Boral — H1 2002 Earnings Presentation
34 slides from Boral's earnings presentation, Feb 13, 2002
Slide 1: 2002 Interim Results
2002 INTERIM RESULTS 13 February 2002 Boral’s underlying profit increases by 28% to $92 million 2002 Interim Result Rod Pearse
Slide 2: Presentation outline
Presentation outline • Features of the year • Financial results • Segment overview žBuilding Products žConstruction Materials žUSA • Perform & grow strategy • Outlook 2002 Interim Result Presentation outline
Slide 3: The Australian cycle is turning
The Australian cycle is turning 30,000 VALUE OF WORK DONE – AUSTRALIA Seas. Adj. ($99/00 $m) 25,000 20,000 Roads/Hwys/Subs 15,000 Non-Dwellings 10,000 A&A 5,000 Dwellings - 97 97 98 98 99 99 00 00 01 01 E 02 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H Source: Australian Bureau of Statistics, BIS Shrapnel forec
Slide 4: USA housing activity remains strong
USA housing activity remains strong VALUE OF WORK COMMENCED IN USA “BRICK STATES”* 100 1992 US$ billion (real) 75 50 25 0 89 90 93 94 97 98 01 91 92 95 96 99 00 ) (E FY FY FY FY FY FY FY FY FY FY FY FY FY 02 FY * Brick States: Alabama, Arkansas, Carolinas, Florida, Georgia, Illinois, Indiana, Kentuc
Slide 5: Features of the half year
Features of the half year • PAT (before disposal of businesses) up 28% to $92m • Sales revenue up 5% to $1.73b • EBIT/ Sales margin steady at 9.3% • Strong result from Asia & USA; Australian market recovering; strong QEU result • Interest down 15%; tax down 29% • EPS steady at 16.2c • Dividend maint
Slide 6: Underlying profit increases by 28% to $92m
Underlying profit increases by 28% to $92m A$ million Dec-01 Dec-00 %YoY change Sales revenue 1,732 1,654 5% EBITDA* 256 245 4% EBIT* 161 153 6% Interest 32 37 (15%) Profit before tax* 130 116 12% Tax* 37 43 (14%) Profit after tax* 92 72 28% Profit on disposal of 0 20 - businesses after tax Profit a
Slide 7: Significant improvement in Dec-01 half compared with the Jun-01 half
Significant improvement in Dec-01 half compared with the Jun-01 half A$ million Dec-01 Jun-01 HY %HoH change Sales revenue 1,732 1,626 7% EBITDA* 256 206 24% EBIT* 161 110 47% Interest 32 33 (3%) Profit before tax* 130 77 68% Tax* 37 22 71% Profit after tax* 92 55 68% Profit on disposal of 0 7 - bus
Slide 8: First half revenue better than expected
First half revenue better than expected External Revenue ($ million) 1H 2H 2,200 2,000 1,800 1,600 1,400 1,200 1,000 02 96 97 98 99 00 01 HY FY FY FY FY FY FY Results for reported building and construction materials businesses each year 2002 Interim Result Financial results
Slide 9: Margins lifting
Margins lifting EBIT/Sales % EBITDA/Sales % 10% 16% 9% 14% 8% 12% 7% 10% 6% 5% 8% 4% 6% 3% 4% 2% 2% 1% 0% 0% 02 96 97 98 01 99 00 02 97 98 01 96 99 00 HY FY FY FY FY FY FY HY FY FY FY FY FY FY Results for reported building and construction materials businesses each year 2002 Interim Result Financial
Slide 10: Operational improvement and growth lifted underlying performance
Operational improvement and growth lifted underlying performance $161 m $153 m Divestments Price Cost savings Growth HY01 Once-off Volume Other Restructuring FX & HY02 EBIT & POSA costs costs other EBIT 2002 Interim Result Financial results
Slide 11: $51m in PEP/step change for first half
$51m in PEP/“step change” for first half 30 20 $ millions 10 0 Building Construction USA Products Materials 2002 Interim Result Financial results
Slide 12: Strong cash flows coming off the bottom of cycle
Strong cash flows coming off the bottom of cycle $1,056 m $983 m Jun01 Op Interest Tax Dividends SIB Growth Proceeds Dec01 Net debt Surplus Capex & other Net Debt 2002 Interim Result Financial results
Slide 13: Solid Balance Sheet
Solid Balance Sheet A$ million Dec-01 Jun-01 Dec-00 % YoY change Net debt 1,056 983 854 24% D/E 55% 53% 47% - D/(D+E) 35% 35% 32% - Interest 31.5 32.5 37.2 (15%) Interest cover 5.1 x 4.3 x 4.9 x - Funds employed 2,972 2,837 2,689 11% ROFE (annualised) 10.8% 7.7% 11.4% NTA/share $2.94 $2.89 $2.86 200
Slide 14: Strong growth in offshore businesses
Strong growth in offshore businesses Sales, A$ million Dec-01 Dec-00 % YoY change Australia 1,289 1,261 2% USA 413 368 12% Other overseas 28 21 33% Discontinued 2 4 - Total 1,732 1,654 5% EBIT, A$ million Australia 97.8 99.6 (2%) USA 59.2 57.2 4% Other overseas 10.4 (0.6) - Corp. / Other (6.3) (3.5)
Slide 15: Underlying operating profits improving
Underlying operating profits improving Sales, A$ million Dec-01 Dec-00 % YoY change Building Products 490 527 (7%) Construction Materials 826 755 10% USA 413 368 12% Other 2 4 - Total 1,732 1,654 5% EBIT, A$ million Building Products 45.3 45.2 0% Construction Materials 62.9 53.8 17% USA 59.2 57.2 4%
Slide 16: Building Products generally stronger
Building Products generally stronger Results: Share of HY02 Revenue Sales down 7% to $490m EBIT steady at $45.3m Plasterboard Bricks EBITDA down 3% to $67m EBIT margin from 8.6% to 9.2% Funds employed Timber Roofing up 20% to $1,011m ROFE at 9.0% (annualised) Masonry Windows PEP & cost savings of $2
Slide 17: Building Products generally stronger
Building Products generally stronger • Dwelling approvals & commencements up 48% and 26% respectively compared with Dec 00 half • Dwelling value of work done up 10% compared with Dec-00 half • Boral’s order books/deliveries strengthened in Dec quarter • During the period prices • strengthened for so
Slide 18: Asia Plasterboard JV performing well
Asia Plasterboard JV performing well • JV net profit of $10.6m for Boral compared to $10m loss two years ago • Finalised acquisition of 71% of Siam Gypsum in Thailand; integration proceeding well • South Korea performing well • 30m m2 plant relocated from Shanghai to Seoul; Korean market growth just
Slide 19: Strong turnaround & potential in Asia
Strong turnaround & potential in Asia Asia EBIT 15 (Plasterboard & Indonesian Concrete) 10 EBIT A$ million 5 0 1H99 2H99 1H00 2H00 1H01 2H01 1H02 -5 -10 -15 -20 2002 Interim Result Segment overview – Building Products
Slide 20: Better performance from Construction Materials
Better performance from Construction Materials Results: Share of HY02 Revenue Sales up 10% to $826m Quarries Cement division EBIT up 17% to $62.9m EBITDA up 11% to $111m Contracting EBIT margin from 7.1% to 7.6% QEU Funds employed Transport Concrete up 4% to $1,359m ROFE at 9.3% (annualised) Asphalt
Slide 21: Better performance from Construction Materials
Better performance from Construction Materials • 2% rise in non-dwellings; 2% decline in RH&S activity in Australia compared with Dec-00 half • $12.8m EBIT from QEU • Prices steady in asphalt, quarries and cement; down in ready- mix concrete & scaffolding during the period • Concrite acquisition com
Slide 22: Greystanes progressing well as part of QEU
Greystanes progressing well as part of QEU NEL* – first sales NEL* – first sales • Sold in FY2001 • Further sales in FY2002 – FY2003 NEL* – first sales SOLD • Sold 1H FY2002 SOLD SEL* Residential • Precinct plan approved Development • Site of current quarry • Staged operations subdivision • Developm
Slide 23: USA steady despite economic uncertainty
USA steady despite economic uncertainty Results: Share of HY02 Revenue Sales up 5% to US$211m (A$413m) Bricks EBIT down 4% to US$30.2m (A$59.2m) EBITDA down 2% to US$42.1m (A$82.3m) EBIT margin from 15.5% to 14.3.% Funds employed up 6% to US$377m Construction materials ROFE at 16.0% (annualised) Cla
Slide 24: USA steady despite economic uncertainty
USA steady despite economic uncertainty • Housing construction up 2.5% compared with Dec-00 half • 37% Boral earnings now from USA • US bricks continues to perform strongly • Price increases for bricks and roof tiles • Energy costs high • Restructuring costs in MonierLifetile and BMTI • MonierLifeti
Slide 25: Good growth in USA profits
Good growth in USA profits 70 USA EBIT 60 50 EBIT A$ million 40 30 20 10 0 96 96 97 97 98 98 99 99 00 00 01 01 02 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2002 Interim Result Segment overview - USA
Slide 26: Boral's Strategic Intent
Boral’s Strategic Intent Boral intends to be a value-driven, focused building and construction materials supplier operating in Australia and increasingly offshore Financial Objectives 1. Exceed the weighted average cost of capital (WACC) on a sustainable basis through the building cycle 2. Beat the
Slide 27: Boral is delivering improved shareholder returns
Boral is delivering improved shareholder returns • Earnings per share of 16.2 cents • Dividend of 9.0 cents for half year • Franking maintained 35% level • Dividend yield, averaging 5.8% for six months to Dec-01 • DRP continuing to operate for interim dividend • Share price up from $2.28 at demerger
Slide 28: Boral's strategy is to perform & grow around leading positions
Boral’s strategy is to perform & grow around its leading reserve and market positions ASIA Plasterboard* Indonesia #1 USA Malaysia #1 Bricks #1 China (east) #1 Roof tiles #1 Korea #1 Fly ash #2 Thailand #1 The Philippines #1 Indonesia concrete #1 AUSTRALIA Cement #1 Concrete #1 Quarries #1 Asphalt #
Slide 29: Boral's strategy is to perform & grow
Boral’s strategy is to perform & grow Since Demerger Acquisitions/Growth capex Divestments Europe Europe Bricks, Europe Calcit Quarry Services & Eng’g Melocco Vic & NSW, Tyres Building products Windows Lineals & Extrusions, Building Products NZ, Southport Ceramics Timber Oberon Softwood JV (with CHH
Slide 30: Second half outlook – improving markets
Second half outlook – improving markets • Increased Australian housing commencements should impact favourably • Australian construction materials markets (non-dwelling and RH&S) flat • Strengthening Asian plasterboard markets (but seasonally weaker) • US volumes remaining strong (but seasonally weak
Slide 31: Growth ahead in Australia
Growth ahead in Australia ANNUAL VALUE OF WORK DONE – AUSTRALIA ($99/00 $m) 50,000 40,000 Roads, Hwys, Sub’s & Bridges 30,000 Non-Dwellings 20,000 A&A 10,000 Dwellings - 97 98 99 00 01 E F F F F 03 04 05 06 02 FY FY FY FY FY FY FY FY FY FY Source: Australian Bureau of Statistics, BIS Shrapnel foreca
Slide 32: Strong markets in USA
Strong markets in USA VALUE OF WORK COMMENCED IN USA "BRICK STATES*” 100 1992 US$ billion (real) 75 50 25 0 95 96 97 98 99 00 01 F F E 04 03 02 FY FY FY FY FY FY FY FY FY FY * Brick States: Alabama, Arkansas, Carolinas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi,
Slide 33: Outlook – Financial Year 2002
Outlook – Financial Year 2002 • Second half revenues to significantly exceed last year • Traditionally a weaker second half but relatively strong underlying profit anticipated in Australia • Seasonally weaker Asian plasterboard & USA profits • QEU should achieve another $12 million profit in June ha
Slide 34: 2002 Interim Results
2002 INTERIM RESULTS 13 February 2002 2002 Interim Result