Fletcher Building Limited · NZX:FBU
Fletcher Building — Macquarie Australia Conference 2014
27 slides from Fletcher Building's conference presentation, May 7, 2014
Slide 1: Macquarie Australia Conference
For personal use only Macquarie Australia Conference May 2014 Nick Olson – Chief Financial Officer
Slide 2: Disclaimer
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 diff
Slide 3: Presentation outline
Presentation outline For personal use only Fletcher Building at a glance Markets Overview/Sector exposure Update on key issues FBUnite Canterbury Rebuild Residential Strategy Financial Management setting Capex and working capital Dividends and Capital Management Strategy Outlook 3 Fletcher
Slide 4: Fletcher Building at a glance
Fletcher Building at a glance For personal use only Revenue – 12 months to 30 June 2013: NZ$8,517m Market Capitalisation¹: NZ$6.7Bn Employees: 18,800 • Shareholders Revenues EBIT (as at Dec 2013) (6 months to Dec 2013) (6 months to Dec 2013) 4% 8% 13% 13% 14% 44% 47% 28% 59% 40% 30% New Zealand Aust
Slide 5: Fletcher Building Overview
Fletcher Building Overview For personal use only Fletcher Building is an integrated manufacturer and distributor of infrastructure and building products, as well as a construction company Infrastructure Building Laminates Distribution Construction Products Products & Panels Cement Building Materia
Slide 6: Sectoral exposure
Sectoral exposure For personal use only Exposures based on revenues Residential Commercial & Infrastructure (New/A&A)* Government (Rural/Mining) Geographical Exposure by Sector¹ New Zealand 46% 38% 16% Australia 52% 27% 21% Rest of World 40% 59% 1% Total 47% 39% 14% 1. Excludes NZ and Australian Dis
Slide 7: New Zealand residential consents up 29% while net migration is at a 10 year high
New Zealand residential consents up 29% while For personal use only net migration is at a 10 year high Total residential consents 12 month Net Migration 12 month rolling - rolling – New Zealand New Zealand 23,000 Long term average (2001-2013) 35,000 22,000 30,000 21,000 25,000 20,000 20,000 19,000 1
Slide 8: Australian residential consents continue to be driven by increases in multi-unit dwellings
Australian residential consents continue to be For personal use only driven by increases in multi-unit dwellings Total residential consents 12 month Housing approvals – by state rolling – Australia 200,000 30,000 25,000 160,000 20,000 120,000 15,000 80,000 10,000 5,000 40,000 - NSW VIC QLD WA 0 Jun-
Slide 9: Australian manufacturing businesses
Australian manufacturing businesses For personal use only Key sector exposures Roofing Sheds + MDF + Particleboard Glasswool Concrete Products Plastic Pipes Commercial High pressure Insulation structures Laminate Rail, roads and New residential New residential New residential New residenti
Slide 10: Update on Key Issues
Update on Key For personal use only Issues CSP Pacific streetlight columns, Auckland
Slide 11: FBUnite: Business Transformation Programme
FBUnite: Business Transformation Programme For personal use only Total benefits arising from FBUnite expected to be approximately $100m p.a. Benefits should become evident in FY15 Capital and operating expenditure will be incurred in FY14 which will offset early benefits FBUnite is a multi-yea
Slide 12: FBUnite Update: Procurement & Financial Shared Services
FBUnite Update: For personal use only Procurement & Financial Shared Services Procurement Full team in place Focus has been on indirect cost items – key categories addressed so far include: − Temporary labour − Transport – fleet and mobile plant − IT − Corporate Services − Raw Materials Financia
Slide 13: FBUnite Update: Property
FBUnite Update: For personal use only Property Centralised property team in place Global database of all owned & leased properties completed Profile of forthcoming lease renewals helping in planning Working with business units to determine ongoing premises requirements A number of lease re
Slide 14: FBUnite Update: Operations Excellence
FBUnite Update: For personal use only Operations Excellence Programme has been structured around 2 key steams of work: Manufacturing Excellence Focus on key manufacturing sites & processes “Model lines” identified across NZ & Australia Rollout of 10 Pillar methodology underway to all manufactu
Slide 15: FBUnite Update: Devolved IT Operations
FBUnite Update: Devolved IT Operations had For personal use only lead to diverse systems and processes 5 DIVISIONS WITH MULTIPLE BUSINESS UNITS No Group IT function No over-arching IT direction or 26 IT ORGANISATIONS strategy Inconsistency with regard to technology standards 21 PAYROLL SYSTEMS
Slide 16: FBUnite Update: IT Strategy
FBUnite Update: For personal use only IT Strategy Group CIO, Carl Powell, commenced in December 2013 Review of IT systems completed, together with future state roadmap Go forward strategy focused on 3 key areas: INTEGRATING THE GET DIGITAL IT OPERATING MODEL ENTERPRISE ORGANISATIONAL EXCELLENC
Slide 17: Canterbury update
Canterbury update For personal use only Fletcher EQR 54,000 full scope home repairs completed out of estimated 70,000 $1.8 billion of work completed Canterbury Home Repair Programme to be completed by December 2014 Horizontal Infrastructure Repairs Fletcher Building is one of 5 contractors r
Slide 18: Residential strategy update
Residential strategy update For personal use only Stonefield development will be largely built out by end of FY15 Three Kings – former quarry in Auckland – is expected to come on stream late FY16 and FY17 Land acquisition has increased in Auckland for future development New sites also contra
Slide 19: Capital Expenditure and Working Capital update
Capital Expenditure and Working Capital update For personal use only Capital expenditure Previous guidance was around $250m for FY14 Likely to underspend due to timing of projects Strong NZ$ relative to A$ impacting favourably on capex and depreciation Beyond FY14, some uplift in capex likel
Slide 20: Capital management
Capital management For personal use only Fletcher Building continues to target strong ‘BBB’ credit characteristics Gearing Target of Net Debt to Net Debt + Equity (including Capital Notes) of 30-40% Leverage Target Net Debt to EBITDA of 2.0 to 2.5 times It is intended that the group will not be
Slide 21: Strategy summary
Strategy summary For personal use only Value-creation through margin improvement, disciplined capital allocation, and active portfolio management Most businesses in the portfolio have potential for continued organic growth and delivery of positive returns. Focus for these businesses will be impr
Slide 22: Outlook
Outlook For personal use only Formica DecoMetal® laminate, Heathrow Airport
Slide 23: Outlook FY14
Outlook FY14 For personal use only New Zealand Level of house building activity expected to continue to underpin trading results Repair of houses and infrastructure in Canterbury will also boost activity levels Improved outlook for commercial construction nationally, particularly in Christchur
Slide 24: Outlook FY14
Outlook FY14 For personal use only Asia Commissioning of new Formica plant in China will impact operational results for FY14, despite increased volumes Mixed operating conditions across Asia North America Increases in new housing construction expected to benefit Formica Key commercial market
Slide 25: Strength of NZ$ to A$ and US$ has continued to impact earnings
Strength of NZ$ to A$ and US$ has continued to For personal use only impact earnings First half operating earnings were up 18% when currency impacts are excluded Revenue (6 months ended 31 Dec) EBIT (6 months ended 31 Dec) 18% 2% 42 281 4380 262 99 4273 239 (13) 4174 (10) NZ$million (206) Foreign cu
Slide 26: Financial outlook
Financial outlook For personal use only For FY14: No change to guidance given at Half Year results in February 2014 Operating earnings before significant items expected to be in the range of $610-$650m Assuming completion of the sale of Pacific Steel by 30 June 2014, a significant expense item
Slide 27: Fletcher Building – key listing information
Fletcher Building – key listing information For personal use only Listed on the New Zealand and Australian stock exchanges New Zealand • Largest listed company by market capitalisation on the NZX¹ Australia • Ranked #46 on the ASX¹ • Fletcher Building gained inclusion in the S&P/ASX 200 index in Mar
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