Boral — H1 2009 Earnings Presentation
23 slides from Boral's earnings presentation, Feb 11, 2009
Slide 1: Results for the half year to 31 December 2008
Boral Limited Results for the six months to 31 December 2008 RESULTS FOR THE HALF YEAR TO 11 February 2009 31 DECEMBER 2008 Rod Pearse, CEO and ManagingCEO Director & MANAGING DIRECTOR, ROD PEARSE 11 FEBRUARY 2009 Agenda Financial and Market Overview Segment Results Divisional Performance Re
Slide 2: Financial & market overview
Financial & market overview 1H2009 Financial results Revenue steady $ 2.6b EBITDA 21% to $ 285m EBIT 35% to $ 155m Net Interest 21% to $ 69m Profit after tax 44% to $ 75m EPS 42% to 12.8 cents Final dividend (100% franked) 56% at 7.5 cents Return on equity1 (MAT) from 9.4% to 6.8% 1. Excludes June 2
Slide 3: EBITDA down 21% due to housing related losses in the US
EBITDA down 21% due to significant housing related losses in the US and a decline in Australian Building Products earnings EBITDA (A$m) 1H2008 1H2009 Construction Building Products USA Asia Materials $10m (4%) $27m (30%) $42m (147%) $3m (29%) 236 226 90 63 29 9 12 -13 Strong infrastructure Weak
Slide 4: Dwellings and non-dwellings weakened in Australia
Dwellings and non-dwellings weakened, though some strength in Qld non-dwellings remained Percentage change in dwellings approvals1 and non-dwellings2 value of work approved – 1H2009 vs 1H2008 Detached Multi-dwellings Non-dwellings 20% 3% 0% -12% -7% -9% -9% -10% -17% -15% -19% -26% -26% -27% -30% -3
Slide 5: Concrete demand declined in all states except WA
Concrete demand declined in all states (except in WA) but remained at high levels supported by strong infrastructure activity Readymix concrete production1 Changes in Australian readymix concrete (MAT, January 1999 to December 2008, ‘000) production1 – 1H2009 vs 1H2008 ‘000 cubic metre change Percen
Slide 6: Housing starts in Brick states fell by 39%
Housing starts in Brick states fell by 39% in 1H09, following a decline of 28% in FY08 and 19% in FY07 % Change in Dwellings Starts 1H2009 vs 1H2008 MI IA 0 to -9% IL IN OH MD -10 to -14% KS MO WV DE -15 to -19% KY VA -20 to -24% OK TN NC AR -25 to -29% SC -30 to -34% MS GA TX LA AL -35 to -44% -45
Slide 7: Segment results
Dwelling (and non-dwelling) activity in Colorado and Oklahoma was well down % Change in Non-dwellings VWC 1H2009 vs 1H2008 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 Sour
Slide 8: Profit after tax down 44% to $75m in 1H2009
Profit after tax down 44% to $75m in 1H2009 A$m 1H2009 1H2008 %∆ Revenue 2,594 2,626 (1) EBITDA 285 360 (21) EBIT 155 240 (35) Net interest 69 57 21 Profit before tax 86 183 (53) Tax 11 51 (77) Profit after tax 75 132 (44) Results for the half year to December 2008 15 Revenues steady with price stre
Slide 9: Margins continue to weaken
Margins continue to weaken primarily because of housing downturns in the USA and in Australia EBIT / Sales EBITDA / Sales 20% 20% 16% 16% 13.7% 12% 12% 11.0% 9.1% 8% 8% 6.0% 4% 4% 0% 0% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 1H08 1H09 1H08 1H09 FY05
Slide 10: Net debt and gearing increased
Net debt and gearing increased largely reflecting weaker operating cashflows and adverse exchange rate movements As at Dec-08 Dec-07 A$m Cash flow from operating activities 141 223 Net debt 2,184 1,609 Net debt / equity 79% 53% EBITDA interest cover 4.1x 6.3x EBIT interest cover 2.3x 4.2x Funds empl
Slide 11: Divisional performance
Boral’s dividend payout ratio has averaged around 60% since demerger Cents / share Dividend EPS 70 64.2 60.4 60 57.0 56.1 47.2 50 40 29.8 42.6 30 32.2 27.0 20 33 34 34 34 26 24.5 10 18 18 21 0 CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 CY2006 CY2007 CY2008 CY2008 excludes June 2008 significant items
Slide 12: Construction Materials: EBITDA down 4%
Construction Materials: EBITDA down 4% driven by lower QEU outcomes; underlying EBITDA flat EBITDA A$m EBITDA / sales 500 1H/2H 20% A$m 1H09 1H08 %∆ 450 18% Sales 1,463 1,454 1 400 16% EBITDA 226 236 (4) 350 14% 300 12% EBIT 155 167 (7) 250 10% Funds employed 2,328 2,339 - 200 8% 150 6% EBITDA/sales
Slide 13: Building Products: EBITDA down 30%
Building Products: EBITDA down 30%; improved pricing offset by housing-related volume reductions and one-off transition costs EBITDA A$m EBITDA / sales 1H/2H A$m 1H09 1H08 %∆ 200 20% 18% 175 Sales 688 687 - 16% 150 EBITDA 63 90 (30) 14% 125 12% EBIT 34 63 (46) 100 10% Funds employed 1,214 1,153 5 8%
Slide 14: USA: EBITDA down US$35m due to housing collapse
USA: EBITDA down US$35m due to housing collapse EBITDA A$m EBITDA / sales US$m 1H09 1H08 %∆ 1H/2H 250 50% Sales1 242 333 (27) EBITDA (10) 25 (141) 200 40% EBIT (28) 9 (430) 150 30% Funds employed 756 781 (3) A$m 100 20% Sales1 313 381 (18) EBITDA (13) 29 (147) 50 10% EBIT (37) 10 (474) 0 0% Funds em
Slide 15: Asia EBIT up $2m
Asia EBIT up $2m reflecting improved Construction Materials but lower LBGA result EBIT1 A$m EBIT / Sales1,2 1H/2H Concrete & Quarries: results stronger 30.0 15% Indonesia - improved concrete pricing and increased volumes 20.0 10% Thailand - improved concrete pricing and 10.0 5% operational imp
Slide 16: Effective pricing and tight capital management are key priorities
Effective pricing and tight capital management are key priorities across the business Price Price Despite Despitevolume volume • Strong pricing outcomes across the group in pressures pressurescontinued 1H09 management management continued focus on pricing focus on pricing • Further price increases a
Slide 17: US accelerated step change programs and PEP benefits
US accelerated step change programs and PEP expected incremental benefits of ~US$40m in FY2009 US$22.6m US$70m Bricks MonierLifetile (50% share) US$22.6m US$25m US Construction Materials US$2.4m (flyash, concrete & aggregates) US$36.4m US$24m US$30m US$10.0m US$7m Cost savings realised US$6m US$15m
Slide 18: Outlook: Australian residential starts near bottom of cycle
Outlook Australian residential starts are expected to be around the bottom of the cycle in FY2009 Australian dwelling starts1 (‘000) By state2 (‘000) 200 60 180 BIS 50 Qld Vic 160 40 NSW HIA 140 30 Boral WA 120 20 SA 100 10 Other3 80 0 FY09f FY10f FY11f FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 F
Slide 19: Australian affordability is improving
Australian affordability is improving (mortgage repayments down from 31% to 25% of household income), driven by falling interest rates Repayment of mortgage as percentage of household income (February 2009) 40% Mortgage stress 35% Brisbane (28%) 30% Perth (28%) Affordable1 Sydney (25%) 25% Australia
Slide 20: Australian markets forecast flat in FY2009 and FY2010
Australian markets forecast to remain flat in FY2009 and FY2010 with good growth thereafter Australian Building Activities – Value of Work Done1 % change $97/98 billion 4.9 65 7.5 5.9 60 0.4 (0.5) 17.4 RHS&B 0.9 55 (1.8) 50 2.7 (7.1) 1.4 45 3.4 Non-dwelling 40 1.3 (11.5) 35 (0.8) 30 25 20 11.4 3.6 D
Slide 21: US housing affordability is improving
US housing affordability is improving as house prices fall; sales of existing houses have stopped falling S&P/Case-Shiller® Home Price Index – Houses Sold During Month November 2008 (Annualised count, millions) 1.6 8 Existing dwelling sales (RHS) 350 1.4 7 Roof Tile States 300 1.2 6 250 1.0 5 200 0.
Slide 22: Asian construction activity and outlook for FY2009
Asian construction activity is being impacted by the global economic downturn SOUTH KOREA THAILAND INDONESIA CHINA - EASTERN Value of construction orders Gross fixed capital Value of completion. Total building received. Trillion Won1 formation. Billion baht1 Trillion Rp1 commencements. Million m2 14
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