Fletcher Building Limited · NZX:FBU
Fletcher Building — ABN-AMRO NZ Day 2008
41 slides from Fletcher Building's conference presentation, Mar 4, 2008
Slide 1: Fletcher Building – ABN-AMRO NZ Day
| | Building 7, > a ce z | ol ef ae N S LL F © S j=) N ac O [a < = = SS Ww z a) > ”n O r = ¢< z 0 < \ Jonathan Ling Chief Executive Office
Slide 2: Disclaimer
2 Disclaimer For personal use only 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: Company Overview
COMPANY For personal use only OVERVIEW ABN-AMRO NZ Day 4 March 2008
Slide 4: Australasia's largest building and construction materials supplier
4 Fletcher Building is Australasia’s largest building and construction materials supplier, by market For personal use only capitalisation, with leading market positions in USA and Europe Countries: Operations in 11 countries Annual Turnover: NZ$7+ billion Market Capitalisation: NZ$4.8 billion Dual L
Slide 5: Market leading businesses
5 Market leading businesses For personal use only Building Laminates Distribution Infrastructure & Panels Steel Products Revenue - 11% Revenue - 16% Revenue - 26% Revenue - 30% Revenue - 17% Plasterboard Building Materials Construction The Laminex Group Rollforming Insulation Distribution Concrete
Slide 6: Diversification of revenue is improving
6 Diversification of revenue is improving For personal use only Revenue by Region Revenue by Division Percentage Percentage 60 32 Formica 30 52 26 35 20 19 30 17 17 16 12 11 7 6 3 2 3 1 0 1 17% NZ Australia Nth Europe Asia Other Building Distribution Infrastructure Laminates Steel America Products &
Slide 7: Our strategic agenda
7 Our strategic agenda For personal use only Earnings Reliability Internal Growth External Growth ABN-AMRO NZ Day 4 March 2008
Slide 8: Record earnings & EPS achieved over previous period
8 Record earnings & EPS achieved over previous period For personal use only $m % 1H08 1H07 Sales 19 3,547 2,980 EBITDA 17 490 418 EBIT 16 394 340 Net Earnings 22 235 193 EPS (cps) 14 47.0 41.1 Dividend (cps) 9 24.0 22.0 ABN-AMRO NZ Day 4 March 2008
Slide 9: Market Forecasts
MARKET For personal use only FORECASTS ABN-AMRO NZ Day 4 March 2008
Slide 10: New Zealand - Volume of work commenced
10 New Zealand - Volume of work commenced For personal use only Residential consents $m 1995/96 Infrastructure WPIP prices -9% +12% +3% +4% +7% +1% 40000 -6% +10% 6000 +9% +6% 30000 4000 20000 10000 2000 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2004 2005 2006 2007 2008 2009 2010 2011 2012 $m
Slide 11: Australia - Volume of work commenced
11 Australia - Volume of work commenced For personal use only $bn 2004/05 Residential approvals prices Infrastructure WPIP '000s +13% +3% +7% 0% +3% 150 250 +7% +9% 200 +1% 100 150 100 50 50 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Residential incl A&A WPIP
Slide 12: USA - Volume of work commenced
12 USA - Volume of work commenced For personal use only Housing starts Infrastructure WPIP '000s $bn real prices 2500 +3% +19% 90 -1% -1% -1% +1% 2000 +15% 88 1500 -12% 86 1000 84 500 82 0 80 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Residential WPIP Non Residen
Slide 13: Growth
GROWTH For personal use only ABN-AMRO NZ Day 4 March 2008
Slide 14: Growth projects: Internal pipeline remains strong
Growth projects: Internal pipeline remains strong For personal use only Building Products • New Christchurch distribution centre underway • Furnace rebuild at Auckland glasswool plant in progress • Completion of Hungarian roof tile plant in 2009 HISTORICAL CAPEX SPEND* Distribution $million • Upgrad
Slide 15: Divisional Reviews
DIVISIONAL For personal use only REVIEWS ABN-AMRO NZ Day 4 March 2008
Slide 16: Earnings for all divisions increased in the first half
16 Earnings for all divisions increased in the first half despite challenging market conditions For personal use only 145 $m Dec 2007 122 Dec 2006 * 91 74 72 65 47 46 42 39 Building Products Distribution Infrastructure Laminates & Panels Steel +2.8% +7.7% +18.9% +40% +2.2% * Includes Formica acquire
Slide 17: Building Products
Building Products For personal use only Plasterboard • Leading NZ market position Historical earnings Insulation 180 35.0 • No.1 in Australasia with 60% of Australian 160 30.0 EBITDA margin (%) and 70% of NZ bulk insulation market 140 25.0 EBITDA ($M) 120 100 20.0 Metal Roof Tiles 80 15.0 • Largest
Slide 18: Building Products
Building Products For personal use only Plasterboard $m % 1H08 1H07 • Business stable Sales × 9.3 376 344 Insulation EBIT × 2.8 74 72 • Overall strong despite NSW weakness Metal Roof Tiles Margin % Ø -5.7 19.7 20.9 • Strong volumes offset by FX translation Funds × 2.7 572 557 Other • Moulding busine
Slide 19: Building Products – Growth drivers
Building Products – Growth drivers For personal use only Plasterboard • Performance boards • Increasing average house size • Air quality Insulation • Energy efficiency • Regulations Metal Roof Tiles • Japan/Europe penetration ABN-AMRO NZ Day 4 March 2008
Slide 20: Distribution – PlaceMakers
Distribution – PlaceMakers For personal use only • 62 outlets across New Zealand • 34% market share trade of core building Historical earnings materials 100 10.0 90 • No.1 in key building materials 80 EBITDA margin (%) 70 EBITDA ($M) • Trade focus – 80+% of sales 60 50 5.0 • Joint Venture rather tha
Slide 21: Distribution
Distribution For personal use only Market Activity $m % 1H08 1H07 • Competitive period for market Sales × 9.1 565 518 Market Share EBIT × 7.7 42 39 • Remained stable despite pressure Margin % Ø 1.3 7.4 7.5 Earnings Funds × 12.1 167 149 • Sales up 9%, margins held up well Return on Funds % Ø 3.8 50.3
Slide 22: Distribution – Growth drivers
22 Distribution – Growth drivers For personal use only • Joint Venture partner model • Acquisition of independents • New store locations • Store upgrade / enhancement • Product extensions e.g. kitchen components ABN-AMRO NZ Day 4 March 2008
Slide 23: Infrastructure
Infrastructure For personal use only Market Shares Concrete Historical earnings • 25% of NZ aggregates market 350 20.0 • 50% of NZ cement market 300 • 33% of NZ readymix concrete market EBITDA margin (%) 15.0 250 EBITDA ($M) • 35% of Australian concrete pipe market 200 10.0 • 55% of NZ pre-cast and
Slide 24: Infrastructure – Concrete & Construction
24 Infrastructure – Concrete & Construction For personal use only H1 2008 Concrete H1 2008 Construction Revenue by Business Revenue by Segment South Residential Pacific 14% 7% Rocla Pipeline Readymix 32% 36% Engineering 30% General Other Building Rocla 2% 49% Quarries 8% Cement Aggregate 14% 8% ABN-
Slide 25: Infrastructure
Infrastructure For personal use only Quarries $m % 1H08 1H07 • NZ volumes down 4% Sales Ø 4.3 921 962 • Rocla earnings +25% Cement EBIT × 18.9 145 122 • Volumes and earnings stable Margin % × 23.6 15.7 12.7 Construction • Earnings increased vs pcp Funds × 14.3 879 769 • Backlog over $1 billion Other
Slide 26: Infrastructure – Growth drivers
Infrastructure – Growth drivers For personal use only Cement • Productivity improvements from recent kiln upgrade Aggregates • Geographic expansion e.g. Cameron's • Quarry end use Construction • Over NZ$1 billion backlog of work ABN-AMRO NZ Day 4 March 2008
Slide 27: Laminates & Panels
Laminates & Panels For personal use only • Leading high pressure laminate and decorative surfaces Historical earnings • Decorated board – No.1¹ 200 20.0 180 • Medium density fibreboard – No.2¹ EB IT DA m argin (% ) 160 15.0 140 EB IT DA ($M) • Particleboard – No.2¹ 120 100 10.0 • Over 50 owned distr
Slide 28: Laminates & Panels (including Formica)
Laminates & Panels (including Formica) For personal use only Australia $m % 1H08 1H07 • Good sales growth, margins competitive New Zealand Sales × 94.2 1,074 553 • Strong sales despite loss of Taupo EBIT × 40.0 91 65 Formica • Integration continues Margin % Ø 28.0 8.5 11.8 Other • Penrose hardboard
Slide 29: Laminates & Panels – Growth drivers
Laminates & Panels – Growth drivers For personal use only Laminex • Product extension e.g. componentry • Particleboard upgrade • HPL sourcing from Asia Formica • USA manufacturing consolidation • Asian sourcing solid surfaces • Asian and Eastern European growth • Laminex / Formica synergies Source:
Slide 30: Laminates & Panels: Formica's contribution
Laminates & Panels: Formica’s contribution For personal use only Market Activity US$m • Demand remained strong in Asia and Europe • North American demand reduced re credit Sales 404 issues HPL sourcing Normalised EBITDA 40.8 • Australia is now sourcing HPL product from Asia • Will reduce manufacturi
Slide 31: Steel
Steel For personal use only Rollforming & Steel Painting • 30% of Australian market – Stramit Historical earnings – Dimond 120 15.0 100 EBITDA margin (%) Long Steel Products EBITDA ($M) 80 10.0 • >80% of NZ market 60 • Reinforcing bar, flats, rod and wire 40 5.0 • 50% Sims Pacific Metals 20 • NZ’s s
Slide 32: Steel
Steel For personal use only Rollforming $m % 1H08 1H07 • Stramit, Dimond and Pacific Coilcoaters Sales × 1.5 611 602 improved earnings EBIT × 2.2 47 46 Long Steel • Earnings down slightly on pcp Margin % × 1.3 7.7 7.6 • Significant improvement on last 6 months Funds × 14.3 542 474 Steel Merchants Re
Slide 33: Steel – Growth drivers
Steel – Growth drivers For personal use only Rollforming • Production extension – pre-engineered building • Industry rationalisation Long Steel • Industry rationalisation • Capacity utilisation/expansion • Export growth Source: Infometrics BIS Feb 08 ABN-AMRO NZ Day 4 March 2008
Slide 34: Financials
FINANCIALS For personal use only ABN-AMRO NZ Day 4 March 2008
Slide 35: Net earnings increased 21.8% from the previous period
35 Net earnings increased 21.8% from the previous period For personal use only $m % 1H08 1H07 EBIT × 15.9 394 340 Interest × 48.9 67 45 Tax Ø 9.8 83 92 Minority Interest Ø 10.0 9 10 Net Earnings × 21.8 235 193 ABN-AMRO NZ Day 4 March 2008
Slide 36: Balance Sheet
36 Balance Sheet For personal use only $m % 1H08 1H07 Operating Cashflow × 7.9 245 227 Net Debt (ND) × 148.9 1,628 654 Net Debt / Equity % × 7.0 39.7 37.1 Interest Cover Ø 21.5 7.3 x 9.3 x Return on Funds % Ø 21.8 20.4 26.1 ABN-AMRO NZ Day 4 March 2008
Slide 37: Net debt movement
For personal use only 0 1200 1600 NZ$ m 2000 400 800 Opening debt 654 Cash from ops ABN-AMRO NZ Day 4 March 2008 (337) Working capital 92 Net debt movement Capex 140 Acquisitions 990 Divestments (37) Dividends 96 Min Distn 18 FX on debt 12 Actual debt 31 Dec 07 1,628 37
Slide 38: Outlook
OUTLOOK For personal use only ABN-AMRO NZ Day 4 March 2008
Slide 39: Outlook for next few years market activity
Outlook for next few years market activity For personal use only New Zealand • Strong infrastructure market • Steady non-residential, offsetting expected weakness in residential markets Australia • Residential expected to remain steady • Non-residential and infrastructure activity declining US • Sig
Slide 40: Outlook 2008
Outlook 2008 For personal use only Markets • Economic uncertainty in key markets complicates forecasting financial performance Formica • Continued focus on integrating Formica with existing business lines • Completion of restructuring and profit improvement projects • Realisation of expected synergi
Slide 41: For personal use only
a, Building ‘* ABN-AMRO NEW ZEALAN NN \ SYDNEY 4 MARCH 2008