Boral Ltd.

Boral — FY2006 Earnings Presentation

25 slides from Boral's earnings presentation, Aug 15, 2006

  1. Slide 1: Boral Results for the year ended 30 June 2006

    Boral Results for the year ended 30 June 2006 Rod Pearse CEO & Managing Director 15 August 2006 Agenda ƒ Financial Highlights and Markets Review ƒ Financial Results ƒ Divisional Performance ƒ Perform & Grow Strategy ƒ Outlook 2 1

  2. Slide 2: Steady financial results in FY2005/06

    Financial Bricks Highlights Union City Eureka Tower Melbourne & Markets Review Construction Materials Indonesia Steady financial results in FY2005/06 Revenue 11% to $ 4.8b EBITDA 4% to $ 823m EBIT 2% to $ 614m Net Interest 38% to $ 98m Profit after tax -2% to $ 362m EPS -3% to 61.7 cents Final divid

  3. Slide 3: Performance highlights; mixed market conditions

    Performance highlights ƒ Profits steady despite Australian dwelling weakness and fuel costs ƒ Construction Materials – EBITDA of $410m down 2%; effective pricing, solid volumes, improved QEU earnings; however, high fuel- related costs and some commissioning / production issues in cement ƒ Building P

  4. Slide 4: State-by-state markets are mixed

    State-by-state markets are mixed: NSW & Qld dwellings well below underlying demand FY06 vs FY05 % change of Dwelling FY06 Dwelling Starts2 as % Approvals & Non-Dwelling VWA1 Underlying Demand3 (FY02 to FY11) Dwellings Non-dwellings WA 127% 37% 29% SA 127% 18% Vic 101% 7% 4% 1% 88% Qld 68% NSW -3% -4

  5. Slide 5: Non-dwellings and RHS&B driving concrete volumes

    Non-dwellings and RHS&B driving concrete volumes Changes in Australian readymix concrete production – FY2006 vs FY2005 Percentage change ‘000 cubic metre change 998 817 13% 111 7% 142 4% 2% 0% -2% -4 -151 Australia NSW VIC QLD WA SA Source: ABS 9 Financial Deer Park Landfill - QEU Results Waurn Pond

  6. Slide 6: Profit after tax down 2% to $362m in FY2006

    Profit after tax down 2% to $362m in FY2006 Dec-05 Jun-06 YOY A$m FY2006 FY2005 half half %∆ Sales revenue 2,343 2,424 4,767 4,305 +11 EBITDA 393 430 823 794 +4 EBIT 293 321 614 603 +2 Net Interest 46 52 98 71 +38 Profit before tax 247 269 516 532 -3 Tax 74 79 153 162 -5 Profit after tax 172 190 362

  7. Slide 7: Some margin compression due to lower housing volumes and higher costs

    Some margin compression due to lower Australian housing volumes and higher fuel-related & other costs EBIT / Sales EBITDA / Sales 20% 20% 17.3% 16% 16% 12.9% 12% 12% 8% 8% 4% 4% 0% 0% FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY05 result onward has been adjusted

  8. Slide 8: Boral's balance sheet remains in good shape

    Boral’s balance sheet remains in good shape As at Jun-06 Jun-05 A$m Net debt 1,578 1,394 Net debt / equity 57% 58% Net debt / (net debt + equity) 36% 37% Net Interest cover 6.3 x 8.5 x Funds employed 4,333 3,800 EBITDA margin on sales 17.3% 18.5% 15 And return on shareholders’ funds remains at a hig

  9. Slide 9: Earnings and EPS growth since demerger; safety performance

    Boral’s earnings & EPS have grown strongly since demerger Cents / share 64 63 62 Dividend Gross DPS EPS 49 49 49 43 34 30 32 26 27 24 21 18 18 34 34 30 23 18 18 18 19 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 17 Boral’s safety performance has continued to improve Lost time injury frequency rate (LTIFR

  10. Slide 10: Divisional Performance

    Divisional Performance Kiln 11 Midland Brick Construction Materials Thailand Cement Mill 7 Berrima Australian EBITDA earnings down; offshore up A$m FY2005 FY2006 2% 416 410 24% 15% 219 191 177 162 8% 28 30 Construction Building Products, USA Asia Materials, Australia Australia 20 10

  11. Slide 11: Construction Materials: EBITDA down 2% due to fuel and other costs

    Construction Materials: EBITDA down 2% due to fuel and other costs Sales revenue EBITDA/sales A$b 3.0 1H sales 2H sales 24% A$m FY06 FY05 %∆ EBITDA/sales Sales 2,410 2,164 +11 2.5 20% EBITDA 410 416 -2 2.0 16% EBIT 286 305 -6 1.5 12% Funds employed 2,202 2,033 +8 1.0 8% EBITDA/sales % 17.0 19.2 EBIT

  12. Slide 12: Construction Materials: price and volume gains

    Construction Materials: price and volume gains ƒ Concrete and Quarries: revenues up 8%; volumes strong but fuel, cement & other cost increases not fully recovered by price gains. Significant lift in Qld. ƒ Asphalt: stronger volumes underpinning 18% revenue lift. Margins sustained despite increases i

  13. Slide 13: Building Products: lower volumes and price improvement

    Building Products: lower volumes and price improvement Ext. sales A$m FY2006 FY2005 %∆ volume ∆ price ∆ Bricks 295 295 - Roofing 104 110 -5 Masonry 128 138 -7 Plasterboard 327 321 2 Timber 220 189 16 Windows 139 134 4 TOTAL 1,213 1,187 2 25 Building Products: lower volumes and price improvement ƒ Br

  14. Slide 14: USA: record earnings and margins

    USA: record earnings & margins Sales revenue EBITDA/sales US$m FY06 FY05 %∆ A$b 1.0 1H sales 2H sales 25% Sales 714 611 +17 EBITDA/sales EBITDA 163 133 +23 0.8 20% A$m FY06 FY05 %∆ Sales 957 810 +18 0.6 15% EBITDA 219 177 +24 0.4 10% EBIT 186 147 +27 Funds employed 848 745 +14 0.2 5% EBITDA/sales %

  15. Slide 15: USA: Perform & Grow strategy on track

    USA: “Perform & Grow” strategy on track ƒ Record profitability due to favourable market conditions, price increases and cost reductions and growth benefits ƒ Bricks: earnings up with strong selling prices and increased direct distribution sales. Volumes steady. Higher fuel, energy and raw material c

  16. Slide 16: Asia: underlying plasterboard earnings steady

    Asia: Underlying plasterboard earnings steady but construction materials down ƒ EBITDA of $30m (up 8%) ƒ Plasterboard JV contribution of $20m, benefiting from one-off Shanghai land compensation payment; underlying result steady – South Korean market remains weak - impacting price and volumes – Thail

  17. Slide 17: We continue to deliver against our objectives

    We continue to deliver against our objectives Objectives Performance 1. Exceed weighted average ROFE1 of 14.2% exceeds WACC. cost of capital (WACC) Focus remains on delivery of price, PEP through the cycle & growth outcomes 2. Deliver better financial Returns from Australia, Asia and USA returns tha

  18. Slide 18: Perform: superior returns in a sustainable way

    Perform: focus on achieving superior returns in a sustainable way EBIT return on funds employed 25% 21.9% 20% 15% 13.0% 11.8% Pre-tax Funding 10% Charge 6.0%1 5% Building Construction USA Asia Materials, Australia Products, Australia 0% Funds employed 1. The contribution from the Asia plasterboard j

  19. Slide 19: Growth capex benefits from FY2007/08

    Growth: ~ $320m of (2005/06 announced) growth capex will benefit results from FY2007/08 Growth project Benefits Benefits from: Vietnam ƒ Commence plasterboard manufacturing – 10m m2 Sep-06 Q (Plasterboard, LBGA) Plasterboard ƒ New 40m m2 plant - $106m net investment Dec-07 Q (Qld) Bricks USA ƒ New U

  20. Slide 20: Building Products and offshore growth benefits from FY2007

    Building Products growth benefits from FY2007 Midland Brick Kiln 11 Herons Creek upgrade Plasterboard Queensland • New $53m, 50m SBE state- • $24m investment in • $106m net investment of-the-art kiln commenced 115,000m³ capacity saw mill • On-line around Oct-2007 during Jun-06 quarter • Construction

  21. Slide 21: Australian residential starts should bottom in FY2007

    Eastlink Project Melbourne Outlook Clay Tiles Trinidad Timber Herons Creek Australian residential starts should bottom in FY2007 Australian Residential Starts (‘000) 200 180 Actual 160 Forecast 140 120 100 80 60 40 20 0 FY07f FY08f FY09f FY10f FY11f FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97

  22. Slide 22: NSW residential recovery will take time; non-residential mini boom

    …but NSW residential recovery, which is important to Boral, will take time New South Wales Residential Starts (‘000) 60 Actual 50 Forecast 40 30 20 10 0 FY07f FY08f FY09f FY10f FY11f FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06e Source: ABS, BIS Shra

  23. Slide 23: Australian market activity forecast relatively steady

    Australian market activity is forecast to remain relatively steady Australian Building Activities – Value of Work Done % change A$97/98 billion Seasonally adjusted 50 (2.3) 0.5 RHS&B (6.0) 45 (13.5) 1.0 Non-dwellings (3.8) 40 Dwellings 35 5.6 (1.2) (20) 30 25 20 15 (3.6) 1.5 3.0 10 5 0 FY07f FY08f F

  24. Slide 24: Boral's USA markets will weaken in FY2007

    Boral’s USA markets will weaken in FY2007 FY07 vs FY06 % change of Building Activities Value Work Commenced - US$92 Dwellings Non-Dwellings Total Exposure 9.6% 9.6% 8.2% 6.8% -2.6% -2.6% -4.2% -5.1% -6.6% -6.3% -5.9% -5.9% Brick states1 Tile states2 Construction Mat’ls Total Boral states states3 1.

  25. Slide 25: Outlook for FY2007

    Outlook for FY2007 ƒ In Australia: • Expect dwelling commencements of ~140,000 -145,000 starts • Continued strength in non-dwellings & infrastructure • Effective price & cost management; products slowdowns / shuts • Cement (4-5%) & concrete ($5/m³) price increases in October ƒ Quarry End Use earning

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