Boral — FY2001 Earnings Presentation
35 slides from Boral's earnings presentation, Aug 22, 2001
Slide 1: Boral achieves a full year profit of $153m in difficult trading conditions
Boral achieves a full year profit of $153m in difficult trading conditions Boral’s 2000/01 Full Year Results Rod Pearse 22 August 2001
Slide 2: Presentation outline
Presentation outline • Features of the year • Financial results • Segment overview x Building Products x Construction Materials x USA • Perform & Grow Strategy • Outlook NOTE: Prior corresponding periods are based on proforma accounts Presentation outline
Slide 3: Major downturn – activity down by 22%
Major downturn – activity down by 22% QUARTERLY VALUE OF WORK DONE – AUSTRALIA (trend) 12,000 10,000 $98/99 ($000) 8,000 6,000 Dwellings 4,000 Non-Dwellings 2,000 Roads, Hwys, Subdivisions 0 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 n- n- n- n- n- n- n- n- n- n- n- n- n- n- n- Ju Ju Ju Ju Ju Ju J
Slide 4: USA residential building activity down 6%
USA residential building activity down 6% VALUE OF WORK DONE IN USA “BRICK STATES*” (seasonally adjusted) 100 1992 US$ million (real) 50 0 ) 98 99 00 89 90 91 92 93 94 95 96 97 (E FY FY FY FY FY FY FY FY FY FY FY FY 01 FY * Brick States: Alabama, Arkansas, Carolinas, Florida, Georgia, Illinois, Indi
Slide 5: Features of the year
Features of the year • Net PAT down 9.1% to $153.4m • $26.4m profit from disposal of Timber businesses • PAT (before profit on disposal of businesses) of $127.0m • Sales revenue down 18.2% to $3,280m due to sharp downturn in Australia • EBITDA to sales margin down marginally to 13.8% • Maiden EBIT o
Slide 6: Revenue and EBIT down due to Australian downturn and oil price impacts
Revenue and EBIT down due to Australian downturn and oil price impacts A$ million FY01 FY00 % change Sales revenue 3,280 4,012 (18%) EBITDA* 451 563 (20%) EBIT* 262 361 (27%) Profit before tax 232 238 (3%) Tax 78 70 12% Profit after tax 153 169 (9%) EBITDA/Sales 13.8% 14.0% * Excludes profit / (loss
Slide 7: Strong cyclical downturn impacted on revenues during the period
Strong cyclical downturn impacted on revenues during the period 2500 External Revenue ($ million) 1H 2H 2000 1500 1000 500 0 94/95 95/96 96/97 97/98 98/99 99/00 00/01 Results for reported building and construction materials businesses each year Financial results
Slide 8: Margins are holding better this cycle
Margins are holding better this cycle 12% EBIT/Sales % 16% EBITDA/Sales % 10% 14% 12% 8% 10% 6% 8% 4% 6% 4% 2% 2% 0% 0% 94 95 96 97 98 99 00 01 94 95 96 97 98 99 00 01 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY Results for reported building and construction materials businesses each year Financ
Slide 9: Improved operational performance offset significant volume and cost impacts
Improved operational performance offset significant volume and cost (fuel & energy) impacts $361 m $262 m FY00 Volume Price Shutdown Fuel & Other Operat’l Portfolio FX & FY01 EBIT Costs energy Costs Savings changes other EBIT Financial results
Slide 10: Significant gains from PEP and “step change” initiatives
Significant gains from PEP and “step change” initiatives SG&A Operational improvements 80 PEP 70 60 50 $ millions 40 30 20 10 0 Building Construction USA Support Services Products Materials Segment overview
Slide 11: Focused inventory management
Focused inventory management Finished goods for Australian businesses Finished Goods $’000 200 150 100 50 0 96 97 98 99 00 01 Ju 6 Ju 7 Ju 8 Ju 9 Ju 0 -9 -9 -9 -9 -0 n- n- n- n- n- n- ec ec ec ec ec Ju D D D D D Results for ongoing building and construction materials businesses - excludes discontinu
Slide 12: Sound balance sheet
Sound balance sheet A$ million FY01 FY00 % change Net debt 983 961 2% Interest 70 90 (22%) Net D/E % 53% 54% Net D/(D+E) % 35% 35% EBIT/interest 4.3 3.7 cover times NTA/share $2.89 $2.78 Financial results
Slide 13: USA EBIT up 2%, while Australian EBIT down 40%
USA EBIT up 2%, while Australian EBIT down 40% reflects a 22% decline in activity Sales, A$ million FY01 FY00 % change Australia 2478 3103 (20%) USA 756 662 14% Other overseas 41 103 (60%) Other 5 144 Total 3,280 4,012 (18%) EBIT, A$ million Australia 180 299 (40%) USA 99 98 2% Other overseas 2 (14)
Slide 14: Building Products and Construction Materials divisions reflect the effects of a heavy downturn
Building Products and Construction Materials divisions reflect the effects of a heavy downturn Sales, A$ million FY01 FY00 % change Building Products 963 1,438 (33%) Construction Materials 1,556 1,769 (12%) USA 756 662 14% Other 5 143 Total 3,280 4,012 (18%) EBIT, A$ million Building Products 66 118
Slide 15: Building Products’ revenue and EBIT down due to a 27% decline in housing activity
Building Products’ revenue and EBIT down due to a 27% decline in housing activity (VWD) Share of 2001 Results: Revenue Sales down 33% to $963m Australian Bricks EBIT down 44% to $66m Plasterboard EBITDA down 37% to $111m EBITDA margin from 12.3% to 11.6% Masonry Funds employed up 8% to $983m Timber
Slide 16: Building Products implemented strong inventory, price and cost controls
Building Products implemented strong inventory, price and cost controls • 27% decline in activity • Strong capacity and inventory management • Prices held for bricks, masonry, plasterboard, hardwood, plywood but down for softwood; margins held for roof tiles. • PEP and “step change” cost savings of
Slide 17: Asian Plasterboard JV off to an encouraging start after first year
Asian Plasterboard JV off to an encouraging start after first year of operation • $15.4m turnaround for Boral • JV delivered net profit of $2.8m for Boral • Improved results in South Korea and Indonesia • Stronger exports to the Philippines and Middle East • Capacity rationalisation and overhead cos
Slide 18: Construction Materials’ EBIT down 31% due to volume declines and higher fuel/bitumen costs
Construction Materials’ EBIT down 31% due to volume declines and higher fuel/bitumen costs Share of 2001 Results: Revenue Sales down 12% to $1,556m Quarries Asphalt QEU EBIT down 31% to $116m EBITDA down 21% to $211m Cement EBITDA margin from 15.1% to 13.5% division Funds employed up 5% to $1,286m C
Slide 19: Construction Materials close to bottom of cycle
Construction Materials close to bottom of cycle • 17% decline in non-dwellings and roads, h’ways & subdivisions • Prices down in pre-mix concrete and scaffolding; steady in asphalt and quarries; recovering in cement • PEP and “step change” cost savings of $70m • $10m lime kiln upgrade, increasing ca
Slide 20: Greystanes, the first major development of the new QEU business
Greystanes, the first major development of the new QEU business, has significant earnings for 5-8 years NEL* – first sales Retail Development • Subdivision work – complete • Current site of office 2001 • Staged subdivision • 10 superlots for subdivision from CY2002 • 5 lots sold in FY2001 • Planned
Slide 21: USA revenue steady but EBIT down due to energy costs and reduced volumes
USA revenue steady but EBIT down due to energy costs and reduced volumes Share of 2001 Results: Revenue Sales down 3% to US$402m (A$756m) Clay rooftiles Construction EBIT down 13% to US$53m (A$99m) materials EBITDA down 7% to US$76m (A$144m) EBITDA margin from 19.9% to 19.0% Funds employed up 8% to
Slide 22: Improved USA earnings due to steady performance and favourable exchange rate impacts
Improved USA earnings due to steady performance and favourable exchange rate impacts • Housing construction down 7%; brick volumes down 11% (severe winter) • Price increases for bricks and roof tiles • Gas & electricity costs reduced EBIT by US$15m • MonierLifetile performs strongly • Softening of f
Slide 23: 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 24: Boral is delivering improved shareholder returns
Boral is delivering improved shareholder returns • Earnings per share of 27.0 cents (29.7 cents in prior year) • Dividend of 18.0 cents for full year • Franking reintroduced at 35% level • Strong dividend yield, averaging 8.1% over last financial year • DRP to operate for final dividend • Strong sha
Slide 25: Boral’s strategy is to perform and grow around its leading reserve and market positions
Boral’s strategy is to perform and grow around its leading reserve and market positions ASIA Plasterboard* USA Indonesia #1 Bricks #1 Malaysia #1 Roof tiles #1 China (east) #1 Fly ash #2 Korea #1 Thailand #1 The Philippines #1 Indonesia concrete #1 AUSTRALIA Cement #1 Concrete #1 Quarries #1 Asphalt
Slide 26: Perform and grow around leading reserve and market positions - AUSTRALIA
Perform and grow around leading reserve and market positions - AUSTRALIA New QEU business CONCRITE TRANSFIELD Asphalt plant Growth in LIME market New Home AUSTRALIA Improvement Cement #1 Concrete #1 business Quarries #1 Asphalt #2 ALSAFE Bricks #1 Roof tiles #2 concrete Masonry #1 Plasterboard #2 Pe
Slide 27: Perform and grow around leading reserve and market positions - CONCRITE
Perform and grow around leading reserve and market positions - CONCRITE Kulnura Peats Ridge SYDNEY Brookvale Windsor Thornleigh Concrete Seven Hills Emu Artarmon Plains Blacktown Boral St Marys Rosehill Concrite Granville Auburn Enfield Greystanes St Peters Botany Liverpool Menai Quarries Hurstville
Slide 28: Perform and grow around leading reserve and market positions - ALSAFE
Perform and grow around leading reserve and market positions - ALSAFE Boral operates Alsafe as a second brand to retain the Concrete Quarries “independent” culture and minimise market share Boral leakage. Wollert Alsafe Somerton Cement Riddells Creek Woodend Somerton Bundoora MELBOURNE Keilor Nunawa
Slide 29: Perform and grow around leading reserve and market positions - USA
Perform and grow around leading reserve and market positions - USA USA BMTI (flyash) MonierLifetile Bricks #1 Clay Rooftiles Boral Bricks WA ME Roof tiles #1 MT ND VT NH Fly ash #2 OR MN ID WI NY MA SD MI WY RI IA PA CT NE OH NJ NV IL DE UT IN CO WV MD VA CA KS MO KY CLAY TILE NC upgrade OK TN AZ AR
Slide 30: Perform and grow around leading reserve and market positions - ASIA
Perform and grow around leading reserve and market positions - ASIA ASIA 30 million m2 Plasterboard* capacity expansion Indonesia #1 in KOREA Malaysia #1 China (east) #1 Rationalisation Korea #1 in SHANGHAI Thailand #1 Dubai Shanghai The Philippines #1 Indonesia concrete #1 Asia JV Manila SGI Bangko
Slide 31: Outlook – Australian housing market expected to improve
Outlook –Australian housing market expected to improve: construction materials and US to be steady • Australian markets at bottom • Signs of housing market recovery • Upturn in Australian Building Products in H2 of FY2002 • Australian Construction Materials markets - flat through FY2002 • US housing
Slide 32: BIS Shrapnel’s latest forecasts show Australian markets growing through to FY2006
BIS Shrapnel’s latest forecasts show Australian markets (VWD) growing through to FY2006 VALUE OF WORK DONE – AUSTRALIA (seasonally adjusted) 50,000 Forecast 40,000 $98/99 ($000) 30,000 Dwellings 20,000 10,000 Non-Dwellings Roads, Hwys, Subdivisions 0 FY (F) FY (F) FY (F) FY (F) ) 91 92 93 94 95 96 9
Slide 33: Strong markets in USA
Strong markets in USA VALUE OF WORK DONE IN USA "BRICK STATES*“ (seasonally adjusted) Forecast 100 1992 US$ million (real) 50 0 FY (E) F Y (F ) F Y (F ) F Y (F ) ) 89 90 91 92 93 94 95 96 97 98 99 F Y 00 (F FY FY FY FY FY FY FY FY FY FY FY FY 01 02 03 04 05 * Brick States: Alabama, Arkansas, Carolin
Slide 34: Outlook – Sales revenue expected to be flat in FY2002 but underlying profit up
Outlook – Sales revenue expected to be flat in FY2002 but underlying profit expected to be up • Overall, FY2002 sales revenue expected to be flat • Underlying profit after tax* expected to be stronger, due to: – stronger Australian housing market – stronger position in Plasterboard in Asia – benefit
Slide 35: Boral achieves a full year profit of $153m in difficult trading conditions
Boral achieves a full year profit of $153m in difficult trading conditions Boral’s 2000/01 Full Year Results Rod Pearse 22 August 2001