Gwa Group Limited · ASX:GWA
Gwa — Investor Day (April 2018)
132 slides from Gwa's investor day presentation, Apr 12, 2018
Slide 1: ASX announcement: Investor Market Briefing Strategy Presentation
12 April 2018 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Investor Market Briefing Strategy Presentation Attached is a copy of the Investor Market Briefing Strategy Presentation hosted by Tim Salt, Managing Director of GWA Group Limited to be held in Sydney at 1
Slide 2: 12th April, 2018
12th April, 2018 © GWA Group Ltd 2018
Slide 3: 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. 2
Slide 4: Safety briefing
Safety briefing —> watkway STUDIO 1 WALKWAY <— @ wetcome kiosk © consurtarion rooms = @caesiarance Q) traininc oom — B) PIPenra Rance © urraccess to rowets TEA & corree GQ ouoarance PP coouwarrance QB) stair access ro rowers © concierce vesk @ saturoom pranner = @Pwarer pray — @ oesicn nus IMM SEATI
Slide 5: 12th April, 2018
12th April, 2018 © GWA Group Ltd 2018
Slide 6: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Customer focus delivering growth Craig Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 7: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Customer focus delivering growth Craig Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 8: 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 significant growth opportunities focused on superior solutions for water 4. In
Slide 9: Significant restructuring enables focus on water solutions’ business
Significant restructuring enables focus on water solutions’ business 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 Inve
Slide 10: 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 spread across Clear focus on B&K segment - $1.4bn category numerous segments Manufacturing Focus on local product manufacturing Collaborative relationships with exclusive sup
Slide 11: Strengthened leadership team
Strengthened leadership team Tim Salt Extensive global experience in managing market leading branded portfolios - strong focus on product CEO and brand innovation in B2B and B2C environments Patrick Gibson Extensive multi-country experience managing Finance and IT functions in: global B2B and FMCG G
Slide 12: Unique operating model meets local needs with global scale
Unique operating model meets local needs with global scale Consumer Innovation Solution Customer insights and product Manufacturing Distribution expertise service design Local research Local R&D and Collaborative, Extensive Add value to Market leading drives design teams exclusive coverage of primar
Slide 13: Significant progress on strategic goals
Significant progress on strategic goals¹ Area of focus Status Specific initiatives Leverage and build on core assets and brands Growing share consistently across core to drive revenue and market share growth segments Add value to customers through improved Joint business plans with major merchants i
Slide 14: Continue to leverage and build on the strength of core brands Caroma and Dorf
Continue to leverage and build on the strength of core brands Caroma and Dorf Brand Awareness 0% 5% 10% 15% 20% 25% 30% 35% 40% Caroma Reece¹ Bunnings¹ Dorf IKEA² Kohler Mondella Grohe Top of Mind Methven Other Spontaneous Fowler Hansgrohe Stylus Posh Parisi Raymor Gessi ¹ Reece and Bunnings are ret
Slide 15: Consistent market share growth
Consistent market share growth B&K Market Share (%) 20.7 20.3 19.6 19.1 18.9 18.7 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Source: GWA estimates – Australia market only, excludes NZ and Spares. Data is MAT to December each year 14
Slide 16: Improved operating results
Improved operating results Group Revenue (A$m) Group EBIT (A$m) 220 223 41 214 42 197 38 32 202 212 220 223 227 37 39 42 33 35 FY14 FY15 FY16 FY17 1HFY18 FY14 FY15 FY16 FY17 1HFY18 H1 H2 H1 H2 Source: GWA 15
Slide 17: Strengthening returns
Strengthening returns Group Return on Funds Employed (%) Group EBIT Margin (%) 20.2 20.9 19.3 17.8 18.1 18.4 17.1 16.1 14.5 12.2 FY14 FY15 FY16 FY17 1HFY18 FY14 FY15 FY16 FY17 1HFY18 ROFE % EBIT % Margin Source: GWA 16
Slide 18: Leading to improved shareholder returns
Leading to improved shareholder returns Total Shareholder Return (TSR) GWA vs ASX 200 Acc Index 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 30-Jun-15 30-Sep-15 31-Dec-15 31-Mar-16 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18 GWA ASX 200 Acc Index Source: 17
Slide 19: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Customer focus delivering growth Craig Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 20: 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. 19
Slide 21: Purpose that builds on GWA’s history of delivering innovative solutions for water
Purpose that builds on GWA’s history of delivering innovative solutions for water Source: GWA 20
Slide 22: Growth agenda focused on our understanding and passion for water
Growth agenda focused on our understanding and passion for water 21
Slide 23: 2018 World Economic Forum report highlights water as one of the most significant global risks
2018 World Economic Forum report highlights water as one of the most significant global risks Water crises identified as the most impactful societal risk in 2018 by WEF Source: The Global Risks Report 2018, World Economic Forum, Switzerland, 2018 22
Slide 24: Water crises already playing out globally
Water crises already playing out globally 23
Slide 25: Increasingly impacting Australia, the planet’s driest continent
Increasingly impacting Australia, the planet’s driest continent 24
Slide 26: How are we thinking about growth?
How are we thinking about growth? ❖ Focus on superior solutions for water ❖ Play to our strengths ❖ Target where we can win 25
Slide 27: Priority is to leverage strengths in existing geographies, segments and categories
Priority is to leverage strengths in existing geographies, segments and categories GWA Superior Solutions for Water Growth Model New Geography ➢ Priority. Strengthen core Existing offering through organic and inorganic expansion Existing Adjacent Segment / Category 26
Slide 28: GWA operates in a large local market with significant growth opportunities
GWA operates in a large local market with significant growth opportunities A$1.4 billion addressable market Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m 13% 9% 10% 22% 46% Source: GWA estimates – Australia market only, excludes NZ and Spares. 27
Slide 29: Macro factors point to stronger for longer
Macro factors point to stronger for longer Driver1 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 h
Slide 30: Significant segment growth opportunities
Significant segment 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 GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estimates – Australia market only, excludes N
Slide 31: Significant category growth opportunities
Significant category growth opportunities 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 Spares 30
Slide 32: And capability to extend into large water solutions adjacencies
And capability to extend into large water solutions adjacencies GWA Superior Solutions for Water Growth Model ➢ Local partnerships in ➢ Cannot win, will Commercial segments in not play New water scarce geographies Geography ➢ Grow via broader ➢ Priority. Strengthen core Existing segment penetration
Slide 33: Opportunities that play to our strengths in superior water solutions
Opportunities that play to our strengths in superior water solutions Australia and NZ growth opportunities ❖ Reinforce GWA’s core business in ANZ ❖ Build scale in the near term and upside growth potential ❖ Investment in known market Strengthen Expand into existing B&K water based core offering cate
Slide 34: Strategy positions GWA for growth
Strategy positions GWA for growth We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth , ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIVEN Add value to customers through superior Deliver e
Slide 35: From push to pull
From push to pull Primary Secondary Secondary Customer End User End User Customer Customer Merchant Renovator/Small builder Independent Consumer Plumber Commercial Commercial Builder/Developer Plumber Residential Builder 34
Slide 36: 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 35
Slide 37: We are well positioned for growth through strategic focus on superior solutions for water
We are well positioned for growth through strategic focus on superior solutions for water ❖ GWA is the leader in a large and robust local market ❖ Strong growth opportunities across segments and categories ❖ Own significant technical expertise in sanitaryware and water sustainability solutions ❖ Cap
Slide 38: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Customer focus delivering growth Craig Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 39: Customer focused strategy to drive growth
Customer focused strategy to drive growth We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth , ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIVEN Add value to customers through superior D
Slide 40: 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
Slide 41: Drives sustained share growth
Drives sustained share growth B&K Market Share (%) 20.7 20.3 19.6 19.1 18.9 18.7 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Source: GWA estimates – Australia market only, excludes NZ and Spares 40
Slide 42: Opportunities to grow in a A$1.4bn market
Opportunities to grow in a A$1.4bn market 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 Focused opportunities to grow GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estimates – Au
Slide 43: Critical to understand and engage with primary and secondary customers
Critical to understand and engage with primary and secondary customers Primary Secondary Secondary Customer End User End User Customer Customer Merchant Renovator/Small builder Independent Consumer Plumber Commercial Commercial Builder/Developer Plumber Residential Builder 42
Slide 44: GWA has scale to create demand for our brands across large and small secondary customers
GWA has scale to create demand for our brands across both large and small secondary customers Secondary Customer Renovator/Small builder Create demand through brand marketing and merchant activation to generate sales Commercial Builder/Developer Create demand through direct engagement with builders
Slide 45: Residential and Multi-Residential housing
Residential and Multi-Residential housing Market by segment (NSV – A$1.4bn) Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m 13% 9% 10% 22% 46% Source: GWA estimates – Australia market only, excludes NZ and Spares 44
Slide 46: Detached residential new build remains resilient
Quantity Completed Annually 20,000 40,000 60,000 80,000 0 100,000 120,000 FY-1975 FY-1976 FY-1977 FY-1978 FY-1979 FY-1980 FY-1981 FY-1982 FY-1983 FY-1984 FY-1985 FY-1986 FY-1987 FY-1988 FY-1989 FY-1990 FY-1991 Source: BIS Oxford Economics: MAT, Actuals to September 2017, Forecast December 2017 – Jun
Slide 47: Multi-residential declining from peak but presents opportunities for selective growth
Quantity Completed Annually 20,000 40,000 60,000 80,000 0 100,000 120,000 FY-1975 FY-1976 FY-1977 FY-1978 FY-1979 FY-1980 FY-1981 FY-1982 FY-1983 FY-1984 FY-1985 FY-1986 FY-1987 FY-1988 FY-1989 FY-1990 FY-1991 Source: BIS Oxford Economics: MAT, Actuals to September 2017, Forecast December 2017 – Jun
Slide 48: Ability to create demand evident in strength across the residential home segment
Ability to create demand evident in strength across the residential home segment Market by segment (NSV – A$1.4bn) Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m Rest-of-market GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estim
Slide 49: Maintain strong position in Detached residential and compete selectively in Multi-residential
Maintain strong position in Detached residential and compete selectively in Multi-residential Market leading penetration Growth Strategy of Australia’s top 25 builders Top 25 home 21 of these ❖ Established deep knowledge of Builders, Builders top 25 their strategies and needs account builders use fo
Slide 50: Commercial new build sustaining long term growth trajectory
Commercial new build sustaining long term growth trajectory Non Residential – Value of Work Done (A$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 49
Slide 51: Ability to create demand in Commercial new build drives strong share position
Ability to create demand in Commercial new build drives strong share position 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
Slide 52: 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 Forecast to Strong pipeline maker engagement of high value quote 3,600 Commercial projects over projec
Slide 53: 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 $673m Rest-of-market GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% share ~ 16% share Source: GWA estimate
Slide 54: Deeper market understanding has identified untapped opportunity in Commercial R&R
Deeper market understanding has identified untapped opportunity in Commercial R&R New build drives future R&R, Growth Strategy large less visible market ❖ Focused resource now targeting sizeable GWA supplies 1 opportunity in 2 toilets in Only 15% of Commercial new jobs require a build. DA. 85% ❖ Lev
Slide 55: Deeper market understanding has identified untapped opportunity in Commercial R&R
Deeper market understanding has identified untapped opportunity in Commercial R&R 54
Slide 56: Residential R&R segment stability provides resilience through the cycle
Residential R&R segment stability provides resilience through the cycle Alterations and Additions – Completions ($m) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Actual Forecast Source: BIS Oxford Economics: MAT, Actuals to December 2017, Forecast March 2018 – June 2022 55
Slide 57: Residential R&R segment is large and remains stable
Residential R&R segment is large and remains stable Renovation Activity (A$bn) Housing sales (‘000s) 2.5 60 2.0 50 $bn per quarter, real 000s per month 40 1.5 30 1.0 20 0.5 10 0.0 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 95 97 99 01 03 05 07 09 11 13 15 17 Alterations & addition
Slide 58: Significant growth opportunity in Residential R&R
Significant growth opportunity in Residential R&R 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 – Australia market only, e
Slide 59: Residential R&R – customer strategies for growth
Residential R&R – customer strategies for growth Growth Strategy Market leading visibility and availability Caroma ❖ Extend merchant partnerships to drive displayed in Foot traffic in ranging, availability and coverage excess of Adelaide store 1,300 +80% in first showrooms six months ❖ Create inspir
Slide 60: Aged Care is a large and growing sector relatively untapped by GWA
Aged Care is a large and growing sector relatively untapped by GWA 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 Aged Care ~$170m segment across Commercial and Residential GWA ~ 35% ~ 25% ~ 35% share share sh
Slide 61: 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 increased to customers and consumers’ needs 150 SKUs. projects identified Expanding to across ANZ ❖ Developed ‘Care’ range tailored to un
Slide 62: 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 differing business needs, strategies, teams. 113 FTEs on customer stores the road supported ca
Slide 63: 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 –
Slide 64: Break
C CAROMA 63
Slide 65: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Craig Customer focus delivering growth Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 66: Consumer driven strategy to drive growth
Consumer driven strategy to drive growth We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth , ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIVEN Add value to customers through superior De
Slide 67: Why consumer driven? The age of the empowered consumer
Why consumer driven? The age of the empowered consumer Digitally “Hands Smart & mobile On” Expectant Loyal Global (if you are honest) 66
Slide 68: Ongoing commitment to build consumer insight
Ongoing commitment to build consumer insight Becoming consumer driven Deeper consumer insight and Consumer first understanding Brands with purpose create stronger Contributing to society consumer relationships Superior omni-channel brand Lifestyle brand business experiences 67
Slide 69: Worked with the empowered consumer to build a deeper understanding of R&R journey
Worked with the empowered consumer to build a deeper understanding of R&R journey TRIGGER/ PROJECT STAGES IDEATION RESEARCH PLANNING CONSTRUCTION COMPLETION From Push RENOVATION JOURNEY 68
Slide 70: 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
Slide 71: 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 70
Slide 72: Brand portfolio aligned to consumer groups
Brand portfolio aligned to consumer groups High Price Position Low Entry Good Better Best Source: GWA 71
Slide 73: Strength of Caroma and supporting brands creates growth platform
Strength of Caroma and supporting brands creates growth platform Brand Awareness 0% 5% 10% 15% 20% 25% 30% 35% 40% Caroma Reece¹ Bunnings¹ Dorf IKEA² Kohler Mondella Grohe Top of Mind Methven Other Spontaneous Fowler Hansgrohe Stylus Posh Parisi Raymor Gessi ¹ Reece and Bunnings are retailers not Ba
Slide 74: The importance of building brands with purpose
The importance of building brands with purpose Becoming consumer driven Deeper consumer insight and Consumer first understanding Brands with purpose create stronger Contributing to society consumer relationships Superior omni-channel brand Lifestyle brand business experiences 73
Slide 75: Reposition Dorf to delight “the capitalists”
Reposition Dorf to delight “the capitalists” 74
Slide 76: Unique styles for premium, style conscious consumers
Unique styles for premium, style conscious consumers 75
Slide 77: Re-invent Clark to offer a full bathroom solution
Re-invent Clark to offer a full bathroom solution 76
Slide 78: Stylish, affordable designs targeted at the “Novice” and “Dreamer” consumer groups
Stylish, affordable designs targeted at the “Novice” and “Dreamer” consumer groups 77
Slide 79: Building on Caroma’s heritage and expertise to transform the future
Building on Caroma’s heritage and expertise to transform the future Source: GWA 78
Slide 80: A culturally iconic and meaningful brand purpose
A culturally iconic and meaningful brand purpose CAROMA VALUES WATER 79
Slide 81: A visual identity that marks a new era for Caroma
A visual identity that marks a new era for Caroma 80
Slide 82: Each and every consumer touch point must build a consistent and rewarding brand experience
Each and every consumer touch point must build a consistent and rewarding brand experience Becoming consumer driven Deeper consumer insight and Consumer first understanding Brands with purpose create stronger Contributing to society consumer relationships Superior omni-channel brand Lifestyle brand
Slide 83: 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 #
Slide 84: Creating inspirational premium solutions for “upgraders” and “capitalists”
Creating inspirational premium solutions for “upgraders” and “capitalists” 83
Slide 85: Leading the thinking and development of solutions for the distinct needs of ageing consumers
Leading the thinking and development of solutions for the distinct needs of ageing consumers 84
Slide 86: Leading the thinking and development of solutions for the distinct needs of ageing consumers
Leading the thinking and development of solutions for the distinct needs of ageing consumers 85
Slide 87: Empathetic design solutions that are flexible and create scale opportunities
Empathetic design solutions that are flexible and create scale opportunities 86
Slide 88: Building on Caroma’s heritage and expertise to transform the future
Building on Caroma’s heritage and expertise to transform the future Source: GWA 87
Slide 89: 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 88
Slide 90: 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
Slide 91: A robust system that is connected and flexible
A robust system that is connected and flexible 90
Slide 92: A robust system that is connected and flexible
A robust system that is connected and flexible 91
Slide 93: Evaluated and endorsed by key commercial customers
Evaluated and endorsed by key commercial customers ✓ Technology platform testing completed ✓ Key customer engagement undertaken ✓ 12 months testing completed in-situ – commercial office and shopping centre ✓ Patent applications in progress ✓ Full commercial installation at one site ✓ Further commerc
Slide 94: Seamless omni-channel brand experiences that delight and deliver value
Seamless omni-channel brand experiences that delight and deliver value Digitally “Hands Smart & mobile On” Expectant Loyal Global (if you are honest) 93
Slide 95: Increased investment in targeted consumer campaigns with content that creates ‘talkability’
Increased investment in targeted consumer campaigns with content that creates ‘talkability’ 94
Slide 96: The new Caroma website understands and facilitates the renovation journey
The new Caroma website understands and facilitates the renovation journey 42m page views in last 3 years +66% over this period 140,000 unique visitations monthly 95
Slide 97: Leverage and grow best in-category social engagement
Leverage and grow best in-category social engagement +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 96
Slide 98: Importance of engaging and immersive physical brand experiences
Importance of engaging and immersive physical brand experiences 97
Slide 99: Our new flagship store – Caroma on Collins, Sydney
Our new flagship store – Caroma on Collins, Sydney 98
Slide 100: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Craig Customer focus delivering growth Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 101: Supply chain strategy to delight consumers and customers at best cost
Supply chain strategy to delight consumers and customers at best cost We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth , ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIVEN Add value to
Slide 102: Progress made in supply chain
Progress made in supply chain Area of focus Progress Specific initiatives World leading quality Best in market reputation for product quality and performance Service excellence Integrated business planning to drive inventory management improvements NPD pipeline delivery Products matched with consume
Slide 103: Supply chain creating competitive advantage
Supply chain creating competitive advantage Joined Up Innovation Supply Network Business and product Best cost solutions alignment Planning design 102
Slide 104: Creating a supply chain synchronised with the front end of our business
Creating a supply chain synchronised with the front end of our business Growth enabler – JUBP¹ Sales / Customer ❖ Customer focused - the right supply chain exceeding service and quality Supply chain attends customer expectations top to top meetings ❖ Joint value creation – supply chain contributing
Slide 105: Australian innovation - products designed for local market conditions and consumers
Australian innovation - products designed for local market conditions and consumers Growth enabler – innovation and product design Ground up designs and Extensive in-house technical solutions technical expertise ❖ Consumer expertise - continued suited to Australian across multiple investment in loca
Slide 106: Creating sustainable supply solutions in partnership with our strategic suppliers
Creating sustainable supply solutions in partnership with our strategic suppliers Growth enabler – supply solutions +10 point Future focused competitive tender improvement in process for product Forecast accuracy ❖ Exclusive supply partnerships – long term development commitment to quality, service,
Slide 107: Designing a global distribution network that delights customers and supports growth
Designing a global distribution network that delights customers and supports growth Growth enabler – network alignment 30,000m² 5* Green streamlined Rating ❖ Business efficiency - optimising service at purpose built warehousing facility best cost across our end to end network ❖ Increased use of tech
Slide 108: Continuous commitment to drive further cost efficiencies
Continuous commitment to drive further cost efficiencies Growth enabler – best cost ❖ Driving continued business efficiency - focused on Waste, Yield and COGS ❖ Distribution network alignment - cost to serve project initiated February 2018 for cost out and customer satisfaction ❖ Evolving sourcing s
Slide 109: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Craig Customer focus delivering growth Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 110: Consistently strengthening returns
Consistently strengthening returns Group Return on Funds Employed (%) Group EBIT Margin (%) 20.2 20.9 19.3 17.8 18.1 18.4 17.1 16.1 14.5 12.2 FY14 FY15 FY16 FY17 1HFY18 FY14 FY15 FY16 FY17 1HFY18 ROFE % EBIT % Margin Source: GWA 109
Slide 111: B&K strong returns with margin resilience
B&K strong returns with margin resilience B&K Return on Funds Employed (%) B&K EBIT Margin (%) ± 50-100 bps 25.2 25.3 25.2 25.0 24.7 24.8 24.1 23.8 22.5 21.2 FY14 FY15 FY16 FY17 1HFY18 FY14 FY15 FY16 FY17 1HFY18 ROFE % EBIT % Margin Source: GWA 110
Slide 112: 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-$12M FY19-FY21 back office, IT state warehouses systems (3 year target) ❖ Operational efficiency – continue to reduce cost b
Slide 113: Strong financial position to fund growth
Strong financial position to fund growth Growth enabler – strong credit metrics Continued low debt ❖ Credit metrics continue to be consistent A$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
Slide 114: Disciplined capital expenditure focused on growth initiatives
Disciplined capital expenditure focused on growth initiatives Growth enabler – disciplined capital expenditure Capital expenditure profile (A$m) ❖ Continued disciplined approach to Capital 14.1 Expenditure 12.3 9.9 ❖ Exit of manufacturing reduced capital requirements and increased more flexible 9.0
Slide 115: Strong cash generation through the cycle
Strong cash generation through the cycle Growth enabler – strong operating cash flow Cashflow from operations (A$m) ❖ GWA continues to generate strong operating cash through the cycle 91.7 88.8 81.7 ❖ Operating cash conversion at high levels ❖ Continued focus on working capital management to drive o
Slide 116: Strong focus on shareholder returns
Strong focus on shareholder returns Strong sustainable shareholder returns Dividends and returns to shareholders ❖ Board focus on providing strong returns 60% to shareholders 50% 40% ❖ Dividend policy: 65-85% of NPAT, subject 30% 20% to prevailing market conditions 10% 0% ❖ Dividend Policy balances
Slide 117: Agenda
Agenda GWA transformation - strong progress made Tim Salt A business with significant growth opportunities Tim Salt Craig Customer focus delivering growth Norwell Semée Consumer driven growth Dickerson Anthony Leveraging our advantaged supply chain Mortimer Patrick Our financial strength Gibson GWA
Slide 118: Strategy creates focus and positions GWA for growth
Strategy creates focus and positions GWA for growth We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth , ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIVEN Add value to customers through
Slide 119: GWA has significant growth opportunities across core segments in a A$1.4bn market
GWA has significant growth opportunities across core segments in a A$1.4bn market Market by segment (NSV – A$1.4bn) Residential Multi Comm Commercial R&R Residential R&R -Res $191m $123m $138m $324m $673m Rest-of-market Focussed opportunities to grow GWA ~ 35% ~ 25% ~ 35% share share share ~ 16% sha
Slide 120: And opportunities to extend into large water solutions adjacencies
And opportunities to extend into large water solutions adjacencies GWA Superior Solutions for Water Growth Model ➢ Local partnerships in ➢ Cannot win, will Commercial segments in not play New water scarce geographies Geography ➢ Grow via broader ➢ Priority. Strengthen core Existing segment penetrati
Slide 121: GWA Making life better through superior solutions for water
GWA Making life better through superior solutions for water ❖ Demonstrating ability to drive growth and improve shareholder returns ❖ A more focused business with strong brands and leading market positions ❖ Pursuing significant growth opportunities focused on superior solutions for water ❖ Increase
Slide 122: GWA, Making Life Better for all stakeholders
GWA, Making Life Better for all stakeholders We make life better through the design and delivery of products, services and technologies that create superior solutions for people to enjoy and sustain water, our planet’s most precious resource. 121
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12th April, 2018 © GWA Group Ltd 2018
Slide 124: Proforma 5 year summary
Proforma 5 year summary Half Year Half Year A$m FY13 FY14 FY15 FY16 FY17 Dec 16 Dec 17 Revenue Bathrooms & Kitchens 286.3 306.6 330.0 342.0 350.4 174.3 178.9 Door & Access Systems 89.8 92.8 96.2 97.7 95.9 49.1 48.2 Total Cont'd Ops 376.1 399.4 426.2 439.7 446.3 223.4 227.1 Discontinued Ops ** 189.2
Slide 125: Australian population growth
Source: ABS 0.0 0.5 1.0 1.5 2.0 2.5 Jun-1982 Jun-1983 Jun-1984 Jun-1985 Jun-1986 Jun-1987 Jun-1988 Jun-1989 Jun-1990 Jun-1991 Jun-1992 Jun-1993 Jun-1994 Jun-1995 Jun-1996 Jun-1997 Jun-1998 Jun-1999 Jun-2000 Jun-2001 Jun-2002 Australian population growth Jun-2003 Jun-2004 Jun-2005 Australian populati
Slide 126: Annual net overseas migration
Source: ABS 100 150 200 250 300 350 0 50 Jun-82 Jun-83 Jun-84 Jun-85 Jun-86 Jun-87 Jun-88 Jun-89 Jun-90 Jun-91 Jun-92 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Annual net overseas migration Jun-04 Jun-05 Jun-06 Jun-07 Annual Net Overseas Migration ('000’s) Jun-08 J
Slide 127: Population growing faster than dwelling stock - increases demand for housing
Population growing faster than dwelling stock - increases demand for housing 126
Slide 128: Strong consumer sentiment
Strong consumer sentiment 127
Slide 129: Renovation lending
Source: ABS Monthly Average 320 340 360 380 400 420 Jan-2011 Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012 Mar-2012 May-2012 Jul-2012 Sep-2012 Nov-2012 Jan-2013 Renovation Lending Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-
Slide 130: 30-35 year old detached house stock closely correlated with renovations activity
30-35 year old detached house stock closely correlated with renovations activity and expected to grow into the early 2020s Volume of Renovations Activity ($bn) 650 40 600 35 Thousands of Houses 550 30 500 25 450 20 400 15 350 10 30-35 year (inc) Houses Completed State Final Demand - MAT Source: ABS,
Slide 131: Non Residential by sector
Non Residential by sector Non Residential – Value of Work Done $m 14,000 Forecast 12,000 10,000 8,000 6,000 4,000 2,000 0 Retail Offices Accommodation Transport Factory Warehouses Other C&I Education Aged Care Health Entertainment & Recreation Other S&I Source: BIS Oxford Economics: MAT, Actuals to
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12th April, 2018 © GWA Group Ltd 2018