes driven by increased infrastructure investment. • Expanded product mix beyond pipes. Construction • Construction outlook remains strong
Slide 22: Infrastructure results
22 For personal use only Infrastructure results Dec 08 Dec 07 Infrastructure NZ$m 6 mths 6 mths % ∆ EBITDA and EBITDA margin * Sales 1018 921 +11 400 20.0 EBITDA 350 EBITDA margin (%) ‐ Concrete & 127 146 ‐13 300 15.0 EBITDA ($M) Construction 250 200 10.0 ‐ Property 10 30 ‐67 150 Total EBITDA 137 17
Slide 23: Property activities include quarry end use, residential and surplus assets
23 Property activities include quarry end use, For personal use only residential and surplus assets EBIT NZ$m 2006 2007 2008 1H08 1H09 Quarry end use 6 42 Residential 25 34 19 11 4 Surplus assets 10 9 19 19 6 Total 35 49 80 30 10 • Property activities, be they residential land or quarry end use, are
Slide 24: Infrastructure: steady sales despite volume decline
24 For personal use only Infrastructure: steady sales despite volume decline Gross Sales Dec 08 Dec 07 NZ$m 6 mths 6 mths %∆ Volume ∆ Price ∆ EBITDA ∆ New Zealand ‐ NZ Concrete 356 362 ‐2 ‐ Construction 485 403 +20 ‐ ‐ Australia Concrete 218 191 +14 ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 25: Laminates & Panels
25 For personal use only Laminates & Panels The Laminex Group • Leading high pressure laminate & decorative surfaces. • Estimated Australasian market shares – Decorated board – No.1 – Medium density fibreboard – No.2 – Particleboard – No.2 • Over 50 distribution outlets owned across Australasia. For
Slide 26: Laminates & Panels strategy
26 For personal use only Laminates & Panels strategy The Laminex Group • Utilise recent investments to drive performance – Particleboard upgrade in Australia – 20% investment in Dongwha to secure MDF supply Formica • Lift performance of Evendale Ohio plant and US operations overall. • Bring new Finn
Slide 27: Laminates & Panels results
27 For personal use only Laminates & Panels results Dec 08 Dec 07 Laminates & Panels NZ$m 6 mths 6 mths %∆ EBITDA and EBITDA margin * Sales 1069 1074 ‐ 250 20.0 EBITDA EBITDA margin (%) ‐ Laminex 58 90 ‐36 200 15.0 EBITDA ($M) ‐ Formica 22 38 ‐42 150 10.0 Total EBITDA 80 128 ‐38 100 EBIT 39 91 ‐57 5
Slide 28: Laminates & Panels: volumes significantly weaker but prices improved
28 Laminates & Panels: volumes significantly weaker For personal use only but prices improved Gross Sales Dec 08 Dec 07 NZ$m 6 mths 6 mths %∆ Volume ∆ Price ∆ EBITDA ∆ New Zealand ‐ Laminex 101 127 ‐20 Australia ‐ Laminex 455 445 +2 Formica ‐ Asia 111 92 +21 ‐ Europe 228 229 ‐ ‐ Nth America 211 217
Slide 29: Formica: downturn in Europe negatively impacted result
29 Formica: downturn in Europe negatively impacted For personal use only result EBITDA NZ$m 1H08 2H08 1H09 Asia 16 14 20 Europe 22 30 7 North America 10 ‐17 1 Corporate ‐10 ‐17 ‐6 Reported EBITDA NZ$ 38 10 22 ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 30: Formica North America: Evendale operational performance on track
30 Formica North America: Evendale operational For personal use only performance on track to meet full year targets NZ$m EBITDA for 6 months to Dec 07 10.0 Restructuring Costs ‐1.0 Operational Improvements: • SG&A initiatives 5.0 • Evendale performance 6.0 11.0 Market Impact ‐19.0 EBITDA for 6 month
Slide 31: Formica: improved operational performance but marked deterioration in US and European markets
31 Formica: improved operational performance but For personal use only marked deterioration in US and European markets • US: High Pressure Laminate sales down by 18% due to slowdown in residential and commercial activity. – Manufacturing performance at Evendale plant has continued to improve. Scrap
Slide 32: Steel
32 For personal use only Steel Rollforming & steel painting • 30% of Australian market – Stramit • Dimond major player in New Zealand roofing market Long steel products • No.1 in New Zealand market. • Reinforcing bar, flats, rod and wire. • 50% shareholding in Sims Pacific Metals. • NZ’s sole electr
Slide 33: Steel: future growth drivers
33 For personal use only Steel: future growth drivers Rollforming • Production extension – pre‐engineered buildings. • Industry rationalisation. Long Steel • Industry rationalisation. • Flexibility of capacity utilisation to meet underlying market demand. • Growth through supply to large infrastruct
Slide 34: Steel results
34 For personal use only Steel results Dec 08 Dec 07 Steel NZ$m 6 mths 6 mths % ∆ EBITDA and EBITDA margin * Sales 777 611 +27 140 15.0 EBITDA 108 59 +83 120 EBITDA margin (%) 100 EBIT 95 47 +102 EBITDA ($M) 10.0 80 Funds Employed 623 542 +15 60 5.0 40 EBITDA/sales % 13.9 9.7 +43 20 ‐ ‐ EBIT/sales %
Slide 35: Steel earnings up due to price volatility and volume gains in long steel
35 Steel earnings up due to price volatility and For personal use only volume gains in long steel Gross Sales Dec 08 Dec 07 NZ$m 6 mths 6 mths %∆ Volume ∆ Price ∆ EBITDA ∆ New Zealand ‐ Long Steel 227 126 +80 ‐ Coated products 99 97 +2 ‐ ‐ ‐ Distribution & services 186 142 +31 Australia ‐ Rollformin
Slide 36: Financial Results
36 FINANCIAL RESULTS For personal use only ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 37: Net earnings
37 For personal use only Net earnings Dec 2008 Dec 2007 NZ $m 6 months 6 months %∆ EBIT 303 394 ‐23 Interest 79 67 +18 Tax 47 83 ‐43 Minority Interests 5 9 ‐44 Net Earnings 172 235 ‐27 ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 38: Balance sheet remains strong
38 For personal use only Balance sheet remains strong Dec 2008 Dec 2007 NZ $m 6 months 6 months %∆ Operating Cashflow 208 245 ‐15 Net Debt (ND) 2003 1628 +23 Net Debt / Equity % 41.3 39.7 +4 EBIT/Total Interest (times) 3.8 5.9 ‐36 Return on Funds % 13.1 20.4 ‐36 ABN AMRO New Zealand Day ‐ Sydney| 6
Slide 39: Key ratios
39 Key ratios Total Shareholder Return (TSR) Debt/Debt Plus Equity Percentage Percentage For personal use only 61 44.4 43.1 40.1 41.3 40 42 37.1 33 22.2 ‐4 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Dec 08 ‐43 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Dec 08 Return on Average Equity Return on Average Funds Percent
Slide 40: Debt maturity profile
40 For personal use only Debt maturity profile • Debt requiring refinancing within the next 12 months is $211m, including $93m of capital notes 400 and $64m of undrawn facilities. 350 300 • The next major refinancing is September 2010. NZ$ millions 250 200 269 268 335 150 54 187 • Average maturity o
Slide 41: Net debt movement
41 For personal use only Net debt movement NZ$million 12 99 2,003 2000 1,846 105 164 59 52 1600 (15) (319) 1200 800 400 0 Working Actual YTD Cash from Divestments Dividends FX on Debt Opening Debt Capex Cash tax Min Distn capital Debt ops ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 42: Capital expenditure
42 For personal use only Capital expenditure NZ$m 1H09 Actual FY09 Forecast New New Carry Over Approved Total Carry Over Approved Total Building Products 32 3 35 44 20 64 Distribution 14 4 18 14 5 19 Infrastructure 27 25 52 45 54 99 Laminex 8 8 16 16 16 32 Formica 17 12 29 30 26 56 Steel 9 5 14 19 1
Slide 43: Outlook
43 OUTLOOK For personal use only Tauranga Harbour Link, NZ ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009
Slide 44: Outlook 2009
44 For personal use only Outlook 2009 • Strong infrastructure investment in NZ and Australia expected to continue. • Residential markets all weaker globally and positive impacts of government initiatives hard to predict – NZ: no significant deterioration expected beyond current low base – Australia:
Slide 45: For personal use only
45 For personal use only ABN AMRO New Zealand Day ‐ Sydney| 6 March 2009