Slide 1: From neighbourhoods to nations
1 From neighbourhoods to nations For personal use only Fletcher Building | Half Year Results | February 2009
Slide 2: Since 1909, the Fletcher group of companies
2 Since 1909, the Fletcher group of companies has For personal use only 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 development of neighbourhoods
Slide 3: Fletcher Building Half Year Results 2009
3 For personal use only Fletcher Building Half Year Results 2009 12 February 2009 Fletcher Building | Half Year Results | February 2009
Slide 4: Disclaimer
4 For personal use only Disclaimer This half year results presentation dated 12 February 2009 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
Slide 5: Agenda
5 For personal use only Agenda • Introduction • Company and Market Overviews • Divisional Performances • Financial Results • Strategy • Outlook Fletcher Building | Half Year Results | February 2009
Slide 6: Company & Market Overviews
6 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 7: Good result in challenging times
7 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 ‐ cps 24.0 24.0 ‐ 48.5 Dividend Rein
Slide 8: Results overview
8 For personal use only Results overview • Operations impacted by deteriorating economic conditions and slowdown in residential and commercial construction activity. • Restructuring costs of $19m and one‐off costs of $10m incurred. • Offsetting this was a strong performance by the Steel Division. •
Slide 9: Residential construction activity has continued to slow
9 Residential construction activity has continued to For personal use only slow Dec 2008 Dec 2007 Dec 2006 07/08 Building Consents 6 months 6 months 6 months Mvmt % New Zealand 7866 12671 13619 ‐38 Australia 67700 85185 79197 ‐21 US (‘000) 389.3 623.3 816.0 ‐38 Fletcher Building | Half Year Results
Slide 10: Lower activity levels and increased input costs impacted EBITDA margin
10 Lower activity levels and increased input costs For personal use only impacted EBITDA margin Dec 2008 Dec 2007 Jun 2008 6 months₁ 6 months₁ 12 months₁ EBITDA/Sales % EBITDA/Sales % EBITDA/Sales % Building Products 14.5 19.6 19.9 Distribution 4.6 7.7 7.2 Infrastructure 12.1 17.2 18.2 ‐ Concrete NZ
Slide 11: Divisional Performances
11 DIVISIONAL PERFORMANCES For personal use only Fletcher Building | Half Year Results | February 2009
Slide 12: Strong performance in Steel, while other divisions experienced lower volumes
12 Strong performance in Steel, while other divisions For personal use only experienced lower volumes and margins EBITDA NZ$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 Fletcher Building | Half Year
Slide 13: Building Products results
13 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 14: Building Products: lower volume levels but improved prices
14 Building Products: lower volume levels but improved For personal use only prices Gross Sales Dec 08 Dec 07 NZ$m 6 mths 6 mths₁ % ∆ Volume ∆ Price ∆ EBITDA ∆ New Zealand ‐ Plasterboard 115 110 +5 ‐ Insulation₂ 82 78 +5 ‐ Metal Roof Tiles₃ 107 84 +27 Australia ‐ Insulation 106 103 +3 ‐ Sinkware 18
Slide 15: Building Products
15 For personal use only Building Products • Plasterboard • Lower volumes due to reliance on housing activity in NZ. • Improved sales mix and overhead cost control helped result. • Insulation • Australia: sluggish demand in NSW and Victoria. • New Zealand: volumes down in weak housing market. • Comm
Slide 16: Distribution results
16 For personal use only Distribution results Dec 08 Dec 07 Distribution NZ$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 ($M) 60 50 5.0 Funds Employed 188 167 +13 40 30 EBITDA/sales % 4.8 8.0 ‐40 20 10 ‐ ‐
Slide 17: Distribution
17 For personal use only Distribution • Sales in line with residential building consents. • Lower volumes on fixed cost base impacted returns. • Store refurbishment and expansion programme was reduced. • Rationalisation of frame and truss manufacturing activities from 23 to 18 sites. • Significant s
Slide 18: Infrastructure results
18 For personal use only Infrastructure results Dec 08 Dec 07 Infrastructure NZ$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 ($M) Construction 250 200 10.0 ‐ Property 10 30 ‐67 150 Total EBITDA 137 17
Slide 19: Property activities include quarry end use, residential and surplus assets
19 Property activities include quarry end use, For personal use only residential and surplus assets EBIT NZ$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 20: Infrastructure: steady sales despite volume decline
20 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 Fletcher Building | Half Year Results | February 2
Slide 21: Infrastructure
21 For personal use only Infrastructure • NZ concrete volumes down <10%. • Australian concrete continued to perform well, pipe business recorded strong start to the year. • Residential margins substantially down but volumes 17% ahead pcp. • Strong Construction backlog at $1,166 million. Fletcher Bui
Slide 22: Laminates & Panels results
22 For personal use only Laminates & Panels results Dec 08 Dec 07 Laminates & Panels NZ$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 ($M) ‐ Formica 22 38 ‐42 150 10.0 Total EBITDA 80 128 ‐38 100 EBIT 39 91 ‐57 5
Slide 23: Laminates & Panels: volumes generally weaker but prices improved
23 Laminates & Panels: volumes generally weaker but For personal use only prices improved Gross Sales Dec 08 Dec 07 NZ$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 ‐3 F
Slide 24: Laminates & Panels
24 For personal use only Laminates & Panels • Volumes down in Australia and NZ, but market shares stable. • Successful transfer of HPL sourcing for Australasian markets to Formica China. • Higher resin costs impacted margins. • In Australia: • Volumes were lower due to residential exposure. • Export
Slide 25: Formica: downturn in Europe negatively impacted result
25 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 Fletcher Building | Half Year Results | February 2009
Slide 26: Formica North America: Evendale operation on track
26 Formica North America: Evendale operation For personal use only performance on track to meet full year targets US$m EBITDA for 6 months to Dec 07 7.5 Restructuring Costs ‐0.6 Operational Improvements: • SG&A Initiatives 3.3 • Evendale Performance 3.9 7.2 Market Impact ‐13.7 EBITDA for 6 months to
Slide 27: Formica: improved operational performance but marked deterioration in US and Europe
27 Formica: improved operational performance but For personal use only marked deterioration in US and European markets • US: High Pressure Laminate sales down by 18% due to slowdown in residential and commercial activity. • Manufacturing performance at Evendale plant has continued to improve. Scrap
Slide 28: Steel results
28 For personal use only Steel results Dec 08 Dec 07 Steel NZ$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 ($M) 10.0 80 Funds Employed 623 542 +15 60 5.0 40 EBITDA/sales % 13.9 9.7 +43 20 ‐ ‐ EBIT/sales %
Slide 29: Steel earnings up based on price volatility and volume gains
29 Steel earnings up based on price volatility and For personal use only volume gains in long steel Gross Sales Dec 08 Dec 07 NZ$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 ‐ Rollform
Slide 30: Steel performance strong in volatile market
30 For personal use only Steel performance strong in volatile market • High but volatile steel and scrap prices were experienced in the first part of the year, benefiting the long steel business with earnings up 350%. • Coated products business lifted earnings by 8%. • Strong demand in Australia for
Slide 31: Financial Results
31 FINANCIAL RESULTS For personal use only Fletcher Building | Half Year Results | February 2009
Slide 32: Net earnings
32 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 Fletcher Building | Half Year Results | February 2009
Slide 33: Balance sheet remains strong
33 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 Fletcher Building | Half Year Results
Slide 34: Key ratios
34 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 35: Debt maturity profile
35 For personal use only Debt maturity profile Funding & Maturity • 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 •
Slide 36: Net debt movement
36 For personal use only Net debt movement NZ$million 12 99 2,003 2000 1,846 105 164 59 52 1600 (15) (319) 1200 800 400 0 Working Actual YTD Cash from Divestments Dividends FX on Debt Opening Debt Capex Cash tax Min Distn capital Debt ops Fletcher Building | Half Year Results | February 2009
Slide 37: Capital expenditure
37 For personal use only Capital expenditure NZ$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 Laminates & Panels 8 8 16 16 16 32 Formica 17 12 29 30 26 56 Steel
Slide 38: Strategy
38 STRATEGY For personal use only Fletcher Building | Half Year Results | February 2009
Slide 39: Strategic objectives remain unchanged
39 For personal use only Strategic objectives remain unchanged Earnings Reliability Internal Growth External Growth Fletcher Building | Half Year Results | February 2009
Slide 40: Significant restructuring of the business already completed
40 Significant restructuring of the business already For personal use only completed • Reduction in worldwide employee numbers by 1100 since 1 July 2008. • Further reductions being implemented in second half. • Plants have reduced number of shifts and hours of operation where appropriate. • Other in
Slide 41: Outlook
41 OUTLOOK For personal use only Tauranga Harbour Link, NZ Fletcher Building | Half Year Results | February 2009
Slide 42: Outlook 2009
42 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 43: For personal use only
43 For personal use only Fletcher Building | Half Year Results | February 2009