Boral — Non-Deal Roadshow (October 2015)
44 slides from Boral's roadshow presentation, Oct 7, 2015
Slide 1: Boral Limited
Boral Limited Presentation for UK Investor Roadshow, October 2015
Slide 2: About Boral
About Boral
Slide 3: Boral overview
Boral overview FY2015 external revenue2 • Boral is an international building and construction materials group by division, % with operations in Australia, the USA USA and Asia 17 Gypsum Construction Materials & Cement • S&P/ASX 100 company 12 61 10 Building Products • Operations across 13 countries1
Slide 4: Boral's Fix, Execute, Transform program
Boral’s Fix, Execute, Transform program Our goal is to transform Boral into a global building and construction materials company that is known for its world-leading safety performance, innovative product platform and superior returns on shareholders’ funds. FIX EXECUTE TRANSFORM 2 years 4 years 6 ye
Slide 5: Construction Materials & Cement and Boral Building Products
Construction Materials & Cement and Boral Building Products SHARE OF REVENUE1, % by state WA / NT NT 2 20 NSW / 12 ACT 1 2 61 QLD 39 25 1 17 QLD 1 12 24 1 WA 13 1 SA 3 VIC / TAS / SA 11 1 30 NSW/ 7 10 1 93 by business ACT 2 2 1 13 Timber Other 9 Bricks & 4 Roofing2 4 4 OPERATING FOOTPRINT VIC/TAS Co
Slide 6: Strategic reserves and integrated downstream operations
Boral is well positioned with strategic reserves and integrated downstream operations 40-50% Quarry QUARRIES 5-15% Quarry CEMENT volumes sold volumes sold Aggregates BITUMEN ~70% of needs internally to and sand internally to from domestic Concrete Asphalt Bitumen Importers manufacturing Australia (J
Slide 7: Boral's Australian revenues are derived from a number of segments
Boral’s Australian revenues are derived from a number of segments Other engineering2, VWD A$ billions Detached dwellings5, # starts 120.0 140,000 100.0 120,000 100,000 Boral’s Australian 80.0 80,000 60.0 60,000 40.0 Revenue 40,000 20.0 20,000 - by end-market1 - 1989 1991 1993 1995 1997 1999 2001 200
Slide 8: Largest Australian segment is Roads, Highways, Subdivisions & Bridges
Boral’s largest segment in Australia is Roads, Highways, Subdivisions & Bridges (RHS&B) Major Australian Road Projects, A significant lift in Major Road Projects VWD A$b (as at September 2015) underpins forecast growth of ~25-30% in RHS&B VWD, over the next 4-5 years Roads, Highways, Major road proj
Slide 9: Concrete demand in Australia
Concrete demand in Australia A proxy for construction materials volumes Industry concrete demand in Australia is forecast to stay at high levels of demand for the next five years Macromonitor Forecast Concrete Demand across all Australian construction markets, million m3 • ~1% CAGR in concrete volum
Slide 10: USG Boral
USG Boral 50%-owned joint venture in Australia, New Zealand, Asia & Middle East SHARE OF REVENUE1, % Other Australia Indonesia 11 China 7 5 34 3 South Korea 12 8 China 2 15 1 2 Thailand 21 India 3 1 Vietnam 1 1 3 1 Korea 1 Middle East 2 1 Philippines Thailand 1 2 MANUFACTURING FOOTPRINT 3 (total num
Slide 11: High growth countries and new products underpin USG Boral's growth
Operations in high growth countries as well as new products will underpin USG Boral’s growth China SHARE OF REVENUE1, % GDP growth 7.4% Population 1.4 bn Other Population growth 0.4% Australia India 11 Urban population 54.4% Indonesia GDP growth 5.6% 7 Rate of urbanisation 3.1% 34 Population 1.2 bn
Slide 12: Boral USA
Boral USA SHARE OF REVENUE1 , % 1 by business 1 Fly Ash & Construction NORTH- Materials 1 MIDWEST 2 EAST 23 Cladding2 1 1 1 1 WEST 1 10 6 5 54 4 1 1 3 23 1 7 Roofing 1 2 2 2 1 1 4 3 3 4 5 6 SOUTH 4 by end market 1 59 1 5 Other 2 RHS&B3 5 OPERATING FOOTPRINT4 4 7 Non- (total number of operations) res
Slide 13: US new residential construction continuing to recover
In the USA, new residential construction is continuing to recover in all regions Forecasters1 currently expect an average of ~1.2m US housing starts in FY2016 and ~1.8m by FY2019, with all regions forecast to recover strongly ‘000 NORTHEAST2 Region Housing Starts SHARE OF BORAL’S ‘000 MIDWEST2 Regio
Slide 14: Focus on improving ROFE in the long term
Focus on improving ROFE in the long term Driven by improved USA, Building Products and Property earnings, and portfolio restructuring EBIT to funds employed (ROFE1) % 18.2 15.9 14.2 11.9 10.1 8.2 7.6 7.2 6.5 6.6 4.7 4.1 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Focused on ongoing d
Slide 15: Safety performance
Safety performance Our goal is to achieve ZERO HARM for all Boral employees and contractors Employee and Contractor RIFR1 • Continuing to reduce injuries with 11% (per million hours worked) decrease in RIFR to 12.1 in FY2015, LTIFR MTIFR from 13.6 in FY2014 22.7 21.4 - LTIFR reduced 5% to 1.8 in FY2
Slide 16: FY2015 Results
FY2015 Results
Slide 17: FY2015 result highlights
FY2015 result highlights Boral delivers significant profit improvements Revenue Gearing, Net D/(Net D+E) Reported Continuing operations $4.4b 15% $4.3b 19% up from 18% EBIT1 Earnings per share1 $357m 21% 31.9cents 45% Profit after tax1 Full year dividend $249m 45% 18.0cents 20% Net profit after tax
Slide 18: Strong earnings performance
Strong earnings performance Boral USA, Building Products and Property sales drive earnings strength EBIT1 variance FY2015 vs FY2014 (A$m) 45 22 38 (28) (14) 357 294 FY2014 Construction Materials Building Boral Boral FY2015 EBIT1 & Cement Products Gypsum2 USA EBIT1 Operating Property 1. Excluding sig
Slide 19: Mixed movements in market activity
Mixed movements in market activity Housing markets stronger with modest decline in Australian roads and continued slowdown in engineering construction FY2015f vs FY2014 Asia4 Korea Thailand China Indonesia Australia RHS&B (VWD)1 2% Other engineering (VWD)1 15% USA Non-residential (VWD)2 1% Total hou
Slide 20: ROFE improvement across all divisions
ROFE improvement across all divisions All divisions reported positive ROFE for FY2015 Construction Materials & Cement Building Products ROFE1 % Solid returns with further gains ROFE1 % Strong earnings improvement • Strong NSW market and • Improved housing activity in increased residential activity N
Slide 21: Construction Materials & Cement
Construction Materials & Cement Maintaining profitability despite lower major road, infrastructure and engineering activity A$m FY2015 FY2014 Var, % Revenue EBIT Revenue 3,091 3,287 (6) $3.1b 6% $301m 9% EBITDA1 485 445 9 • Higher earnings from Property, Asphalt, EBIT1 301 277 9 Cement and Concrete
Slide 22: Building Products
Building Products Increased housing activity and cost savings support improved profitability across all products A$m FY20152 FY2014 Var, % Revenue EBIT Revenue 485 487 – $485m $30m from $8m EBITDA1 50 29 70 • Revenue broadly steady, reflecting: EBIT1 30 8 260 - Price gains and stronger housing activ
Slide 23: Boral Gypsum (50%-owned USG Boral JV)
Boral Gypsum (50%-owned USG Boral JV) Strong price discipline, larger product range and market activity drive significant growth A$m FY2015 FY2014 Var, % Underlying Revenue Underlying EBIT Reported Gypsum result1 EBIT1,2 – 67 $1.3b 16% $141m 38% Equity income1,2 49 10 • Margin expansion in all key r
Slide 24: Boral USA
Boral USA Breaks through to profitability with improved market activity and strong focus on costs Revenue EBIT A$m FY2015 FY2014 Var, % Revenue 839 681 23 A $839m 23% A$6m from (A$39m) EBITDA1 50 3 EBIT1 6 (39) • Strong growth in Cladding, Roofing and Construction Materials; benefits from EBIT ROS1,
Slide 25: Group financial performance
Group financial performance Stronger housing markets, improved operational performance and Property earnings drive profitability A$m FY2015 FY2014 Var % Revenue 4,415 5,204 (15) EBITDA1 605 556 9 Depreciation and amortisation (249) (261) EBIT1 357 294 21 Net interest1 (64) (83) Tax1 (44) (37) Non-co
Slide 26: Significant items
Significant items Gains from sale of Western Landfill offset by impairments and further business restructuring Notes: A$m FY2015 Notes 1. In February 2015 Boral sold its Western Landfill Gain on disposal of Western Landfill 115 1 business for net cash proceeds of $139m and generated profit before ta
Slide 27: Cash flow
Cash flow Continuing to generate strong cash flows Cash flow, A$m FY2015 FY2014 • Operating cash flow of $418m reflects: EBITDA1 605 556 − strong EBITDA despite absence of consolidated Gypsum earnings, partially offset Change in working capital 37 91 by USG Boral JV dividends; Interest (63) (79) − l
Slide 28: Capital expenditure remains constrained
Capital expenditure remains constrained Increasing proportion of stay in business capital spending Total capital expenditure • SIB capex at 85% of depreciation, up from A$m 78% in FY2014 • Growth capex remains constrained to SIB1 Growth Depreciation and amortisation essential projects - Preliminary
Slide 29: Balance sheet
Balance sheet Strong balance sheet and maintaining debt at lower levels Gearing1, % • Net debt up to $817m from $718m due to foreign exchange impact 31 31 30 • Principal debt gearing covenant2 at 29%; up 19 from 26% at 30 June 2014 (threshold is less 18 14 than 60%) • Weighted average debt maturity
Slide 30: Strategic Priorities & Outlook
Strategic Priorities & Outlook
Slide 31: Boral's Fix, Execute, Transform program
Boral’s Fix, Execute, Transform program FIX EXECUTE TRANSFORM 2 years FY2013 4 years Started 6 years + Fixing things that are Improving the way we Transforming Boral for holding us back operate to be more performance excellence efficient, disciplined and and sustainable growth Streamlined organisa
Slide 32: Reshaping the portfolio and positioning to transform the business
Reshaping the portfolio and positioning to transform the business Boral Construction Boral Building Boral Gypsum Boral USA Materials & Cement Products Landfill: Divested East Coast Bricks: Sheetrock® Brand Completed restructure Western Landfill Boral CSR Bricks JV plasterboard of regional sa
Slide 33: Managing costs down
Managing costs down $213m annualised cost benefits delivered in FY2015 $150m of benefits from corporate-led programs ~$63m of benefits to Boral from divisional A$m restructuring and improvement programs Overhead & rationalisation Contractor spend & other 150 $11m of savings in FY2015 from 130 20 res
Slide 34: Outlook for FY2016
Outlook for FY2016 (as announced at FY2015 results, 27 August 2015) • Focused on maintaining FY2016 EBIT broadly in line with FY2015, Boral excluding Property. Property earnings contribution uncertain Construction • Restructuring and improvement initiatives and continued strength in Materials & Sydn
Slide 35: Supplementary slides
Supplementary slides
Slide 36: FY2015 segment revenue and EBIT
FY2015 segment revenue and EBIT External revenue A$m EBIT1 A$m FY2015 FY2014 Var, % FY2015 FY2014 Var, % Construction Materials 3,091 3,287 (6) 301 277 9 & Cement Building Products 485 487 – 30 8 260 Boral Gypsum2 – 691 (100) 49 77 (37) Boral USA 839 681 23 6 (39) 115 Unallocated – – – (29) (29) – D
Slide 37: Earnings and dividends per share
Earnings and dividends per share Fully franked final dividend of 9.5 cents per share declared Earnings and dividends per share1 Fully franked full-year dividend of A$ cents DPS EPS 18.0 cents, up 20% on FY2014 − fully franked final dividend of 9.5 cents 31.9 Full-year dividend payout ratio of 56
Slide 38: Debt profile
Debt profile Debt levels maintained at historically lower levels Gross debt currency exposure FY2015 FY2014 As at 30 June 2015 Debt facilities A$m A$m US PP1 1,105 913 22% USD CHF notes2 209 178 AUD Other loans/ finance 9 10 leases 78% Gross debt 1,323 1,101 Net debt 817 718 Total = A$1,323m 1. US P
Slide 39: RHS&B activity forecast to decline
RHS&B activity forecast to decline Value of work done forecast to decrease in FY2015 Roads, Highways, Subdivisions & Bridges1 RHS&B – by state (value of work done, $b) FY2015f v FY2014 (value of work done, $b) 19.9 19.2 -2% 18.5 17.7 16.7 16.4 +1% 15.1 -16% 6.3 6.4 -2% +12% 4.5 3.8 -5% 1.9 2.1 2.3 2
Slide 40: Australian residential activity continues to grow
Australian residential activity continues to grow Housing starts growth driven by Victoria, NSW and Queensland Total housing starts1 Housing starts – by state1 (‘000) Detached Other FY2015f vs FY2014 Detached Other +19% 215 217 213 +27% 181 162 163 +21% 145 101 96 106 65 62 77 55 70 56 +20% 114 121
Slide 41: Australian non-residential activity forecast to modestly decline
Australian non-residential activity forecast to modestly decline Non-residential activity estimated to be down by 1% Non-residential1 Non-residential – by state1 (value of work done, $b) FY2015f v FY2014 (value of work done) 37.0 -1% 36.6 35.2 35.0 34.7 +6% +6% 33.4 33.3 -9% -4% 9.4 10.0 8.8 9.3 7.1
Slide 42: US housing activity continues to grow
US housing activity continues to grow Total housing starts remain below long-term average US total housing starts1 • US housing starts of 1,052k1 in FY2015, up (‘000) 10% with single-family starts up 8%1 +10% – Total starts remain 30% below long-term average of 1.5m housing starts • US single-family
Slide 43: Non-IFRS information
Non-IFRS information Boral Limited’s statutory results are reported under International Financial Reporting Standards. Earnings before significant items is a non-IFRS measure reported to provide a greater understanding of the underlying business performance of the Group. Significant items are detail
Slide 44: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 7 October 2015 unless otherwise stated. It is provided in summary form and does not purport to be complete. It should be read in conjunction with