Boral — FY2008 Earnings Presentation
23 slides from Boral's earnings presentation, Aug 19, 2008
Slide 1: Results for the Full Year to 30 June 2008
RESULTS FOR THE FULL YEAR TO 30 JUNE 2008 CEO & MANAGING DIRECTOR, ROD PEARSE 19 AUGUST 2008 Construction of EastLink, Melbourne Agenda Financial Highlights and Markets Review Financial Results Divisional Performance Perform & Grow Strategy Outlook Results for the full year to June 2008 2
Slide 2: Financial highlights & markets review
Financial highlights & markets review New plasterboard plant, Pinkenba, Brisbane FY2008 Financial results Revenue 6% to $ 5.2b EBITDA1 10% to $ 688m EBIT1 16% to $ 448m Net Interest 1% to $ 112m Underlying profit after tax1 17% to $ 247m Profit after tax 19% to $ 243m Underlying EPS1 17% to 41.4 cen
Slide 3: Solid lift in Australian EBITDA offset by decline in offshore EBITDA
A solid lift in Australian EBITDA ( $52m) was offset by a large decline in offshore EBITDA ( $123m) EBITDA (A$m) FY2007 FY2008 Construction Building Materials Products USA Asia $35m (8%) $17m (11%) $118m (91%) $5m (22%) 489 454 151 168 129 11 21 16 High levels of non- Lift in Qld & SA, 27% red
Slide 4: Australian dwelling approvals and under-building by state
Dwellings remained particularly weak in NSW and weakened further in WA detached Percentage change in dwellings approvals and non-dwellings value of work approved – FY2008 vs FY2007 Detached Multi-dwellings Non-dwellings 36% 24% 24% 21% 9% 10% 9% 7% 7% 3% 5% 4% 3% -1% 0% -1% -5% -13% Australia NSW Vi
Slide 5: Concrete demand increased; US housing market downturn
Concrete demand increased (except in NSW), underpinned by strong non-dwellings and RHS&B Readymix concrete production1 Changes in Australian readymix concrete (MAT, January 1999 to June 2008, ‘000) production1 – FY2008 vs FY2007 ‘000 cubic metre change Percentage change 9,000 Qld 8,000 Qld 917 7,000
Slide 6: Housing starts in Brick and Tile states
Housing starts in Brick states fell by 29% in the year, this follows a 21% decline in FY2007 % change in Dwellings Starts FY2008 vs FY2007 MI 1 to 20% IA 0 to -9% OH IL IN MD -10 to -14% KS MO WV KY VA -15 to -19% OK TN -20 to -24% AR NC -25 to -29% SC MS GA -30 to -34% TX LA AL -35 to -44% Boral Br
Slide 7: Financial results
Non-dwelling activity in Colorado and Oklahoma was well down % change in Non-dwellings VWC FY2008 vs FY2007 1 to 20% 0 to -9% CO -10 to -14% VA -15 to -19% OK AZ -20 to -24% GA -25 to -29% TX -30 to -34% FL -35 to -44% -45 to -54% BMTI key market Construction Materials operations Source: Non-dwellin
Slide 8: Underlying profit after tax down 17% for the full year
Underlying profit after tax down 17% for the full year Dec-07 Jun-08 A$m FY2008 FY2007 %∆ half half Revenue 2,626 2,573 5,199 4,909 6 EBITDA1 360 328 688 762 (10) EBIT1 240 208 448 531 (16) Net Interest (57) (55) (112) (111) 1 Profit before tax1 183 153 336 420 (20) Tax1 (51) (39) (90) (122) (26) Un
Slide 9: Margin pressures due to US housing decline and low NSW activity
Margin pressures due to significant US housing decline and low NSW activity EBIT / Sales EBITDA / Sales 20% 20% 16% 16% 1 13.2% 12% 12% 1 8.6% 8% 8% 4% 4% 0% 0% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 1. Excluding significant items. Note - FY05 resul
Slide 10: Balance sheet remains in good shape with strong cash flows
Boral’s balance sheet remains in good shape with strong cash flows As at June-08 June-07 A$m Cash flow from operating activities 582 482 Net debt 1,515 1,482 Net debt / equity 52% 50% Net Interest cover1 4.0 x 4.8 x Funds employed 4,425 4,470 Return on funds employed1 10.1% 11.9% Return on equity1 8
Slide 11: Dividends and franking maintained; sustainability performance
Boral’s dividends and franking have been maintained despite the cyclical earnings pressure Cents / share 64 63 62 Dividend Gross DPS EPS 50 49 49 49 49 49 43 41 34 30 32 26 27 24 21 18 18 34 34 34 34 30 23 18 18 18 19 1 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 1. Underlying EPS - Excluding
Slide 12: Construction Materials: EBITDA up 8%
Divisional performance Construction of Gateway Bridge, Brisbane Construction Materials: EBITDA up 8% driven by improved pricing and stronger volumes EBITDA A$m EBITDA / sales A$m FY08 FY07 %∆ 500 24% Sales 2,960 2,549 16 450 20% EBITDA 489 454 8 400 350 16% EBIT 351 318 10 300 Funds employed 2,310 2
Slide 13: Construction Materials revenues up 16%
Construction Materials revenues up 16% underpinned by a lift in infrastructure & non-dwellings and stronger pricing Ext. sales FY08 FY07 %∆ volume ∆ price ∆ EBITDA ∆ A$m Cement1 566 477 19 Concrete & 1,512 1,354 12 Quarries Asphalt 648 515 26 QEU 181 118 53 Other2 53 85 TOTAL 2,960 2,549 16 1. Cemen
Slide 14: Building Products revenues up 6%; USA EBITDA down 90%
Building Product revenues up 6%; stronger pricing & higher volumes in Qld & SA offset weakness in WA Ext. sales FY08 FY07 %∆ volume ∆ price ∆ EBITDA ∆ A$m Bricks 307 305 1 Roofing 120 108 11 Masonry 122 119 3 Plasterboard 376 351 7 Timber 273 247 11 Windows 159 145 9 TOTAL 1,357 1,275 6 Results for
Slide 15: USA: revenues down due to housing volumes
USA: revenues down due to significant decline in housing related volumes Ext. sales FY08 FY07 %∆ volume ∆ price ∆ EBITDA ∆ US$m US Bricks 346 478 (28) Clay Tiles 25 27 (8) Concrete Tiles1 Fly Ash 111 116 (4) Construction 125 78 61 Materials2 TOTAL 607 699 (13) 1. MonierLifetile JV is equity accounte
Slide 16: Asia EBIT down $5m
Asia EBIT down $5m; improved LBGA result offset by lower earnings from Construction Materials EBIT1 EBIT / Sales1,2 A$m 30.0 15% Plasterboard JV after tax contribution3 of $18.1m up 12% 20.0 10% Growth and improved market 10.0 5% conditions in key plasterboard markets including Korea, Thailand,
Slide 17: Perform & Grow strategy is delivering value through the cycle
Boral’s Perform & Grow strategy is delivering value through the cycle Price Price • Sustainable pricing outcomes management management • Fuel levies introduced in some businesses Revenue • New products & markets (eg. engineered Revenue flooring, plasterboard systems, concrete enhancement enhancement
Slide 18: Growth capex by segment since demerger
Boral’s Perform & Grow strategy is delivering value through the cycle PERFORM PERFORM Australian Australianorganic organic growth • Growth capex ($327m in FY08) has been growth invested across Boral’s portfolio Australian Australian • Over time Boral’s growth portfolio is GROW GROW acquisition acqui
Slide 19: $327m of growth capital invested during FY2008
$327m of growth capital invested during FY2008 to strengthen Boral’s leading positions Asia Plasterboard1 plants (total investment): South Korea US$42m India & Chengdu US$28m Australia USA New Queensland plasterboard Oklahoma concrete & quarries plant net ~$119m acquisitions US$84m Asphalt
Slide 20: Outlook
LBGA JV investment - US$48m (total) on new plasterboard plant in China New US$48m plant in Baoshan, Shanghai New plant to be – 34m m2 p.a. initially, site flexibility to built in Shanghai substantially increase capacity – Strengthens LBGA’s leading position China in East China; positions business
Slide 21: Australian residential starts around the bottom of the cycle
Australian residential starts continue to be around the bottom of the cycle (BIS Shrapnel) Australian dwelling starts by state1 (‘000) 200 Australia 160 120 80 60 NSW 50 Vic Qld 40 30 WA 20 SA 10 Other2 0 FY08f FY09f FY10f FY11f FY12f FY13f FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00
Slide 22: Australian markets forecast to grow ~5% in FY2009
Australian markets forecast to grow ~5% in FY2009 Australian Building Activities – Value of Work Done1 % change $97/98 billion 65 4.8 (0.4) 5.8 60 2.7 3.4 4.8 2.6 9.3 RHS&B 55 2.3 (1.7) 50 45 (1.1) Non-dwelling (2.1) 40 (3.0) (2.2) 1.2 35 30 25 20 7.4 (1.1) Dwelling2 11.9 15 8.5 8.4 10 5 0 FY09f FY1
Slide 23: Outlook for FY2009
Asian construction demand expected to grow SOUTH KOREA THAILAND INDONESIA CHINA - EASTERN Value of construction orders Gross fixed capital Value of completion. Total building received. Trillion Won1 formation. Billion Bhat1 Trillion Rp1 commencements. Million m2 120 1,000 100 1,400 900 90 100 1,200