Gwa Group Limited · ASX:GWA

Gwa — Macquarie Australia Conference 2018

51 slides from Gwa's conference presentation, May 2, 2018

  1. Slide 1: ASX announcement cover letter

    2 May 2018 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Macquarie Australia Conference Presentation Attached is a copy of the presentation given by the Managing Director of GWA Group Limited, Tim Salt, at the Macquarie Australia Conference in Sydney today. Yours

  2. Slide 2: Macquarie Australia Conference

    Macquarie Australia Conference 2nd May, 2018 © GWA Group Ltd 2018

  3. Slide 3: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 2

  4. Slide 4: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 3

  5. Slide 5: GWA – making life better through superior solutions for water

    GWA – making life better through superior solutions for water 1. Demonstrating ability to drive growth and improve shareholder returns 2. A more focused business with strong brands and leading market positions 3. Pursuing growth opportunities focused on superior solutions for water 4. Increased use

  6. Slide 6: Restructuring to focus on water solutions

    Restructuring to focus on water solutions Exit of local Strategic sanitaryware proposed manufacturing divestment of and source from Door & Access overseas Sale of Systems suppliers Gliderol business Garage Sale of Dux Hot Doors Tim Salt Caroma Water appointed Flagship Investor Managing stores open S

  7. Slide 7: Which has repositioned the business for growth

    Which has repositioned the business for growth GWA 2014 GWA 2018 (today) Operational Focus Diverse building products business Clear focus on B&K segment - $1.4bn category Manufacturing Focus on local product manufacturing Collaborative relationships with exclusive supply partners Cost base High fixe

  8. Slide 8: Significant progress on strategic goals

    Significant progress on strategic goals¹ Area of focus Status Specific initiatives Leverage and build on core assets and brands Growing share consistently across core to drive revenue and market share growth segments Add value to customers through improved Joint business plans with major merchants i

  9. Slide 9: Unique operating model meets local needs with global scale

    Unique operating model meets local needs with global scale Consumer Innovation Solution Customer insights and product Manufacturing Distribution expertise service design Local research Local R&D and Collaborative, Extensive Add value to Market leading drives design teams exclusive coverage of primar

  10. Slide 10: Continuing to leverage and build on the strength of core brands to grow market share

    Continuing to leverage and build on the strength of core brands to grow market share Brand Awareness B&K Market Share (%) 0% 20% 40% Caroma 20.7 Reece¹ Bunnings¹ 20.3 Dorf IKEA² Kohler 19.6 Mondella Grohe Top of Mind Methven 19.1 Other Spontaneous Fowler 18.9 Hansgrohe 18.7 Stylus Posh Parisi Raymor

  11. Slide 11: Improved operating results and returns

    Improved operating results and returns Group Revenue (A$m) Group EBIT (A$m) H1 H2 H1 H2 214 220 223 197 42 41 38 32 202 212 220 223 227 42 33 35 37 39 FY14 FY15 FY16 FY17 1HFY18 FY14 FY15 FY16 FY17 1HFY18 Group Return on Funds Employed (%) Group EBIT Margin (%) ROFE % EBIT % Margin 20.2 20.9 19.3 17

  12. Slide 12: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 11

  13. Slide 13: GWA, a business with purpose

    GWA, a business with purpose We make life better through the design and delivery of products, services and technologies that create superior solutions for people to enjoy and sustain water, our planet’s most precious resource. 12

  14. Slide 14: How are we thinking about growth?

    How are we thinking about growth? ➢ Local partnerships ➢ Cannot win, will in Commercial not play ❖ Focus on superior water solutions segments in water New scarce geographies ❖ Play to our strengths Geography ❖ Target where we can win ➢ Priority ➢ Grow via broader ➢ Strengthen core segment offering t

  15. Slide 15: Macro factors point to stronger for longer

    Macro factors point to stronger for longer Driver Status Population growth +300,000-400,000 per annum GDP +2.6% year to December 2017 House Prices Capital city prices up +5% year to Dec. 17 Interest Rates Cash rate stable at 1.5% since August 2016 Stock of 30-35 year old houses expected to Age of ho

  16. Slide 16: Large markets with significant growth opportunities within segments

    Large markets with significant growth opportunities within segments Market by segment (NSV – A$1.4bn) Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m Rest-of-market GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estimates – Austra

  17. Slide 17: Significant growth opportunities across product categories

    Significant growth opportunities across product categories Market by category (NSV – A$1.4bn) Sanitaryware Taps and Showers Baths Sinks & Tubs $574m $654m $76m $145m Rest-of-market GWA ~ 35% share ~ 20% ~ 20% ~ 12% share share share Source: GWA estimates – Australia market only, excludes NZ and Spar

  18. Slide 18: Transformation continues shift from push to pull

    Transformation continues shift from push to pull To From… To Business first Consumer first Making products Contributing to society Industrial business Lifestyle brand business 17

  19. Slide 19: We are well positioned for growth through strategic focus on superior water solutions

    We are well positioned for growth through strategic focus on superior water solutions ❖ GWA is the leader in a large and robust local market ❖ Strong growth opportunities across segments and categories ❖ Technical expertise in sanitaryware and water sustainability solutions ❖ Capability can be lever

  20. Slide 20: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 19

  21. Slide 21: Significant progress in customer engagement

    Significant progress in customer engagement Area of focus Progress Specific initiatives Increased understanding of key Customer planning embedded customers creating tailored plans business plans and review and programs In store availability commitment Builders segmentation and value proposition Clea

  22. Slide 22: Critical to understand and engage with primary and secondary customers

    Critical to understand and engage with primary and secondary customers Primary Secondary Secondary Secondary Customer End User End User Customer Customer Customer Merchant Renovator/Small builder Independent Consumer Plumber Commercial Commercial Builder/Developer Plumber Residential Builder 21

  23. Slide 23: Detached residential new build remains resilient

    Detached residential new build remains resilient. Selective opportunities in multi-residential Detached housing completions Australia (#) Multi-residential housing completions Australia (#) 120,000 120,000 100,000 100,000 Quantity Completed Annually Quantity Completed Annually 80,000 80,000 60,000 6

  24. Slide 24: Maintain strong position in detached residential and compete selectively in multi-residential

    Maintain strong position in detached residential and compete selectively in multi-residential Market leading penetration Growth Strategy of Australia’s top 25 builders Top 25 home 21 of these ❖ Established deep knowledge of Builders, Builders top 25 their strategies and needs account builders use fo

  25. Slide 25: Commercial new build sustaining long term growth trajectory

    Commercial new build sustaining long term growth trajectory Non Residential – Value of Work Done (A$m) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Actual Forecast Source: BIS Oxford Economics: MAT, Actuals to June 2017, Forecast September 2017 – June 2022 24

  26. Slide 26: Leverage expertise in Commercial new build to drive further growth

    Leverage expertise in Commercial new build to drive further growth Market leading penetration of Growth Strategy Australia’s biggest Projects & Customers ❖ Best lead identification and key decision Strong Forecast to pipeline of maker engagement high value quote 3,600 Commercial projects over projec

  27. Slide 27: R&R is the largest segment opportunity across both Commercial and Residential

    R&R is the largest segment opportunity across both Commercial and Residential Market by segment (NSV – A$1.4bn) Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m Rest-of-market GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estimate

  28. Slide 28: Deeper market understanding has identified untapped opportunity in Commercial R&R

    Deeper market understanding has identified untapped opportunity in Commercial R&R New build drives future R&R, Growth Strategy large less visible market ❖ Focused resource now targeting sizeable GWA supplies 1 opportunity in 2 toilets in Only 15% of Commercial jobs require new build. a DA. 85% ❖ Lev

  29. Slide 29: Residential R&R segment is large and stable

    Residential R&R segment is large and stable Renovation Activity (A$bn) Alterations and Additions – Completions ($m) 9,000 8,000 2.5 7,000 2.0 6,000 $bn per quarter, real 5,000 1.5 4,000 1.0 3,000 2,000 0.5 1,000 0.0 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 FY-2001 FY-2002 FY-200

  30. Slide 30: Residential R&R – customer strategies for growth

    Residential R&R – customer strategies for growth Growth Strategy Market leading visibility and availability ❖ Extend merchant partnerships to drive Caroma Foot traffic in Adelaide ranging, availability and coverage displayed store +80% in excess of 1,300 in first six ❖ Create inspirational experienc

  31. Slide 31: Driving our focus on Aged Care opportunity

    Driving our focus on Aged Care opportunity Market leading Growth Strategy visibility and availability ❖ Built deep understanding of products, ‘Care’ range 250 key customers and consumers’ needs increased to projects 150 SKUs. identified Expanding to across ANZ ❖ Developed ‘Care’ range tailored to un

  32. Slide 32: Engagement with merchant partners remains key

    Engagement with merchant partners remains key Market leading visibility, Growth Strategy demand creation, availability and coverage ❖ Established clarity of each Merchant’s Specialist sales 80% of Merchant teams. 113 FTEs differing business needs, strategies, on the road customer stores priorities a

  33. Slide 33: Plans targeting significant NSV growth opportunities

    Plans targeting significant NSV growth opportunities Market by segment (NSV – A$1.4bn) Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m Rest-of-market Potential ~$150m NSV GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estimates –

  34. Slide 34: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 33

  35. Slide 35: Identified five distinct consumer groups and insights into their approach to renovating

    Identified five distinct consumer groups and insights into their approach to renovating Expert THE CHEERFUL UP THE CAPITALIST GRADER (12%) (13%) THE INSPIRED (28%) Form over THE DREAMER Function Function¹ over Form (25%) THE NOVICE (22%) Novice 1 Function – Consumer attitude toward bathrooms is such

  36. Slide 36: Each group occupies a different place on the price ladder

    Each group occupies a different place on the price ladder High THE CAPITALIST THE (12%) CHEERFUL UP GRADER (13%) Price Position THE INSPIRED (28%) THE DREAMER (25%) THE NOVICE (22%) Low Entry Good Better Best Source: GWA 35

  37. Slide 37: Building on Caroma's heritage and expertise to transform the future

    Building on Caroma’s heritage and expertise to transform the future Source: GWA 36

  38. Slide 38: Continuing to extend and leverage Cleanflush innovation to strong effect

    Continuing to extend and leverage Cleanflush® innovation to strong effect Caroma Cleanflush Sales 20 new Cleanflush variants % of GWA suites ($NSV) across sub categories by 2020 25 70% % of GWA suites $NSV 20 60% 20 # of SKUs 17 50% 15 14 40% 10 30% 10 6 20% 5 10% 0 0% FY16 FY17 FY18F FY19F FY20F #

  39. Slide 39: World class innovation that changes the industry's practice and expectation of water management

    World class innovation that changes the industry’s practice and expectation of water management 38

  40. Slide 40: Caroma Smart Command – changing standards in building water management

    Caroma Smart Command® – changing standards in building water management Key features of SmartCommand¹ Key benefits of SmartCommand¹ ❖ Touchless bathroom products Hygenic user experience ❖ Remote BMS² connectivity to all Increased bathroom up time and better user experience bathrooms Reduced water us

  41. Slide 41: Leverage our digital and physical assets to create an omni-channel presence

    Leverage our digital and physical assets to create an omni-channel presence +76% in Facebook followers (last 3 years) Engagement >3% (Industry average¹ 0.17%) +1,000% in Instagram followers (last 2 years) Engagement >3% (Industry average¹ 1.66%) ¹ All industry average 40

  42. Slide 42: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 41

  43. Slide 43: Leveraging our advantaged supply chain

    Leveraging our advantaged supply chain Growth enablers 30,000m² 5* Green streamlined Rating purpose built ❖ Creating a supply chain synchronised with warehousing the front end of the business facility ❖ Products designed for local market conditions and consumers ❖ Creating sustainable supply solutio

  44. Slide 44: Agenda

    Agenda 1) GWA transformation - strong progress made 2) A business with significant growth opportunities 3) Customer focus delivering growth 4) Consumer driven growth 5) Leveraging our advantaged supply chain 6) Our financial strength 43

  45. Slide 45: Consistently strengthening returns

    Consistently strengthening returns Group Return on Funds Employed (%) Group EBIT Margin (%) 20.2 20.9 19.3 18.1 18.4 17.1 17.8 16.1 14.5 12.2 FY14 FY15 FY16 FY17 1HFY18 FY14 FY15 FY16 FY17 1HFY18 B&K Return on Funds Employed (%) B&K EBIT Margin (%) 25.2 25.3 25.2 25.0 24.8 24.7 24.1 23.8 22.5 21.2 F

  46. Slide 46: Implement next phase of cost savings

    Implement next phase of cost savings Growth enabler – cost savings Automation and efficiency Stock consolidation improvements in and direct shipping ❖ Total cost savings of $9-$12M FY19-FY21 back office, IT state warehouses systems (3 year target) ❖ Operational efficiency – continue to reduce cost b

  47. Slide 47: Strong financial position to fund growth

    Strong financial position to fund growth Growth enabler – strong credit metrics Continued low debt ❖ Credit metrics continue to be consistent A$m 180 165 18 Times with investment grade 160 149 16 140 14 ❖ Syndicated banking facility extended in 120 12 October 2017 – single 3-year revolving 95 100 10

  48. Slide 48: GWA Making life better through superior solutions for water

    GWA Making life better through superior solutions for water ❖ Demonstrating ability to drive growth and improve shareholder returns ❖ A more focused business with strong brands and leading market positions ❖ Pursuing significant growth opportunities focused on superior solutions for water ❖ Increase

  49. Slide 49: GWA, a business with purpose

    GWA, a business with purpose We make life better through the design and delivery of products, services and technologies that create superior solutions for people to enjoy and sustain water, our planet’s most precious resource. 48

  50. Slide 50: Disclaimer

    Disclaimer This presentation contains non-IFRS measures to assist users to assess the underlying financial performance of the Group. The non-IFRS financial measures in this presentation were not the subject of a review or audit by KPMG. 49

  51. Slide 51: Macquarie Australia Conference

    Macquarie Australia Conference 2nd May, 2018 © GWA Group Ltd 2018

GWA Group — Macquarie Australia Conference 2018 on 6ix