Boral — UBS Warburg's Industrials Conference 2003
39 slides from Boral's conference presentation, May 26, 2003
Slide 1: Building on our strong resource and market positions
Building on our strong resource and market positions Rod Pearse UBS Warburg’s Industrials Conference 26th May 2003
Slide 2: Boral's Strategic Intent
Boral’s Strategic Intent “Boral intends to be a value-driven, focused building and construction materials supplier operating in Australia and increasingly offshore” “Our strategy is to Perform & Grow” CEO (Elect), October 1999 Building on our strong resource and market positions
Slide 3: We will grow around our leading reserve and market positions
“We will grow around our leading reserve and market positions” CEO Elect, Oct-99 8 Countries; 12,300 people; 543 total operating sites (excludes distribution) 41 ASIA Plasterboard* Indonesia #1 Malaysia #1 The Philippines #1 China (east) #1 Korea #1 62 Thailand #1 USA Indonesia Concrete #1 Fly ash #
Slide 4: Earnings driven by a range of geographies and markets (FY2002)
Earnings driven by a range of geographies and markets (FY2002) EBIT By segment Revenue* By market Building Australian Australian Engineering & Construction Products, Non-Dwellings Materials, Australia construction 15% 18% Australia 24% 40% USA Dwellings Australian 21% Dwellings 31% USA Asia 31% USA
Slide 5: Our Financial Objectives are...
Our Financial Objectives are… 1. Exceed the weighted average cost of capital (WACC) on a sustainable basis through the building cycle 2. Beat the competition in comparable markets 3. Deliver superior total shareholder returns (TSR) CEO (Elect), October 1999 “We are delivering our financial objective
Slide 6: Three years on – we are delivering against our Perform & Grow strategy
Three years on – we are delivering against our Perform & Grow strategy Operational • Prices up Improved Improvement • Costs down (PEP + step-change operating Selling, general programs) margins & admin • Overheads down Property Value • Business turnarounds Add • Asia restructuring Focused Capital bal
Slide 7: Sales are becoming stronger; EBIT has strengthened substantially
Sales are becoming stronger; EBIT has strengthened substantially Sales revenue, $million EBIT, $million 2500 250 2000 200 1500 150 1000 100 500 50 0 0 2H97 1H98 1H99 2H99 2H00 1H02 2H97 1H98 2H99 1H00 2H01 1H97 2H98 1H00 1H01 2H01 2H02 1H03 1H97 2H98 1H99 2H00 1H01 1H02 2H02 1H03 Results for reporte
Slide 8: Margins have continued to improve
Margins have continued to improve EBIT/Sales EBITDA/Sales 14% 18% 16% 12% 14% 10% 12% 8% 10% 6% 8% 6% 4% 4% 2% 2% 0% 0% HY03 HY03 FY97 FY98 FY00 FY01 FY99 FY02 FY00 FY01 FY97 FY98 FY99 FY02 Results for reported building and construction materials businesses each year Building on our strong resource
Slide 9: 40% improvement in ROE since demerger
40% improvement in ROE since demerger Return on Equity 14% 12% 10% 8% 6% 4% 2% 0% FY99 FY00 FY01 FY02 CY02 (proforma) (proforma) (MAT) Building on our strong resource and market positions
Slide 10: Three years on – we are delivering against our Perform & Grow strategy
Three years on – we are delivering against our Perform & Grow strategy Operational Improved Improvement operating Selling, general margins & admin Property Value $25m pa EBIT from QEU Add Focused Capital SIB capex at around 63% of balance expenditure depreciation since demerger D/E from sheet 83% to
Slide 11: The Greystanes Redevelopment is Boral's first major QEU project
The Greystanes Redevelopment is Boral’s first major QEU project…. NEL* – sales completed Retail Development “Greystanes BusinessHub” • Site of original Boral office • Staged subdivision from CY02 • Planned to become a district centre SEL* “Greystanes BusinessHub” Residential Development • Precinct p
Slide 12: Penrith Lakes Scheme is another important QEU project for Boral
With a 40% shareholding, the Penrith Lakes Scheme is another important QEU project for Boral Building on our strong resource and market positions
Slide 13: Development of our old brick site and clay quarry at Moorebank
…as is the development of our old brick site and clay quarry at Moorebank Building on our strong resource and market positions
Slide 14: Three years on – we are delivering against our Perform & Grow strategy
Three years on – we are delivering against our Perform & Grow strategy Operational Improved Improvement operating Selling, general margins & admin Property Value Add Focused Capital balance expenditure sheet Working Growth / acquisition capital management capital expenditure of around $200m pa Dives
Slide 15: Over $725m of capital allocated to growth in Australia and offshore since demerger
Over $725m of capital allocated to growth in Australia and offshore since demerger Australia Concrete: Concrite, Alsafe, Go-Crete, Canberra Minimix Completed/ Planned Quarries: Compton Park Quarry Growth Expenditure Asphalt: Transfield Asphalt, Allen’s Asphalt Australia Lime: Marulan lime upgrade, C
Slide 16: Over $725m of capital allocated to growth in Australia and offshore since demerger
Over $725m of capital allocated to growth in Australia and offshore since demerger Australia Concrete: Concrite, Alsafe, Go-Crete, Canberra Minimix Completed/ Planned Quarries: Compton Park Quarry Growth Expenditure Asphalt: Transfield Asphalt, Allen’s Asphalt Australia Lime: Marulan lime upgrade, C
Slide 17: Strengthening our leading cement positions in NSW & Victoria
Strengthening our leading cement positions in NSW & Victoria CEMENT UPGRADE PROGRAM: • $131m capital at Waurn Ponds & Berrima • $25m cash cost savings (end of FY04) • Capacity flexibility to meet growing demand Sunstate Cement: 1m tpa clinker grinding capacity at in JV with ABL Kooragang Island: 150
Slide 18: Leading market positions and strong platform for growth in plasterboard in Asia
We have leading market positions and a strong platform for growth in plasterboard in Asia • JV with Lafarge (LBGA) formed in FY2000 • Boral has 48% equity share (up from 27%), equal Board representation • Well positioned assets with strong synergies delivered by LBGA management team • Strong platfor
Slide 19: Through the JV with Lafarge, Boral has leading plasterboard positions throughout Asia
Through the JV with Lafarge, Boral has leading plasterboard positions throughout Asia Lafarge Boral Gypsum Asia (LBGA) plants - 270m m2 of capacity Korea: Dangjin, LBGA plaster/accessories plants Ulsan, Yosu Seoul 105m m2 LBGA sales Offices Chongqing Shanghai China: Shanghai, Chongqing Dubai 35m m2
Slide 20: Consolidation of supply over past five years has strengthened Boral's position
Consolidation of supply over past five years has strengthened Boral’s position China: BPB buys TG; LBGA relocates one plant to Korea; Korea: small players receding Seoul 2 player market Chongqing Taiwan: Shanghai 1 player UCC Dubai Thailand: Manila Bangkok BPB buys TG; Ho Chi Minh LBGA buys Siam Kua
Slide 21: Boral's Asian operations have delivered a $30m turnaround since demerger
Boral’s Asian operations have delivered a $30m turnaround since demerger ASIA EBIT EBIT / Revenue** A$ m 15 15% 10% 10 5% 5 0% HY03 FY98 FY97 FY00 FY01 FY02 FY99 0 -5% 1H00 1H99 2H99 2H00 1H01 2H01 1H02 2H02 1H03 -5 -10% -10 -15% -20% -15 -25% -20 -30% ** FY01, FY02 & FY03 revenues include Boral’s s
Slide 22: Leading market positions in the US and a strong platform for growth
We have leading market positions in the US: #1 in bricks, #1 in roof tiles, #2 in flyash…& a strong platform for growth MonierLifetile Guadalajara, (concrete roof tiles) Mexico US Clay Tile Boral Brick Plants Franklin Brick Locations Boral Brick Studios Flyash (BMTI) Building on our strong resource
Slide 23: US$66m Franklin Brick acquisition strengthens our #1 position in the USA
US$66m Franklin Brick acquisition complements existing brick operations & strengthens our #1 position in the USA Gleason Salisbury Van Wyck Lexington Atlanta Augusta Muskogee Macon (II) Henderson Macon (I) Marshall Bessemer Phenix City 23 Franklin Brick Locations 28 Boral Brick Studios 21 Boral Bric
Slide 24: Shareholder returns
Shareholder returns
Slide 25: 100% earnings-driven share price growth since demerger
100% earnings-driven share price growth since demerger $5.00 5250 $4.50 4750 BLD $4.00 4250 BLD Share Price ASX100 Index $3.50 3750 $3.00 3250 $2.50 ASX100 2750 $2.00 2250 $1.50 1750 $1.00 1250 Jun-00 Jun-01 Jun-02 Oct-00 Oct-01 Oct-02 Aug-00 Aug-01 Aug-02 Apr-00 Apr-01 Apr-02 Apr-03 Feb-00 Feb-01 F
Slide 26: Dividends have grown since demerger
Dividends have grown since demerger 28 24 20 Cents/share EPS 16 Gross 12 DPS 8 DPS 4 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 *Gross DPS = (franking % x DPS)/(1-tax rate) + DPS (1-franking %); assumed average tax rate of 30% Building on our strong resource and market positions
Slide 27: Boral continues to deliver top quartile TSR performance
Boral continues to deliver top quartile TSR performance TSR PERFORMANCE OF ASX100 – 1 Mar 2000 to 30 Apr 2003* 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 31.9% pa BORAL * Start price 1 March 2000: $2.32, Closing share price 30 April 2003: $4.76 Source: Bloomberg Building on our strong resou
Slide 28: Relative to Australian peers, Boral is a solid performer
Relative to Australian peers, Boral is a solid performer Gross dividend yield (annualised) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% JHX BKW RIN ABC BLD CSR BRS Gross dividend yield = ((franking % x DPS)/(1-tax rate) + DPS (1-franking %))/share price at announcement; assumed average tax rate of 30%; DPS for BK
Slide 29: Boral's multiples are not particularly demanding
…and Boral’s multiples are not particularly demanding FY2003 PE 16 12 8 4 0 JHX BKW BRS ABC CSR BLD RIN Source: Bloomberg 21 May 2003 Building on our strong resource and market positions
Slide 30: Outlook
Outlook
Slide 31: Australian activity levels are strong and expected to remain buoyant in FY04
Australian activity levels are strong & expected to remain buoyant in FY04 before strengthening further in FY05/06 AUSTRALIA - VALUE OF WORK DONE (BUILDING & CONSTRUCTION) $98 Billion. Seasonally adjusted. 50 45 Roads, Highways, 40 Subdivisions & Bridges 35 30 Non Dwelling 25 20 15 Dwelling (incl A&
Slide 32: US activity in the Brick States remains strong
US activity in the Brick States* remains strong and is expected to remain buoyant USA BRICK STATES - VALUE OF WORK COMMENCED US$92 Value, Billions 180 Forecast 160 140 120 NON-RESIDENTIAL 100 80 60 RESIDENTIAL 40 20 0 1996 1990 1991 1993 1994 1997 1999 2000 2001 2002 2003 f 2004 f 2006 f 2007 f 1992
Slide 33: Asian construction demand continues to grow
Asian construction demand continues to grow Korea Thailand Indonesia China - Shanghai Value of construction orders Gross fixed capital Value of completion. Value of construction received. Trillion Won formation. Billion bhat Trillion Rp work done. Billion yuan 40 600 40 70 30 30 400 20 20 35 200 10
Slide 34: Outlook for FY2003
Outlook for FY2003 • Easing of dwelling approvals and VWD in Jun-03 half • Stronger Australian non-dwelling demand in H2 • H2 typically seasonally weaker • Stronger construction materials prices in H2 • Solid USA earnings; strong A$ • Performance improvement in Asia • Anticipate stronger QEU contrib
Slide 35: Appendix
Appendix
Slide 36: Construction Materials, Australia
Construction Materials, Australia • No.1 position in Australian Quarries construction materials Cement division** • Integrated business model is driver of value Contracting • Earnings from infrastructure, Transport non-dwellings and dwellings QEU • QEU earnings stream Asphalt • Improved industry str
Slide 37: Building Products, Australia
Building Products, Australia • Leading supplier of building Australian Plasterboard Bricks products in Australia • Driven by dwelling and non- dwelling • Timber & Windows have turned around Roofing • Opportunity for improved Timber performance in Bricks East and Masonry Windows Roofing • EBIT/Sales
Slide 38: United States
United States Bricks • No. 1 brick position in the USA • No. 1 roof tile supplier in the USA • Strong residential markets • Pursuing direct brick distribution Clay rooftiles model (Franklin Brick acquisition) Flyash & admixtures • Good growth prospects in roof-tiles Concrete rooftiles** • Solid EBIT
Slide 39: UBS Warburg's Industrials Conference
Building on our strong resource and market positions Rod Pearse UBS Warburg’s Industrials Conference 26th May 2003