Slide 1: Formica Laminates & Panels Investor Presentation
For personal use only Formica Laminates & Panels Investor Presentation October 2009 Mark Adamson, Chief Executive - Formica
Slide 2: Disclaimer
2 Disclaimer This presentation contains not only a review of operations, but also some forward looking statements about Fletcher Building and the environment For personal use only in which the company operates. Because these statements are forward looking, Fletcher Building’s actual results could di
Slide 3: Formica has a global network of manufacturing sites and sales offices
Formica has a global network of manufacturing sites and 3 sales offices Formica manufacturing sites and sales offices by region For personal use only North America Europe Asia Helsingborg North Sweden Kolho, Finland Shields Newcastle, U.K. Moscow, Russia St. Jean, Canada Aycliffe, U.K . Warsaw, Pola
Slide 4: Our core business is HPL manufacturing, sales & marketing
Our core business is HPL manufacturing, sales & marketing 4 Limited vertical or horizontal integration Channel Sales & For personal use only Raw material Manufacturin Wholesale & Postforming & Retail/ Marketi production g Distribution fabrication installation Product ng Foils & Decorative Printers P
Slide 5: Market size and growth, share and competition vary by country
Market size and growth, share and competition vary by 5 country Overview of HPL market and Formica share by region For personal use only North America Europe Asia * 3 tier market * * * * * * * * * * * * * * * * * * * * * * * * * ** ** * * ** * * * ** ** ** *1 * ** Industry participants (#) 3 3 11 12
Slide 6: Formica is the largest global laminates company
6 Formica is the largest global laminates company • Formica has the largest market share Excluding ITW and FB the HPL market is For personal use only fragmented and dominated by local players • Wilsonart have a sizeable share in the US, Canada and Germany, with smaller export driven presence in othe
Slide 7: Formica enjoys a broad geographic spread of revenue
Formica enjoys a broad geographic spread of revenue 7 HPL remains the dominant product category Asia Europe North America For personal use only 0.0% 9.0% 9.9% 13.2% 5.0% 4.8% 19.3% 19.6% 66.6% 66.3% 85.4% 176m SqFt 303m SqFt 293m SqFt HPL Compact Bonded Products Solid Surfacing • HPL Dominates reven
Slide 8: Substitute products exist at price points above and below HPL
Substitute products exist at price points above and 8 below HPL There is massive substitution in the sectors in which Laminate competes For personal use only Estimated installed cost of residential Estimated installed cost of commercial toilet benchtops by material (USA) cubicle by material (UK) Mar
Slide 9: HPL occupies a specific price/value niche in surfacing products
9 HPL occupies a specific price/value niche in surfacing products How the relationships of these categories emerge from recession is unknown For personal use only Affluent Emergence Historic Granite Trend & Stones Solid Surfacing Premium HPL Volume Frugal box Emergence Commodity HPL Price LPL Formic
Slide 10: The economic crisis has led to a significant fall in demand
The economic crisis has led to a significant fall in demand 10 Impact most pronounced in developed countries Region Construction spending Formica sales volumes1 For personal use only US$b (2000 dollars) NZ$m1 600 North America 300 • USA • Canada 0 2005 2006 2007 2008 2009 FY06 FY07 FY08 FY09 US$b (2
Slide 11: Residential demand
Residential demand 11 The macro economic indicators affecting housing are improving but more is needed for the housing market to turn the corner Economic Indicator Trend For personal use only Worst appears over, return to modest growth GDP predicted in 2010 Continued increase in unemployment in all
Slide 12: Formica's mix of revenue differs by region
Formica’s mix of revenue differs by region 12 Residential traditionally leads the cycle with commercial lagging by 18 months For personal use only Asia Europe North America 25% 45% 50% 50% 55% 75% Commercial Residential • Economic drivers of residential and Key Economic Indicators commercial sectors
Slide 13: Economic data suggest conditions are tougher than expected
Economic data suggest that conditions are tougher 13 than expected. Signs of mild recovery in, commercial decline worsens in 2009 Market Outlook US Year over Year Projected Growth For personal use only • Shared Consensus from MGH and NBMDA 2008 2009 2010 2011 2012 • Positive signs of 2010 recovery l
Slide 14: US Housing starts data a key indicator of residential demand
US Housing starts data a key indicator of residential demand 14 USA Dwelling Starts Cycles Peak to Peak Each successive recession since the (Seasonally adjusted, moving annual total, 70’s has been longer, deeper and For personal use only thousands) slower to recover Years Source: US Census Bureau Fo
Slide 15: Architectural drawings are a key lead indicator for the commercial sector
15 Architectural drawings are a key lead indicator for the commercial sector US activity is at an historic low with a similar picture in major European markets For personal use only Source: calculatedriskblog.com Formica Analyst Presentation – October 2009
Slide 16: The recovery of Evendale had a massive impact on FY09 performance
The recovery of Evendale had a massive impact on FY09 performance. All elements of 16 performance improved dramatically including productivity, yield, overheads and service Finished Board Scrap Labour Productivity For personal use only Service Phenolic Press- OEE Ship Line Fill Rate (all Products) 9
Slide 17: Project Reset
17 Project Reset Five key work streams have been identified which will deliver significant future value Reset Programme For personal use only Direct Indirect Customer Product Manufacturing Procurement Procurement Profitability Profitability • Implement global • Historic • Optimise • Evaluation of •
Slide 18: Long term excess capacity exists in the European footprint
Long term excess capacity exists in the European footprint 18 Plans are in place to balance the capacity Europe For personal use only KOLHO, FINLAND NEWCASTLE, U.K. . AYCLIFFE, U.K. BILBAO, SP QUILLAN, FR. VALENCIA, SP 2009 2010 2011 2012 2013 Europe Excess Capacity 28% 15% 12% 10% 8% (HPL) Excess C
Slide 19: North American breakeven improvements since acquisition
North American breakeven improvements since 19 acquisition For personal use only M SQF Sales and HPL Breakev en Volum es NZ (millions) Sales and Breakeven Revenue $600 450 400 $500 350 300 $400 250 $300 200 150 $200 100 $1 00 50 0 $0 Pre Aq FY 08 FY 09 FY10 Post Pre Aq FY 08 FY 09 FY10 Post Reset Re
Slide 20: Strategy
20 Strategy • Complete restructuring For personal use only • US service improvement and share gain • EU manufacturing footprint rationalisation • Asian second brand strategy • Downstream integration into bonded components • Align resources for economic recovery Formica Analyst Presentation – October