Slide 1: Distribution Investor Presentation October 2009
For personal use only Distribution Investor Presentation October 2009 John Beveridge, Chief Executive - Distribution
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: Fletcher Distribution's overarching goal is to maximise FBU's return on investment
Fletcher Distribution's overarching goal is to maximise FBU's 3 return on investment along the value chain No 1 Choice for Customers and Suppliers in the For personal use only Vision Built Environment • A unique combination of people, ownership model and integrated Business distribution system that
Slide 4: Fletcher Distribution mission, brand promise and values
For personal use only Fletcher Distribution 4 • Operate national pricing models, supply chain and procurement to meet customer needs without reducing local entrepreneurship • Have superior capability and resilience through a flexible cost structure Mission to compete in all key segments • Move to a
Slide 5: Joint Venture model gives competitive advantage
Joint Venture model gives competitive advantage • The combination of ownership structure, operator skill and FBU scale provides a strong and enduring business model For personal use only • High Calibre of people running the stores as JV‟s – Attracted by the returns and ownership opportunity in joint
Slide 6: JVO gives Competitive advantage
JVO gives Competitive advantage • Able to attract and retain good staff For personal use only – Many key people in stores have equity share and aspire to JV ownership – The industry‟s best talent is attracted • Excellent customer relationships – especially with trade – Affinity with SME peers in the
Slide 7: Succession Planning and Talent Attraction underway
Succession Planning and Talent Attraction underway For personal use only http://www.doyoumeasureup.co.nz/ Distribution Analyst Presentation – October 2009
Slide 8: Market Share in Trade Improving
Market Share in Trade Improving 8 PlaceMakers trade focused model is well proven and been resilient in the downturn For personal use only Revenue share of top five NZ builders Share of total building materials (%)* merchant merchant players: players, 2001–08* 2001–08 100 30 32 34 75 60 66 72 FDL has
Slide 9: FDL not experienced full extent of market drop off in past two years
FDL - not experienced full extent of market drop off in 9 past two years Trade Market Share vs. Total Market Materials Trade Market Share vs Total Market Materials For personal use only 400 40% 350 35% 300 30% 250 25% Market Materials ($m) Market Share 200 20% 150 15% 100 10% Market Materials Market
Slide 10: Revenue and EBITDA under pressure as market slows
However revenue and EBITDA under pressure as market 10 slows in competitive industry Distribution Revenue and EBITDA: FY07-09 For personal use only NZ$m 1,200 1,142 1,064 FDL has experienced revenue 928 growth and gains in trade market share, but EBITDA margins have 800 suffered Financials highly de
Slide 11: Well positioned when market revives
Well positioned when market revives • Over the course of F09 For personal use only – Staff numbers down 18% – Costs down 10% – Inventory and debtors down $41m – 18% – Cash flow $28m - despite EBITDA decline • Facility upgrade plans are in process for consideration – Albany, Oamaru, Warkworth, Pakura
Slide 12: PlaceMakers strategic focus on the trade and complimentary retail offer
PlaceMakers strategic focus is clear - on the trade and complimentary retail offer • Prior to 2005, the competitive landscape was less aggressive – only 13 big boxes in NZ For personal use only • This enabled PlaceMakers to complement its trade focus strategies with a secondary market of the serious
Slide 13: Focus on two core customer segments: The trade and the serious DIY
Focus on two core customer segments: 13 The trade and the serious DIY Primary segment: Trade Customers • The trade customer will get first For personal use only consideration – Commercial Offer – Group home builder Positioning Trade Serious DIY General Retail – Residential – Sub contractors Premium
Slide 14: The Know How Card – key DIY tool
The Know How Card – key DIY tool For personal use only Distribution Analyst Presentation – October 2009
Slide 15: Market segment and product analysis relative to competitors
Market segment and product analysis relative to 15 competitors and resilient in the downturn Trade Retail and Truss Frames timber Other Structural Doors/Windows Plasterboard Interior Panels/ Ext. Cladding / Insulation Other Outdoor Masonry / Rebar Concrete / Agg. / Plywood Timber Appearance Wood Oth
Slide 16: Customer segments support the Trade Focus
Customer segments support the Trade Focus – 16 For personal use only Percentage of total gross margin dollars (before rebates) by customer type • The spread of margin GROUP BUILDER dollars generated by KNOW HOW CARD USERS the segments indicate their relative size and importance RESIDENTIAL BUILDER R
Slide 17: Further opportunity to leverage scale
17 Further opportunity to leverage scale For personal use only Percentage of Total Revenue by Category • Opportunity to leverage scale in the supply chain as the biggest trade player. • The value of PlaceMakers in distributing Fletcher Building product and supporting key industry suppliers is also a
Slide 18: A series of operational initiatives to support strategic focus
A series of operational initiatives in place to support this 18 strategic focus Enablers Initiatives For personal use only People: Attract, Develop, • Establish training for branch sales staff and Retain the Industry‟s – Staff training Best Sales Talent – Product training Goals • Invest in JVO dev
Slide 19: Manufacturing – a core strategy
Manufacturing – a core strategy • Frame and Truss manufacturing – 10% of sales For personal use only – Key enabler of total trade offer • Key activities over past year – Consolidation of facilities to more efficient plants – reduction from 22 to 14 – Profitability has seen a two fold increase – Mark
Slide 20: Manufacturing – a core strategy
Manufacturing – a core strategy • Clear objectives For personal use only – Cooperative regional JV and FDL ownership models to be introduced – Technical selling skills training – Ongoing rationalisation for scale and efficiency • Improvements underway in detailing and estimating process. A key aspec
Slide 21: Distribution summary
Distribution summary • FDL model has stood up well in recession • Focus on Trade / DIY reinforced For personal use only • Better execution at lower cost • Improve & target customer offer to selected segments • Know How – Can Do is our core promise Distribution Analyst Presentation – October 2009