Fletcher Building Limited · NZX:FBU
Fletcher Building — Non-Deal Roadshow (November 2004)
45 slides from Fletcher Building's roadshow presentation, November 2004
Slide 1: Investor Roadshow, November 2004
November 2004 Ralph Waters Chief Executive Officer Ralph Waters 11 August 2004 Chief Executive Officer
Slide 2: Fletcher Building
2 Fletcher Building One of New Zealand’s top industrial companies with a history going back to the early 1900’s The leader in the NZ building industry FBU is listed on NZX and ASX Strong market shares in all its building sectors Full information on www.fletcherbuilding.co.nz November 2004
Slide 3: Company Dimensions
3 Company Dimensions Revenue: NZ$4.25 billion Market cap: NZ$2.45 billion No.4 on NZX Employees: 11,000 Shares: 442 million Daily average turnover ≈1,500,000 Shareholders: NZ 47% Aust 30% USA 13% Other 10% November 2004
Slide 4: Earnings
4 Earnings After Tax Earnings $m 300 240 168 200 93 100 0 2002 2003 2004 November 2004
Slide 5: Total Shareholder Return
5 Total Shareholder Return % 50 43 33 34 40 24 30 20 10 0 2002 2003 2004 YTD 2005 November 2004
Slide 6: What is Fletcher Building?
6 What is Fletcher Building? Building Construction Materials Distribution 10% 10% 80% Not a construction company Not a distribution business A building materials manufacturer which controls its channels to market November 2004
Slide 7: Earnings Reliability
7 Earnings Reliability Building Construction Materials Distribution 10% 10% 80% + Laminex + Tasman Geographic & economic diversification New growth opportunities Established acquisition credentials November 2004
Slide 8: A Broader Revenue Base
8 A Broader Revenue Base 2004 year annualised Other Australia 4% 25% New Zealand 71% November 2004
Slide 9: The Fletcher Building Value Chain Delivers High Returns
9 The Fletcher Building Value Chain Delivers High Returns Laminates Building Other & Concrete Products Manufacturers Panels Dedicated Shared Other Distribution Distribution Construction Distribution Markets Markets November 2004
Slide 10: Product range
10 Tasman sarking overlay Pynefloor® particleboard flooring Plyco doors Fletcher Steel Tasman Dimond or AHI roofing structural steel I beams insulation Laminex high pressure laminates Tasman house wrap Oliveri sinks Firth bricks Firth concrete Gib® and pavers blocks plasterboard Fletcher Aluminium L
Slide 11: Concrete
11 Concrete 50% of NZ cement market 33% of NZ RMC market 25% of NZ aggregates market 60% of NZ concrete pipe market 60% of NZ pre cast market November 2004
Slide 12: Building Products
12 Building Products 94% of NZ market No.2 in NZ No.1 in Australasia No.1 in Australasia (also facility in California) No.2 in Australasia No.1 in Australasia November 2004
Slide 13: Building Products – Steel
13 Building Products – Steel 50% of Sims (scrap metal) 250,000T EAF Steel Mill Rod, Bar & Wire General steel distribution Painting & roll forming of flat steel November 2004
Slide 14: Laminates & Panels
14 Laminates & Panels HPL (2 mills) No.1 Australasia Decorated Board No.1 Australasia MDF (3 mills) No.2 in Australasia Particle Board (2 mills) No.2 in Australasia Over 50 owned distribution Hardboard (1 mill) outlets across Australasia No.2 in Australasia November 2004
Slide 15: Distribution
15 Distribution 54 PlaceMakers stores in NZ 35% of building materials market Joint Venture rather than franchise No.1 in segment Trade focus – 80% of sales November 2004
Slide 16: Construction
16 Construction New Zealand’s leading construction company Commercial (Buildings) Engineering (Infrastructure) South Pacific (General) Residential (NZ largest home builder) November 2004
Slide 17: Summary of Results
17 Summary of Results Jun Jun Jun $m 2002 2003 2004 Revenue 2966 3221 3958 EBITDA 294 429 582 EBITA 217 338 471 EBIT 210 331 460 Net Earnings 93 168 240 EPS (cents) 27.0 43.4 55.7 Dividend cps 14.0 19.0 25.0 November 2004
Slide 18: Financial Performance Again Improved Across All Segments
18 Financial Performance Again Improved Across All Segments EBIT $m 61% 230 180 164 76% 16% 24% 130 102 24% 94 95 81 80 73 59 54 42 34 30 -20 Building Products Distribution Concrete Construction Laminates & Panels June 2003 June 2004 November 2004
Slide 19: Performance Measurement: Return on Funds
19 Performance Measurement Return on Funds % 30 24.4 24.7 23.1 20 10 0 2002 2003 2004 November 2004
Slide 20: Performance Measurement: Return on Equity
20 Performance Measurement Return on Equity % 24.3 23.0 25 16.9 20 15 10 5 0 2002 2003 2004 November 2004
Slide 21: Performance Measurement: Economic Value Added
21 Performance Measurement Economic Value Added $m 139 150 100 65 46 50 0 2002 2003 2004 November 2004
Slide 22: Simplified Balance Sheet
22 Simplified Balance Sheet Jun Jun 2004 2003 NZ$m NZ$m Assets Current Assets 1022 919 Fixed Assets 1023 972 Intangibles & Goodwill 342 195 Provision for Deferred Taxation 86 104 Investments 159 155 Total Fletcher Building Assets 2632 2345 Liabilities Current Liabilities 666 627 Net Debt 448 502 Cap
Slide 23: Key Ratios
23 Key Ratios Debt/Debt Plus Equity % 80 70 53.2 60 49.2 49.9 47.2 48.4 50 40.2 43.1 40 30 20 10 0 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 November 2004
Slide 24: Strategic Agenda
24 Strategic Agenda Earnings Reliability Internal Growth External Growth November 2004
Slide 25: Earnings Reliability
25 Earnings Reliability Cycle not just residential but total construction including non-residential and infrastructure Factors that will influence total work put in place GBC estimates of projects over 1000 ton cement Fletcher Construction estimates of construction jobs over $25 million Ho
Slide 26: Earnings Reliability: Infrastructure Projects
26 Earnings Reliability Infrastructural projects will deliver growth.. Building Consents Measured, WIP Forecast 14,000 GBC Major Project Analysis F03 What's On - Major Projects Forecast Industry Redline Project Est Cement Project Timing Est Cement 12,000 Measured Britomart 10,000 Fergusson Wharf 200
Slide 27: Earnings Reliability: Total Construction Work (NZ)
27 Earnings Reliability Total Construction Work (NZ) New Zealand Value of Work Completed Forecast NZ$ million 14000 +5% +17% -5% +10% +10% 12000 +18% Infrastructure 10000 +10% +14% 8000 Non +8% Residential +22% +5% 6000 -7% A&A 4000 +25% -3% -24% Residential 2000 0 97 98 99 00 01 02 03 04 05 06 Sour
Slide 28: Internal Growth Opportunities
28 Internal Growth Opportunities Expect to approve up to $100 million more than depreciation in 04/05 Building Products AHI Roofing expansion Insulation expansion Concrete Golden Bay expansion Whitehall quarry November 2004
Slide 29: Internal Growth Opportunities
29 Internal Growth Opportunities Construction Auckland land Queenstown land Laminates & Panels Resin Joint Venture Asian distribution November 2004
Slide 30: Internal Growth Opportunities
30 Internal Growth Opportunities Distribution The following new stores are under construction Riccarton (opened Oct 04) Mt Wellington (due to open Dec 04) Queenstown (due to open Dec 04) With eight others to be upgraded November 2004
Slide 31: External Growth Opportunities
31 External Growth Opportunities We have the financial capacity Limited opportunities in total Our acquisition criteria narrows that further Evaluating Amatek November 2004
Slide 32: Amatek
32 Amatek Fibreglass insulation Concrete pipes Pre cast concrete Sand quarries Metal roofing and purlins All Australian based November 2004
Slide 33: Outlook
33 Outlook NZ and Australia residential markets will soften this year, but off record high levels We expect A&A to strengthen Non–residential outlook is strong for next two to three years in New Zealand Infrastructure spend will also be strong for at least the next three years We expect EB
Slide 34: Ralph Waters, Chief Executive Officer
Ralph Waters 11 August 2004 Chief Executive Officer
Slide 35: Return of the golden weather – New Zealand
35 Return of the golden weather – New Zealand Average real GDP growth 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1960s 1970s 1980s 1990s 2000-2007 November 2004
Slide 36: Terms of Trade – New Zealand
36 Terms of Trade – New Zealand 1300 World commodity boom 1250 1200 economic reforms Economic reforms 1150 1100 Oil oil Crises crises 1050 1000 950 900 850 800 60 70 80 90 00 November 2004
Slide 37: Rewarded for producing what the World wants
37 Rewarded for producing what the World wants - New Zealand 3 year moving average GDP growth 5.0% GDP 4.5% GDP adjusted for the ToT 4.0% 3.5% 3.0% 2.5% 2.0% 98 99 00 01 02 03 04 05 November 2004
Slide 38: Budget Balance – New Zealand
38 Budget Balance $m – New Zealand 7000 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 Treasury Forecast Actual/Infometrics Forecast November 2004
Slide 39: Unemployment rate – New Zealand
39 Unemployment rate – New Zealand Seasonally adjusted 11% 10% 9% 8% 7% 6% 5% 4% 3% 86 88 90 92 94 96 98 00 02 04 November 2004
Slide 40: Productivity – New Zealand
40 Productivity – New Zealand 3 yr moving average growth rate 3.0% GDP 2.5% GNDI 2.0% 1.5% 1.0% 0.5% 0.0% 98 99 00 01 02 03 04 05 06 07 Why? • Rising cost of labour forces firms to look for productivity • Heavy capital investment – more capital per worker • Reallocation of labour and capital – terms
Slide 41: GDP growth
41 GDP growth Annual % change GDP 8% Aus 7% NZ 6% 5% 4% 3% 2% 1% Last five yrs: NZ 3.8% Aus 3.4% 0.76 1993-2004: NZ0.87 3.6% Aus 3.8% 0 93 95 97 99 01 03 05 07 November 2004
Slide 42: Changing population growth – the residential driver
42 Changing population growth – the residential driver Year ended March 2003 March 2005 • Net migration 41,200 14,500 • Population growth requires 25,300 15,000 • Depreciation/occupancy/vacancy 5,800 9,800 • Required build rate 31,100 24,800 • Actual build rate 28,300 29,700 • Underbuilding or 2,800
Slide 43: Build rate will slow
43 Build rate will slow Annual consent total Sept quarter annualised 26,000 33,000 31,000 29,000 27,000 25,000 23,000 21,000 19,000 00 01 02 03 04 05 06 07 November 2004
Slide 44: Total building and construction activity
44 Total building and construction activity March years (NZ) $m investment 1995/96 prices Construction Residential Non-residential 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 95 96 97 98 99 00 01 02 03 04 05 06 07 November 2004
Slide 45: Prospects for Australia
45 Prospects for Australia Year end % growth, GDP 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Avg 99-03 04 05 06 07 • Housing sags a little – but households confident • Fiscal stimulus to come • Energy – accelerating investment • Asian demand helps out • A baby version of the US 1950-1970 November
Fletcher Building — Non-Deal Roadshow (November 2004) on 6ix