Fletcher Building Limited · NZX:FBU
Fletcher Building — FY2002 Earnings Presentation
33 slides from Fletcher Building's earnings presentation, Aug 14, 2002
Slide 1: Annual Results Analyst Presentation
Annual Results Analyst Presentation 14 August 2002
Slide 2: Annual Results Presentation notice
This Annual Results Presentation dated 14 August 2002 provides additional comment on the media release of the same date. As such, it should be read in conjunction with and subject to the explanations and views of future outlook on market conditions, earnings and activities given in that release.
Slide 3: Summary of Results
Summary of Results ** June* June* % 2002 2001 YOY $m 12 Mths 12 Mths Change Revenue 2847 2740 +4% EBITDA 294 196 +50% EBIT Before Unusuals 205 106 +93% Net Earnings Before Unusual Items 88 18 +389% Net Earnings Including Unusual Items 93 -288 N/A EPS Before Unusuals (cents) 25.5 5.2 +390% EPS After
Slide 4: Accounting Policy Changes
Accounting Policy Changes The accounts incorporate two changes in accounting treatment: Capital Notes Interest – Capital Notes interest is now included as an interest charge, where historically it was treated as a distribution – Whilst the accounting standards restrict us from changing comparative d
Slide 5: Accounting Policy Changes: PlaceMakers Consolidation
Accounting Policy Changes PlaceMakers Consolidation – PlaceMakers Joint Venture branches are now consolidated whereas previously they were equity accounted – Historically, the Joint Ventures operated on a March balance date, now changed to a June balance date 3
Slide 6: Accounting Policy Changes: PlaceMakers Consolidation (Cont.)
Accounting Policy Changes PlaceMakers Consolidation (Cont.) – The net effect is to report 15 months income this year. – First 3 months income being April 2001 to June 2001 has been included as an unusual item, and the remaining 12 months being July 2001 to June 2002 as normal trading income – The co
Slide 7: Segmental EBIT
Segmental EBIT June June % $m 2002 2001 YOY 12 Mths 12 Mths Change Building Products and Steel 85 58 +47% Distribution 34 18 +89% Concrete 60 31 +94% Construction 30 5 +500% Corporate/Unallocated -4 -6 +33% EBIT Pre Unusuals 205 106 +93% Restatement -12 EBIT Pre Unusuals as per Accounts 205 94 +118%
Slide 8: Building Products and Steel Results
Building Products and Steel Results June June % 2002 2001 YOY $m 12 Mths 12 Mths Change Revenue 820 840 -2% EBIT 85 58 +47% Margin 10.4% 6.9% +51% Funds 433 450 -4% Return on Funds 19.6% 12.9% +52% 6
Slide 9: Building Products
Building Products Winstone Wallboards – Volume improved in line with market – Price and mix better – Profit well up +17% Fletcher Aluminium – Disappointing result overall – New GM from February 2002 – Disposed of non-core distribution assets – New window suite now settled and IFOTIS improving – Impr
Slide 10: Building Products
Building Products Fletcher Wood Panels – Revenue up 7% - both volume and price – EBIT steady but still unsatisfactory – Prices firming internationally – New products yet to make a significant contribution Scott Panel & Hardware – Volume and profit maintained at good levels 8
Slide 11: Steel
Steel Manufacturing – record steel production >200,000 tonnes – growth in volume and price of exports – improvement in manufacturing processes – strong turnaround in earnings – Sims performance excellent 9
Slide 12: Steel
Steel Processing and Distribution – Volumes down in EasySteel and Dimond but improving in last quarter – Results below potential – Latest profit trends better – Pacific Coilcoaters excellent result driven by strong domestic and export demand 10
Slide 13: Distribution Results
Distribution Results June* June* % 2002 2001 YOY $m 12 Mths 12 Mths Change Gross Revenue 686 638 +8% EBIT 34 18 +89% Margin 5.0% 2.8% +79% Funds 101 92 +10% Return on Funds 33.7% 19.6% +72% * Restated to incorporate changes to accounting treatment 11
Slide 14: Distribution
Distribution – Sales levels increased with improving market conditions, and better trading in wholly owned stores – Margins have improved across stores as a result of initiatives underway – Return on Funds now at over 33% 12
Slide 15: Concrete Results
Concrete Results June June % 2002 2001 YOY $m 12 Mths 12 Mths Change Revenue 470 454 +4% EBIT 60 31 +94% Margin 12.8% 6.8% +88% Funds 416 485 -14% Return on Funds 14.4% 6.4% +125% 13
Slide 16: Concrete
Concrete Golden Bay (Cement) – Volumes up – Prices up – Operating costs increased as a result of clinker imports – Distribution costs increased to meet local demand – Profit steady 14
Slide 17: Concrete
Concrete Firth (Readymix Concrete) – Volumes up through market and market share gains – Prices up – Strong profit improvement 15
Slide 18: Concrete
Concrete Winstone Aggregates – Higher volumes – Still an unfavourable mix – Roading spend down significantly – Good profit improvement on pcp giving satisfactory result 16
Slide 19: Concrete
Concrete Humes (Concrete Pipes) – Low levels of subdivision and roading although good pick up in second half – Streamlining of operations generating cost savings – Much improved profit result Stresscrete (Pre-cast Beams etc) – Much improved operating performance 17
Slide 20: Construction Results
Construction Results June June % 2002 2001 YOY $m 12 Mths 12 Mths Change Revenue* 871 808 +8% EBIT 30 5 +500% Funds -95 -59 -61% * Includes full Australian income for 2002 18
Slide 21: Construction
Construction Construction – Commercial and Engineering – Manapouri Tunnel completed and handed over – Public sector in NZ providing the major opportunities e.g. hospital, education – Australian Construction and Co-generation business sold – Earnings from the Australia and US contributed around $13 m
Slide 22: Construction
Construction Construction – Residential – Strong performance with the number of sales and margins well ahead of last year and budget – Further restructuring was undertaken during the period, reducing overheads – A stand out result 20
Slide 23: Profit After Tax
Profit After Tax June June Dec June 2002 2002 2001 2001 $m 12 Mths 6 Mths 6 Mths 12 Mths EBIT before Unusuals 205 127 78 94 Interest -29 -14 -15 -36 Interest - Capital Notes -22 -11 -11 -24 Tax -54 -34 -20 -15 Minority Interests -12 -9 -3 -1 NPAT Pre Unusuals 88 59 29 18 Adjustments Net of Tax 5 1 4
Slide 24: Adjustments
Adjustments June June Dec June 2002 2002 2001 2001 $m 12 Mths 6 Mths 6 Mths 12 Mths i. Unusual Items Permanent Impairment -11* -11* -101 Other Losses/Gains 16** 10 6 -37 Restructuring and Separation Costs -43 5 -1 6 -181 ii. Taxation 2 -2 -125 Total Adjustments 5 1 4 -306 * This relates to the valua
Slide 25: Simplified Balance Sheet
Simplified Balance Sheet June 2002 Dec 2001 June 2001 NZ$m NZ$m NZ$m Assets Current Assets 642 682 639 Fixed Assets 669 736 759 Provision for Taxation 108 128 137 Investments 72 69 90 Total Fletcher Building Assets 1491 1,615 1,625 Liabilities Current Liabilities 502 508 561 Net Debt 168 293 274 Cap
Slide 26: Ratios
Ratios June June 2002 2001 $m 12 Mths 12 Mths Net Debt / Total Capitalisation 17% 26% Net Debt & Capital Notes / Total Capitalisation 40% 49% EBITDA / Interest on Net Debt 10.1 5.1 Net Debt / EBITDA 0.6 1.5 Dividend 14 cps 12 cps Payout Ratio 55% 240% 24
Slide 27: Net Debt Movement
NZ$ Millions 100.0 150.0 200.0 250.0 300.0 50.0 0.0 Opening Debt 274 JV opening debt 14 Cash from ops 187 Capex 51 Divestments 54 Net Debt Movement Dividends 32 Min Distn 14 Cap Notes/Equity 20 FX on cash 4 Closing debt 168 25
Slide 28: Building Materials Relative Valuations
Building Materials Relative Valuations BLD CSR JHX FBU Price ($) $3.85 $6.00 $5.81 $2.28 Market Capitalisation ($m) 2,201 5,622 2,652 790 Year End June March March June ROA (%) 2003F 10.6 11.8 18.7 13.5 2002A/F 8 11.3 8.4 12.6 Enterprise Value Multiples (x) 2003F 5.0 5.5 10.7 3.9 (based on EBITDA) 2
Slide 29: Operational & Strategic Update
Operational & Strategic Update
Slide 30: Operational Initiatives
Operational Initiatives • New products – Fibrerock, Fibreplastics, MDF derivatives • Freight rationalisation • Joint venture construction contracts • Securing key residential land in Auckland • Distribution overhaul • Major capital projects at Golden Bay and Winstone Wallboards • Kyoto/NGA’s 27
Slide 31: Strategic Issues
Strategic Issues • Grow in New Zealand – support core businesses and grow where opportunities arise • Achieve Australian Expansion – decrease volatility in earnings and provide path for future growth • Portfolio Management – concentration to fewer higher return businesses • Management development –
Slide 32: Business Portfolio
Business Portfolio Sold This Year – Lunn Avenue quarry – Cyclone – Aluminium distribution in New Zealand and Australia – Fletcher Construction Australia – Varnsdorf co-generation plants in Australia – All Bolivian businesses (post balance date) under contract Closed This Year – Backbone 29
Slide 33: Outlook
Outlook • Fletcher Building normally has a second half bias • Should be more balanced this year as – First half should remain strong – Second half is forecast to slow • Expect another satisfactory result 30