Fletcher Building Limited · NZX:FBU
Fletcher Building — Investor Day (June 2023)
14 slides from Fletcher Building's investor day presentation, June 2023
Slide 1: Medium Term Outlook
Medium Term Outlook Bevan McKenzie, CFO Fletcher Building Limited
Slide 2: We have established a solid base of operational performance
We have established a solid base of operational performance EBIT1 Margin: NZ and AU Materials & Distribution Divisions ▪ Sustained margin uplift delivered from FY19 to FY23 >9% 8.0% 8.3% 6.6% ▪ Driven mainly by operational improvements in our NZ and AU Materials & Distribution businesses ▪ Fixed cos
Slide 3: Our FY23 margins have been delivered in a market already softening off the peak
Our FY23 margins have been delivered in a market already softening off the peak – outlook for FY24 is for activity to move to around mid-cycle levels Market volumes This year: FY23 vs. 2H22 Outlook: FY24 vs. FY23 ~7% ~8% ~5% ~8% Outlook has heightened degree of uncertainty, esp. in NZ residential. C
Slide 4: In the medium term, our sectors are supported by solid macro tailwinds
In the medium term, our sectors are supported by solid macro tailwinds Residential Commercial Infrastructure ▪ Long-term housing stock ▪ Commercial investment continues ▪ Infrastructure deficit will require undersupply in a positive trajectory, esp. in decades of large investment across logistics, h
Slide 5: We are focused on locking-in the operational gains we have made and driving further margin expansion
We are focused on locking-in the operational gains we have made and driving further margin expansion over the medium term Drivers of Medium Term Margin Expansion ▪ Investment in growth adjacencies NZ & AUSTRALIA – $800m+ committed, mainly organic NZ focus +50-100 MATERIALS & bps DISTRIBUTION ▪ Custo
Slide 6: Growth investment programme well advanced, strong ROFEs & earnings uplift
Growth investment programme well advanced, strong ROFEs & earnings uplift $800m+ growth invest’s FY23-26 Screened against robust criteria $120m+ full run-rate EBIT growth Waipapa Tumu ROFE ≥ 15% Timber c.$35m EBIT from M&A acquisition acquisition Waipapa, Tumu, and circular acquisitions in FY24 Circ
Slide 7: Committed growth investment of $800m+ is phased over FY23-FY26
Committed growth investment of $800m+ is phased over FY23-FY26 Committed Growth Capex ($m) c.$300m c.$250m c.$250m Further significant organic opportunities available in FY26 onwards FY23F FY24 FY25-26 Page 26 | Fletcher Building Limited Investor Day Presentation | © June 2023 Note: Excludes WWB Tau
Slide 8: Customer: great customer outcomes are strongly linked to performance across all key metrics
Customer: great customer outcomes are strongly linked to performance across all key metrics CUSTOMER SAFETY ENGAGEMENT PROFITABILITY (Relationship NPS) (TRIFR) (eNPS) (EBIT margin %) 60 40 4.4 ~2.5x 2.2 20 10 Top third of FB BUs by Bottom third of FB BUs by customer NPS customer NPS FB Average Page
Slide 9: Customer: our performance is solid, but too variable across BUs
Customer: our performance is solid, but too variable across BUs – consistent delivery at target levels represents a massive opportunity in our industry FB Relationship1 NPS Results FY23 – by Business Unit Competitive Benchmark NPS Results 2022-23 70 Our 60 target: 55 58 Best Fletcher BU 50 Current F
Slide 10: Customer: we are focused on improving service and solutions in four areas
Customer: we are focused on improving service and solutions in four areas PRODUCT QUALITY, RESPONSIVE, JOINED UP THE AVAILABILITY, & DELIVERY CUSTOMER SERVICE FUNDAMENTALS Right product, right place, Seamless customer experience & on time, every time – DIFOTIS communication across all channels BRING
Slide 11: Housing: we are well-positioned to grow unit sales in the future
Housing: we are well-positioned to grow unit sales in the future – but only once we are confident of a NZ market recovery Valuation of Land on Balance Sheet Growth Potential in Stronger Market (units) ▪ High-quality communities built at scale, avg. c.$1bn price <$1m = deepest part of market 1,200+ ▪
Slide 12: Construction legacy projects are a cash outflow in FY23-FY24 before assumed claim recoveries in FY25
Construction legacy projects are a cash outflow in FY23-FY24 before assumed claim recoveries in FY25 Forecast FCC Legacy Project Cash Flows ($m) ▪ Buildings: remaining net cash outflows relate to losses on fire reinstatement works and final ‘BAU’ works; outflows are c.125 concentrated in FY24 follow
Slide 13: Underlying cash flows and balance sheet settings remain robust
Underlying cash flows and balance sheet settings remain robust Underlying Trading Cash Flow1 ($m) ▪ Underlying FY23 cash flows robust, strong second half delivered in line with prior guidance 929 ▪ Forecast balance sheet metrics at Jun-23F: ▪ Net debt c.$1.5b 585 ▪ Funding facilities c$2.8b 525 c.50
Slide 14: Well positioned for cycle, disciplines & culture driving performance, with clear pathway for growth
Well positioned for cycle, disciplines & culture driving performance, with clear pathway for growth ▪ Solid FY23 delivered in softer trading conditions ▪ FY24 focus on preserving operational gains as market reverts to mid-cycle levels ▪ Construction legacy nearing completion, some risk to manage, go