Slide 1: Fletcher Building Laminates & Panels Division Analysts Presentation
Page 1 1 Page For personal use only Fletcher Building Laminates & Panels Division Analysts, Presentation April 12-13 Brisbane Analysts Presentation│ April 2012
Slide 2: Meeting Agenda
Page 2 Meeting Agenda For personal use only Welcome & Introduction Mark Adamson Laminate & Panels Vision Mark Adamson Laminate & Panels Performance Leigh Box Formica Business Update Gerry Bollman Homapal Integration Update Leigh Box Laminex Australia—Business Update David Surveyor Laminex New Zealan
Slide 3: L&P Vision
Page 3 3 Page For personal use only Performance L&P Vision Mark Adamson Analysts Presentation│ April 2012
Slide 4: Laminate & Panels now operates under a single, integrated global management structure
Page 4 4 Page Laminate & Panels now operates under a single, integrated global management structure For personal use only Laminates & Panels Executive Committee* Mark Adamson, CEO President President President EGM GM Group VP Group VP Group VP Group VP Group Group VP Group VP Group VP Asia Europe N.
Slide 5: Fletcher now has the world's leading Laminates & Panels business
Page 5 5 Page With the integration of Formica and Laminex and the acquisition of Homapal, Fletcher now has the world’s leading Laminates & Panels business For personal use only Global Presence High Quality Manufacturing Assets Strong Market Positions Leading Brands Advantaged Channels to Market Anal
Slide 6: Unlike other competitors, Fletcher L&P has a truly global reach
Page 6 Unlike other competitors, Fletcher L&P has a truly global reach For personal use only Manufacture, Sell & Distribute Sell & Distribute Expansion Opportunity Analysts Presentation│ April 2012
Slide 7: High quality, well positioned manufacturing assets: North America
Page 7 The business also has high quality, well positioned manufacturing assets, generally well matched to current demand and future opportunity For personal use only 95% 68% Percentages highlight capacity utilization North America Heavy investment; significant improvement in performance & cost; wel
Slide 8: High quality, well positioned manufacturing assets: E.U.
Page 8 The business also has high quality, well positioned manufacturing assets, generally well matched to current demand and future opportunity For personal use only 75% 70% 68% 55% 35% 85% Percentages highlight capacity utilization E.U. Even with an economic rebound, further restructuring required
Slide 9: High quality, well positioned manufacturing assets: Asia
Page 9 The business also has high quality, well positioned manufacturing assets, generally well matched to current demand and future opportunity For personal use only 90% 0% 100% 100% Percentages highlight capacity utilization Asia Shows the need for more capacity given current demand and future pot
Slide 10: High quality, well positioned manufacturing assets: Australia & New Zealand
Page 10 The business also has high quality, well positioned manufacturing assets, generally well matched to current demand and future opportunity For personal use only 85% Percentages highlight 100% capacity utilization 100% Australia & New Zealand 77% 100% Low pressure factory facilities High press
Slide 11: High quality, well positioned manufacturing assets: global
Page 11 The business also has high quality, well positioned manufacturing assets, generally well matched to current demand and future opportunity For personal use only 75% 70% 95% 68% 55% 90% 0% 35% 85% 68% 100% 100% 85% 100% 100% 77% 100% Percentages highlight 35% capacity utilization 90% 100% Anal
Slide 12: Leading market positions in key global markets: Americas
Page 12 Together Formica and Laminex either hold or have a path to build leading positions (#1 or #2) in most key global markets For personal use only Canada 3 players #1 market position 49% share USA 3 players #2 market position 32% share Mexico 3 players; #1 market position 33% share Analysts Pres
Slide 13: Leading market positions in key global markets: Europe and others
Page 13 Together Formica and Laminex either hold or have a path to build leading positions (#1 or #2) in most key global markets For personal use only UK 3 players #1 market position Scandinavia 40% share 4 players #1 in market position 65% share France 3 players #3 market position Russia 19% share
Slide 14: Leading market positions in key global markets: Asia
Page 14 Together Formica and Laminex either hold or have a path to build leading positions (#1 or #2) in most key global markets For personal use only China High End 6 players #1 market position 40% share China Mid-Tier 8 players #8 market position 3% share Taiwan 4 players #1 market position Thaila
Slide 15: Leading market positions: Australia and New Zealand
Page 15 Together Formica and Laminex either hold or have a path to build leading positions (#1 or #2) in most key global markets For personal use only Australia 3 players #1 market position 59% share New Zealand 5 players #1 market position 55% share Analysts Presentation│ April 2012
Slide 16: Fletcher has a stable of leading brands in key product segments
Page 16 Moreover, Fletcher has a stable of leading brands in key products segments—here is just a sample For personal use only • What brands get you: pricing, share gain, HPL LPL distributor access, entrée to new markets • L&P core products of HPL and LPL have significant potential globally, but tha
Slide 17: Fletcher has advantaged market access across the world
Page 17 Finally Fletcher has advantaged market access across the world For personal use only 40,000 20,000 42,000 22,000 21,000 15,000 111,200 350 125 250 57,850 Number of A&D 9,200 750 850 Retail 50 (Big Box/ K&B) Distributor (Locations) Source: management estimates Global Coverage Analysts Present
Slide 18: Formica Performance
Page 18 18 Page For personal use only Performance Formica Performance Leigh Box Analysts Presentation│ April 2012
Slide 19: Formica has recently posted significant improvement in earnings
Page 19 Despite significant headwinds that have curtailed top line growth, Formica has recently posted significant improvement in earnings For personal use only Revenue EBIT ROFE NZ$ M NZ$ M EBIT has recovered from FY 08 due to initiatives and continuing efficiencies that have been largely cost base
Slide 20: Challenging year especially in Europe
Page 20 FY 12 is proving to be another challenging year especially in Europe with continued market deterioration in the 1st half particularly around Spain and Southern Europe For personal use only Revenue, Reported First Half Volumes Domestic Currency Revenue North America 4% 3% -7% Asia 9% 7% 1% Eu
Slide 21: First half continued EBIT improvement over prior year
Page 21 First half continued EBIT improvement over FY 11 through initiatives. Flat volumes and conditions in Europe along with strengthening NZD inhibited further earnings growth For personal use only 13% Asia continues to 9% 30 benefit from growth in 1 26 1 China, but adversely 25 2 25 impacted b
Slide 22: Second half trading continues to be difficult
Page 22 Second half trading continues to be difficult with conditions in Europe extremely challenging. North America and Asia are more optimistic, but still face domestic issues For personal use only Europe Asia North America • Southern Europe remains • Traditionally lower than • CY2012 has seen an
Slide 23: Formica initiatives to continue to grow EBIT
Page 23 In the face of continuing uncertainty in key markets, Formica is pursuing a number of Initiatives aimed at continuing to grow EBIT, while looking to contain capital & cash usage For personal use only EFFICIENCY REVENUE COST AVOIDANCE INITIATIVES • Share gain initiatives • Increasing equipmen
Slide 24: Regional growth initiatives well down the path of execution
Page 24 We have not yet completed all of the regional growth initiatives targeted at building our key positions but are well down the path of execution For personal use only • Project approved; site selected in JiuJiang; MOU with local government signed China HPL • Progressing construction planning
Slide 25: Laminex Performance
Page 25 25 Page For personal use only Performance Laminex Performance Leigh Box Analysts Presentation│ April 2012
Slide 26: Economic downturn impacted earnings in F09, with recovery in F10 and F11
Page 26 The economic downturn impacted earnings in F09, with recovery in F10 and F11. For personal use only Revenue EBIT ROFE - % 1,200 130 13 1,100 120 12 1,000 110 11 100 10 900 90 9 800 80 8 700 70 7 600 60 6 500 50 5 400 40 4 300 30 3 200 20 2 100 10 1 0 0 0 FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY
Slide 27: First half highlights weaker market conditions
Page 27 FY 12 1st half highlights weaker market conditions in both Australia and New Zealand compared to the corresponding prior period. For personal use only Revenue, Reported First Half Volumes Domestic Currency Revenue Australia -4% -6% -6% New Zealand -6% -7% -7% Total -4% -6% -6% • Australian v
Slide 28: First half operating earnings dominated by decline in Australian market
Page 28 First half operating earnings before unusuals dominated by continued decline in Australian market activity. Laminex has responded with business re-structuring and cost reduction initiatives. For personal use only 60 57 Australia impacted by 18 lower residential 37 market and higher mix 2 o
Slide 29: Second half trading continues to be difficult
Page 29 Second half trading continues to be difficult, with housing construction rates equivalent to FY 09 lows. For personal use only Australia New Zealand • Housing approvals down 16% year on • The trend for the number of new house year to February 2012. approvals continues to edge upward, but the
Slide 30: Laminex initiatives to grow EBIT and control capital
Page 30 Laminex is pursuing a number of initiatives aimed at continuing to grow EBIT, while looking to control capital & cash usage on the underlying business For personal use only EFFICIENCY REVENUE COST AVOIDANCE INITIATIVES • Share gain initiatives • Lean manufacturing • Defer spend where possibl
Slide 31: Formica Business Update
Page 31 31 Page For personal use only Performance Formica Business Update Gerry Bollman Analysts Presentation│ April 2012
Slide 32: North America Performance
Page 32 32 Page For personal use only North America Performance Analysts Presentation│ April 2012
Slide 33: FY12 Formica NA Strategic Initiative Update
Page 33 FY12 Formica NA Strategic Initiative Update: Significant progress has been made against all key objectives For personal use only FY12 Objectives Progress • Safety: Continue roll out of Formica Group safety • Excellent Progress. On track with program roll-out. program and achieve 20+% reducti
Slide 34: FY13 Formica NA Strategic Agenda
Page 34 FY13 Formica NA Strategic Agenda retains focus and builds on the key strategies developed during recent years For personal use only FY13 Initiatives • Continued disciplined roll-out of Formica Group safety plan (directly 1 Safety aligned to Fletcher plan). Focus on leading indicators and saf
Slide 35: Laminate edge challenge: what to do with the edges?
Page 35 As a flat surfacing product, laminate has a basic fabrication and install challenge: What to do with the edges? For personal use only Square Edge Post-form Edge Brown line encases the countertop Eliminates brown line on two sides Lowest cost laminate countertop Considered optimal fro
Slide 36: Formica's IdealEdge eliminates historic challenges
Page 36 Although a post-form countertop is considered optimal from a design aesthetic, it still has its limitations For personal use only Formica’s IdealEdge eliminates these historic challenges, causing consumers to take a second look at laminate Analysts Presentation│ April 2012
Slide 37: For personal use only
For personal use only Page 37 Analysts Presentation│ April 2012
Slide 38: For personal use only
For personal use only Page 38 Analysts Presentation│ April 2012
Slide 39: Asia Performance
Page 39 39 Page For personal use only Asia Performance Analysts Presentation│ April 2012
Slide 40: FY12 Formica Asia Strategic Initiative Update
Page 40 FY12 Formica Asia Strategic Initiative Update: Significant progress has been made against all key objectives For personal use only FY12 Objectives Progress • Continue High End sales growth in • Excellent Progress. Continue to expand and develop China and increase overall share of specificati
Slide 41: FY13 Formica Asia Strategic Agenda
Page 41 FY13 Formica Asia Strategic Agenda retains focus and builds on the key strategies developed during recent years For personal use only FY13 Initiatives • Focus on training and development, improving overall organizational 1 Organizational efficiency and effectiveness Development • Continue to
Slide 42: Focus on specification, distribution and direct sales in China's high-end market
Page 42 Focus on specification, distribution and direct sales in the China’s high- end market, supported by sales training For personal use only Drive specification sales to support first brand positioning Specification Build distribution Drive direct sales to capability to capture incremental captu
Slide 43: Speed distribution channel development and expand color ranges for 2nd brand
Page 43 Speed distribution channel development, expand color ranges, improve product quality and pursue more capacity to develop 2nd brand (Fulihua) For personal use only Distributor Development Colour Range Development (Number of Decors Offered) 120 100 131 100 Woodgrain 81 6 44 Number of distribut
Slide 44: Phased strategy for China LPL market
Page 44 Develop different strategy by phase with import LPL products in the starting stage and focus on identified customer groups initially For personal use only LPL Market (364 M SQM) Target Customer Base 100% Imported (Phase I) 0.7% 2.5 M SQM Residential Furniture 98% 2.9% Semi-Imported 10.5 M SQ
Slide 45: Drive specification and direct sales in ASEAN region
Page 45 Continue to drive specification and direct sales and increase distribution capacity, supported by new product launches in ASEAN region For personal use only 1 Specification Direct Sales • Drive specification • Drive direct sales to sales to support first capture incremental 100-year brand po
Slide 46: Specialty product initiatives to drive premium positioning
Page 46 Implement various initiatives in specialty products to capture incremental share and drive Formica’s premium positioning For personal use only Develop a distribution network Increase premium Define and portfolio and prototype the new drawdown from Homapal range Deco basic range offer Metal O
Slide 47: Europe Performance
Page 47 47 Page For personal use only Europe Performance Analysts Presentation│ April 2012
Slide 48: FY12 Formica Europe Strategic Initiative Update
Page 48 FY12 Formica Europe Strategic Initiative Update: Significant progress has been made against all key objectives For personal use only FY12 Objectives Progress • Tactical projects: • Good Progress. • France Profitability • Continued cost cuts and customer profitability • Worktop Rationalizatio
Slide 49: FY13 Formica Europe Strategic Agenda
Page 49 FY13 Formica Europe Strategic Agenda retains focus and builds on the key strategies developed during recent years For personal use only FY13 Initiatives • Focus on training and upgrading salesforce effectiveness Organizational 1 • Increase performance of managers through Transform training P
Slide 50: India HPL market is the largest in the world and expected to double
Page 50 India – The HPL market is the largest in the world and is expected to double in size over the next 10 years For personal use only Market Size (Millions of India China USA UK Square Meters) 2010 225m 223m 15m 60m 2020 500m 316m 15m 60m Source: LEK & Formica market research June 2011 Analysts
Slide 51: Homapal Integration Update
Page 51 51 Page For personal use only Performance Homapal Integration Update Leigh Box Analysts Presentation│ April 2012
Slide 52: Homapal is located in Herzberg, Germany
Page 52 Homapal is located in the small town of Herzberg, Germany and in the local community is a key business which enjoys support of the Regional Government For personal use only Berlin Hanover Herzberg Munich Herzberg is A significant approximately employer with a 100km south of stable workforce
Slide 53: Homapal has a large manufacturing site
Page 53 Homapal has a large manufacturing site with HPL presses, treaters, and ancillary equipment—all in a very good state of repair For personal use only Homapal is bordered by the Yellow (factory) and blue (Administration) Analysts Presentation│ April 2012
Slide 54: Key criteria underpinned the acquisition of Homapal
Page 54 A number of key criteria underpinned the acquisition of Homapal which has been highly successful & well established with Formica for many years For personal use only Business Model Based on competitive advantage • Established competitive advantage in a premium market based on excellent servi
Slide 55: Homapal has a 33% share of global premium metallic laminate market
Page 55 Homapal has a 33% share of the global premium metallic laminate market; predominantly in Europe and N A with significant exposure in Asia Pacific For personal use only Revenue by Region • Formica currently Other procures and 6% distributes 40 percent of Homapal products North Germany across
Slide 56: Homapal has a highly flexible manufacturing base
Page 56 Homapal has a highly flexible manufacturing base, skilled staff, and latest technology to develop unique visuals and respond quickly to special orders For personal use only • Incorporates hand finishing • Main products are metallic adding a unique touch to the end product laminates (Premium
Slide 57: Homapal to retain independence while leveraging L&P division
Page 57 The business will continue to retain its independence while at the same time pursuing opportunities to fully leverage its position in the L&P division For personal use only Geographic Expansion in several markets will be enabled • Presence in Germany will be used to leverage sales and distri
Slide 58: Laminex Australia
Page 58 58 Page For personal use only Performance Laminex Australia David Surveyor Analysts Presentation│ April 2012
Slide 59: Australia's leading decorative surfaces business
Page 59 Australia’s leading decorative surfaces business For personal use only • Laminex is a leading decorative surfaces business: - Strong competitive positions in all core categories - Business model that extends through the full value chain - Diverse customer base weighted towards residential co
Slide 60: Laminex has four distinct competitive advantages
Page 60 Laminex has four distinct competitive advantages For personal use only • The most recognisable range of decorative product brands, with PRODUCT RANGE Laminex and Formica being the two main brands in the kitchen category AND BRANDS • Laminex has the widest range of high quality decorative sur
Slide 61: Broad product offering with majority of revenue from value-added products
Page 61 Laminex has a broad product offering and generates the majority of its revenue from value-added (LPL & HPL) products to residential construction For personal use only Revenue by Product FY12 YTD Revenue by Major Region FY12 YTD Export Other WA 2% 16% Export 20% VIC,TAS & SA 2% 35% Componentr
Slide 62: Laminex accesses the market through its own network
Page 62 Laminex accesses the market through its own network selling to a large number of customers For personal use only Australia’s largest ‘Decorative surfaces Laminex Australia has a large branch network’ number of small customers Sales Customer Active Revenue band % of Customers per total per re
Slide 63: Strong portfolio of well known market brands
Page 63 A strong portfolio of well known market brands sets Laminex apart from its competitors For personal use only Laminex’s brands support a wide range of customer requirements Laminex’s flagship brand of HPL, LPL and an extended range of premium decorative, componentry and complimentary product
Slide 64: Australia's leading decorative surfaces business
Page 64 Australia’s leading decorative surfaces business For personal use only • Laminex is a leading decorative surfaces business: - Strong competitive positions in all core categories - Business model that extends through the full value chain - Diverse customer base weighted towards residential co
Slide 65: Economic headwinds have impacted results
Page 65 Economic headwinds have impacted results For personal use only Number of Dwelling approvals Australia • Economic slow down in Australia has impacted sales, Laminex has responded by trying to capture volume products, but growth in these products is not enough to offset the loss of higher marg
Slide 66: Strategy to improve financial performance and create sustainable advantage
Page 66 Strategy to improve financial performance and create a sustainable competitive advantage For personal use only • Redesign the organisation for both cost and effectiveness. Reduce head office and 11. Lowering cost base by establishing new capabilities establish a systematic program to take ou
Slide 67: Laminex's strategy addresses the cost base
Page 67 Laminex’s strategy addresses the cost base…… For personal use only Categorisation against Strategy Progress against Strategies • During the current year Laminex Australia has reduced the number of 1 employees significantly across head office, Plants, Sales & Organisational Distribution. rest
Slide 68: Improves its competitive position
Page 68 ….and improves its competitive position For personal use only Categorisation against Strategy Progress against Strategies • Implementation underway on a significant HPL and LPL launches 2 next financial year LPL & HPL • Successful launch of 180FX in the Australian market in 2011 growth • New
Slide 69: Laminex continues to invest in critical manufacturing areas
Page 69 Laminex continues to invest in critical manufacturing areas……. For personal use only Gympie - • State of the art LPL manufacturing gives enhanced product capability at lower cost • A$30m investment in new LPL short cycle line and warehousing that further enhances current MDF assets LPL paper
Slide 70: Product enhancements maintain industry leading position on colour and design
Page 70 Product enhancements such as HPL/LPL décors maintain our Industry leading position on colour and design For personal use only Examples of recent investments in existing product range Laminex has established this position through: 180FX - HPL Silk Finish - LPL • The most recognisable kitchen
Slide 71: Scale of Global Laminates and Panels will benefit Laminex
Page 71 The scale of Global Laminates and Panels will benefit Laminex in three key areas For personal use only • Laminex will be promoting the world‟s leading range of global decors Marketing • Laminex will contribute to, and leverage from a global R&D and NPD program, creating opportunities to brin
Slide 72: Laminex New Zealand
Page 72 72 Page For personal use only Performance Laminex New Zealand Melle de Pater Analysts Presentation│ April 2012
Slide 73: Laminex New Zealand
Page 73 LAMINEX NEW ZEALAND INVESTOR For personal use only PRESENTATION April 2012 Analysts Presentation│ April 2012
Slide 74: Laminex is NZ's leading decorative surfaces business
Page 74 Laminex is NZ’s leading decorative surfaces business For personal use only • Laminex’s competitive advantage is derived through: − A portfolio of reputable brands with market leading positions − Balanced end market and regional revenue exposure − A vertically integrated manufacturing footpri
Slide 75: Laminex's brands are leaders in their respective markets
Page 75 Laminex’s brands are leaders in their respective markets For personal use only Portfolio of reputable brands each with market leading positions FY11 Sales Breakdown Analysts Presentation│ April 2012
Slide 76: Sales are diversified and balanced by end market and region
Page 76 Sales are diversified and balanced by end market and region For personal use only FY11 Sales Breakdown Source: Management Estimates Analysts Presentation│ April 2012
Slide 77: Vertically integrated manufacturing footprint
Page 77 Vertically integrated manufacturing footprint with strong manufacturing capability For personal use only Paper Treatment Low Pressure Laminate Particle Press Board MARKET Manufacture MDF Manufacture Bench top Manufacture Formica HPL Analysts Presentation│ April 2012
Slide 78: Supported by a national distribution footprint
Page 78 Supported by a national distribution footprint For personal use only Sales branch Distribution centre Manufacturing facility Analysts Presentation│ April 2012
Slide 79: Sales are linked to market activity levels at historic lows
Page 79 Sales are linked to market activity levels which are at historic lows For personal use only WPIP $M Laminex N Z Sales and Building Work Put in Place (WPIP) Laminex NZ Sales WPIP SOURCE: WPIP ex Statistics New Zealand Analysts Presentation│ April 2012
Slide 80: Significant change positioning the business well for the future
Page 80 Which has driven significant change has over the last 6 years positioning the business well for the future For personal use only Analysts Presentation│ April 2012
Slide 81: Strategic focus now is on strengthening the core
Page 81 Strategic focus now is on strengthening the core For personal use only • Business simplification • Refocusing on core laminate ranges • Reducing complexity and costs • Leveraging Laminates and Panels global scale and expertise • Strengthening competitive advantage • Focussing on value propos
Slide 82: Future Outlook
Page 82 82 Page For personal use only Performance Future Outlook Mark Adamson Analysts Presentation│ April 2012
Slide 83: Outlook uncertain, especially in Europe; Asia growth to continue
Page 83 Beyond FY 12 the outlook remains uncertain, especially in Europe. North America showing some signs of recovery. Growth in Asia set to continue but is dependant on China For personal use only Europe Asia North America • Forecasters show little • Activity levels and • Outlook remains flat if a
Slide 84: Outlook uncertain in Australia; New Zealand anticipates some recovery
Page 84 Beyond FY 12 the outlook remains uncertain in Australia, whilst New Zealand anticipates some recovery. For personal use only Australia New Zealand • Laminex is managing for a flat market, • Some forecasted market improvement economic improvement will deliver based on slow economic growth ups
Slide 85: End Of Report
Page 85 85 Page For personal use only Performance End Of Report Analysts Presentation│ April 2012