Fletcher Building Limited · NZX:FBU
Fletcher Building — H1 FY2003 Earnings Presentation
38 slides from Fletcher Building's earnings presentation, Feb 12, 2003
Slide 1: Half Year Results Presentation
Half Year Results Presentation 12 February 2003
Slide 2: Interim Results Presentation notice
This Interim Results Presentation dated 12 February 2003 provides additional comment on the media release of the same date. As such, it should be read in conjunction with and subject to the explanations and views of future outlook on market conditions, earnings and activities given in that release.
Slide 3: Highlights
Highlights • Net profit up 151% to $83 million • Operating Earnings up 105% to $160 million • Acquisition of Laminex • Major refinancing initiatives • Sale of Bolivian operations Feb 03 1
Slide 4: Summary of Results
Summary of Results Dec Dec* Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths Revenue 1483 1455 2966 EBITDA 203 123 294 EBITA 162 82 212 EBIT Before Unusuals 160 78 205 Net Earnings Before Unusuals 83 29 88 Net Earnings Including Unusuals 83 33 93 EPS After Unusuals (cents) 22.4 9.6 27.0 Dividend cps 9.0
Slide 5: Accounting Policy Changes
Accounting Policy Changes Capital Notes Interest – From the June 2002 accounts, Capital Notes interest is included as an interest charge – Accounting standards restrict us from changing comparative data in our published accounts. We have adjusted the results in this presentation to reflect this chan
Slide 6: Accounting Policy Changes
Accounting Policy Changes PlaceMakers Change in Period End • The year end for the PlaceMakers Joint Venture branches was changed from 31 March 2002 to 30 June 2002 • The December 2001 segmental results for Distribution have been changed to show the July to December earnings Feb 03 4
Slide 7: Segmental EBIT
Segmental EBIT Dec Dec Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths Building Products 66 36 85 Distribution 25 14 34 Concrete 44 24 60 Construction 16 13 30 Laminex* 8 Corporate/Unallocated 1 -4 -4 EBIT Before Unusuals 160 83 205 Less Restatement -5 EBIT Before Unusuals 160 78 205 Feb 03 * Acquired o
Slide 8: Building Products Results
Building Products Results Dec Dec Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths Revenue 447 405 820 EBIT 66 36 85 Funds 430 453 433 Return on Funds (annualised) 30.7% 15.9% 19.6% Feb 03 6
Slide 9: Building Products
Building Products The focus on working capital and operational efficiencies has yielded significant benefits Winstone Wallboards Strong earnings reflect: • Volumes up with buoyant market conditions • Improved product mix, prices steady Fletcher Aluminium • Substantial turnaround in profitability • N
Slide 10: Building Products
Building Products Fletcher Wood Panels • Revenues up substantially on previous period • Profitability improving • New products starting to make a significant contribution • Aggressively pursuing synergies with Laminex • Rising NZ$ will impact exports and future earnings Scott Panel & Hardware • Volu
Slide 11: Building Products
Building Products Steel Manufacturing • Record steel production >212,000 tonnes in 2002 calendar year • Continued growth in volume of exports • Improvement in manufacturing processes • Current and future earnings impacted by current strength of NZ$ • Rising scrap prices (in real terms) whilst good f
Slide 12: Building Products
Building Products Steel Processing and Distribution • Improving earnings in EasySteel and Dimond with further improvements expected • EasySteel supply costs significantly reduced through Auckland distribution consolidation and upgrade • Pacific Coilcoaters excellent result largely driven by strong d
Slide 13: Distribution Results
Distribution Results Dec Dec Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths Gross Revenue 389 336 686 EBIT 25 14 34 Funds 105 101 101 Return on Funds (annualised) 47.6% 27.7% 33.7% Feb 03 11
Slide 14: Distribution
Distribution • Sales levels continued to increase with strong market conditions and improved performances in wholly owned PlaceMakers stores • Margins have been maintained despite higher volume of trade sales • PlaceMakers outstanding but Building Depot not in same league Feb 03 12
Slide 15: Concrete Results
Concrete Results Dec Dec Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths Revenue 255 232 470 EBIT 44 24 60 Funds 401 458 416 Return on Funds (annualised) 21.9% 10% 14.4% Feb 03 13
Slide 16: Concrete
Concrete Golden Bay (Cement) • Volumes up • Prices up • Production costs per tonne down • Distribution costs increased due to a greater requirement for road transportation to meet demand • Profit significantly ahead of last year Feb 03 14
Slide 17: Concrete
Concrete Firth (Readymix Concrete) • Volumes up through market and market share gains • Ready mix concrete volumes for the six months were the highest on record • Prices up • Substantial profit improvement Feb 03 15
Slide 18: Concrete
Concrete Winstone Aggregates • Higher volumes • Still an unfavourable mix • Production costs lower • Profit more than double pcp Feb 03 16
Slide 19: Concrete
Concrete Humes (Concrete Pipes) • Activity levels up • Margins down • Steady result Stresscrete (Pre-cast Beams etc) • Market conditions strong • Further improvement in operating performance Feb 03 17
Slide 20: Concrete
Concrete International • Bolivia sale completed • Peru profitability approaching cost of capital • Indian assets subject to a conditional sale agreement Feb 03 18
Slide 21: Construction Results
Construction Results Dec Dec Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths Revenue 310 496 871 EBIT 16 13 30 Funds -80 -44 -95 Feb 03 19
Slide 22: Construction
Construction Construction • Revenue down as a result of Australian exit • Strong performance in all divisions, although South Pacific market still slow • Current backlog in excess of $500m • Significant number of larger projects due for tender suggests activity levels will remain high over the next
Slide 23: Construction
Construction Residential • Continuing strong performance with sales comparable to last year but at improved margins • Result achieved on a lower funds base resulting in excellent EBIT/Funds results Feb 03 21
Slide 24: Laminex Results
Laminex Results Dec $m 2002 Revenue 81 EBIT 8 Funds 727 Return on Funds (annualised) 9.5% * Acquired on 13 November 2002 Feb 03 22
Slide 25: Laminex
Laminex • Continued strong domestic demand at least to June • Increased commercial demand over last year • Export volumes down on last year due to increased domestic demand • Margins have improved. The result of price and mix • Efficiencies achieved through warehouse consolidation in Victoria and in
Slide 26: Profit After Tax
Profit After Tax Dec Dec Jun 2002 2001 2002 $m 6 Mths 6 Mths 12 Mths EBIT before Unusuals 160 78 205 Interest -23 -27 -51 Tax -45 -19 -54 Minority Interests -9 -3 -12 NPAT before Unusuals 83 29 88 Adjustments Net of Tax 4 5 Profit After Tax 83 33 93 Restate Capital Notes Interest After Tax 8 Profit
Slide 27: Adjustments
Adjustments Dec Dec Jun $m 2002 2001 2002 6 Mths 6 Mths 12 Mths i. Unusual Items Permanent Impairment -11 Other Losses/Gains 6 16 6 5 ii. Taxation -2 Total Adjustments Nil 4 5 Feb 03 25
Slide 28: Simplified Balance Sheet
Simplified Balance Sheet Dec 2002 June 2002 NZ$m NZ$m Assets Current Assets 869 637 Fixed Assets 984 666 Intangibles & Goodwill 200 8 Provision for Deferred Taxation 97 96 Investments 120 72 Total Fletcher Building Assets 2,270 1,479 Liabilities Current Liabilities 587 490 Net Debt 530 168 Capital N
Slide 29: Key Ratios
Key Ratios Debt /Debt plus Equity % 80 70 60 53.2 49.2 47.2 50 40.2 40 30 20 10 0 Jun 01 Dec 01 Jun 02 Dec 02 Feb 03 28
Slide 30: Key Ratios
Key Ratios Return on Average Equity* Incl unusuals Excl unusuals % 80 60 40 24.5 24.5 16.9 16.0 20 12.1 10.6 2.9 0 -20 -40 -43.8 -60 Jun 01 Dec 01 Jun 02 Dec 02 Feb 03 *Net earnings after capital notes interest/average shareholders funds 5
Slide 31: Key Ratios
Key Ratios Return on Average Funds* Incl unusuals Excl unusuals % 40 28.6 28.6 30 23.1 22.5 17.6 20 16.4 9.3 10 0 -10 -8.6 -20 Jun 01 Dec 01 Jun 02 Dec 02 Feb 03 *EBIT/(Average net debt+equity+capital notes-deferred tax asset 30
Slide 32: Key Ratios
Key Ratios Interest cover* (times) 12 10 8.8 8 5.8 6 4.6 4 3.1 2 0 Jun 01 Dec 01 Jun 02 Dec 02 * EBITDA/Interest Feb 03 31
Slide 33: Cap Notes/Equity Divestments
Feb 03 NZ$ Millions 0 100 200 300 400 500 600 700 800 900 1000 Opening Debt 168 Cash from ops (169) Working capital 42 Capex 796 Divestments (23) Net Debt Movement Dividends 22 Min Distn 6 Cap Notes/Equity (290) Fx on AUD debt (22) Closing debt 530 32
Slide 34: Operational & Strategic Update
Operational & Strategic Update
Slide 35: Operational Initiatives
Operational Initiatives • Synergies between Laminex and FB Panels businesses • Electro-magnetic wiping technology in wire mill • New PlaceMakers stores • Two key Construction JVs Feb 03 33
Slide 36: Organisation
Organisation • Fletcher Wood Panels & Scott Panel & Hardware has become part of Laminex Division from February 2003 • Results for 02/03 still reported separately • Results for 03/04 will be for enlarged Panel/Laminates Division Feb 03 34
Slide 37: Strategic Issues
Strategic Issues • Organic growth through new products / markets • Evaluate opportunities that meet our strict acquisition criteria • Resolve a Negotiated Greenhouse Agreement Feb 03 35
Slide 38: Outlook
Outlook • Exchange rate will impact earnings • Power costs / supply again an issue • Demand may peak this quarter • On balance another satisfactory half Feb 03 36