Fletcher Building Limited · NZX:FBU
Fletcher Building — ABN Amro New Zealand Day 2006
48 slides from Fletcher Building's conference presentation, Mar 1, 2006
Slide 1: ABN Amro New Zealand Day Sydney
ABN Amro New Zealand Day Sydney 1 March 2006 Ralph Waters Chief Executive Officer Ralph Waters 11 August 2004 Chief Executive Officer
Slide 2: Disclaimer
Disclaimer This presentation contains not only a review of operations, but also some forward looking statements about Fletcher Building and the environment in which the company operates. Because these statements are forward looking, Fletcher Building’s actual results could differ materially. Media r
Slide 3: What is Fletcher Building?
What is Fletcher Building? Ralph Waters 11 August 2004 Chief Executive Officer
Slide 4: Fletcher Building
4 Fletcher Building One of New Zealand’s top industrial companies with a history going back to the early 1900’s The leader in the NZ building industry FBU is listed on NZX and ASX Strong market shares in all its building sectors Full information on www.fletcherbuilding.co.nz March 2006
Slide 5: Company Dimensions
5 Company Dimensions Revenue: NZ$5.5 billion Market cap: >NZ$3.5 billion No.3 on NZX Employees: Over 14,000 Shares: 466 million Daily average turnover ≈1 million shares Shareholders: NZ 41% Aust 36% USA 11% Other 12% March 2006
Slide 6: Net Earnings
6 Net Earnings $m 400 347 300 240 190 200 168 93 100 0 Jun 02 Jun 03 Jun 04 Jun 05¹ Dec 05 (6 mths) 1. Restated for IFRS March 2006
Slide 7: Total Shareholder Return
7 Total Shareholder Return¹ % 70 61 60 50 43 40 33 30 24 20 13 10 6 0 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Dec 05 (6 mths) 1. TSR calculated ((Gross Dividend Paid + Movement in Share Price)/Opening Share Price) March 2006
Slide 8: The Fletcher Building Value Chain Delivers High Returns
8 The Fletcher Building Value Chain Delivers High Returns Laminates Building Other & Concrete Products Manufacturers Panels Dedicated Shared Other Distribution Distribution Construction Distribution Markets Markets March 2006
Slide 9: March 2006
9 Tasman sarking overlay Pynefloor® particleboard flooring Plyco doors Fletcher Steel Tasman Dimond or AHI roofing structural steel I beams insulation Laminex high pressure laminates Tasman house wrap Oliveri sinks Firth bricks Firth concrete Gib® and pavers blocks plasterboard Fletcher Aluminium La
Slide 10: Geographic Diversity
10 Geographic Diversity Operating Earnings $NZ 6 Months Dec 05 6 Months Dec 04 Other Other 4% 4% Australia 21% Australia 30% NZ 66% NZ 75% March 2006
Slide 11: Market Diversity
11 Market Diversity Operating Earnings $NZ 6 Months Dec 05 6 Months Dec 04 Distribution 11% Distribution 14% Building Products 34% Building Products 41% Infrastructure 26% Infrastructure 37% Laminates & Panels Laminates & 18% Panels 19% March 2006
Slide 12: Infrastructure - Concrete
12 Infrastructure - Concrete 50% of NZ cement market 33% of NZ RMC market 25% of NZ aggregates market 60% of NZ + 35% of Australia concrete pipe market 60% of NZ precast market 30% NSW and 80% of WA sand market March 2006
Slide 13: Infrastructure - Construction
13 Infrastructure - Construction New Zealand’s leading construction company Commercial (Buildings) Engineering (Infrastructure) South Pacific (General) Residential (NZ largest home builder) March 2006
Slide 14: Building Products
14 Building Products 94% of NZ market No.2 in NZ No.1 in Australasia with 60% Australia, 80% NZ glass wool market No.1 in Australasia (also facility in California) No.2 in Australasia No.1 in Australasia March 2006
Slide 15: Building Products - Steel
15 Building Products - Steel 50% of Sims (scrap metal) Sole producer of long products in NZ 250,000 EAF steel mill (rod, bar & wire) General steel distribution 30% Australia & NZ rollforming market 50% of flat steel painting in NZ March 2006
Slide 16: Laminates & Panels
16 Laminates & Panels HPL (2 mills) No.1 Australasia Decorated Board No.1 Australasia MDF (3 mills) No.2 in Australasia Particle Board (2 mills) No.2 in Australasia Over 50 owned distribution Hardboard (1 mill) outlets across Australasia No.2 in Australasia March 2006
Slide 17: Distribution
17 Distribution 54 PlaceMakers stores in NZ 35% of building materials market Joint Venture rather than franchise No.1 in segment Trade focus – 80% of sales March 2006
Slide 18: Results
Results For the Six Months to 31 Dec 2005 Ralph Waters 11 August 2004 Chief Executive Officer
Slide 19: Highlights
19 Highlights NPAT $190 million Geographic and product diversification delivers improved earnings despite softer markets EPS 40.9 cps Increased Returns Interim dividend increased to 19 cps To Shareholders TSR of 13% for the six months Progress With $200m committed and in progress Growth Projects Mar
Slide 20: Summary of Results
20 Summary of Results Dec Dec Jun 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths Sales 2764 2159 4636 EBITDA 406 354 742 EBITA 335 299 614 EBIT 335 299 612 Net Earnings 190 172 347 EPS (cents) 40.9 39.2 77.6 Dividend cps 19.0 15.0 32.0 March 2006
Slide 21: Segmental EBIT
21 Segmental EBIT Dec Dec Jun 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths Building Products 115 125 227 Distribution 36 42 81 Infrastructure 125 77 196 Laminates & Panels 62 58 107 Corporate/Unallocated -3 -3 1 EBIT 335 299 612 March 2006
Slide 22: Building Products Results
22 Building Products Results Dec ³ Dec Jun ¹ 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths Sales 876 575 1324 EBIT 115 125 227 Margin 13.1% 21.7% 17.1% Funds 916 601 905 Return on Funds (annualised) 25.1% 41.6% 27.1% ² 1 Includes 4 months of Amatek 2 Proforma returns based on 12 months of Amatek 3. Includ
Slide 23: Distribution Results
23 Distribution Results Dec Dec Jun 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths Sales 493 472 920 EBIT 36 42 81 Margin 7.3% 8.9% 8.8% Funds 128 109 116 Return on Funds (annualised) 56.3% 77.1% 69.8% March 2006
Slide 24: Infrastructure Results
24 Infrastructure Results Dec ³ Dec Jun ¹ 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths Sales 889 617 1441 EBIT 125 77 196 Margin 14.1% 12.5% 13.6% Funds 704 425 666 Return on Funds (annualised) 35.5% 36.2% 33.9%² 1 Includes 4 months of Amatek 2 Proforma returns based on 12 months of Amatek 3. Includes 6
Slide 25: Laminates & Panels Results
25 Laminates & Panels Results Dec Dec Jun 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths Sales 505 494 948 EBIT 62 58 107 Margin 12.3% 11.7% 11.3% Funds 835 842 826 Return on Funds (annualised) 14.9% 13.8% 12.9% March 2006
Slide 26: Earnings After Tax
26 Earnings After Tax Dec Dec Jun ¹ 2005 2004 2005 $m 6 Mths 6 Mths 12 Mths EBIT 335 299 612 Interest -45 -33 -77 Tax -90 -82 -166 Minority Interests -10 -12 -22 Net Earnings 190 172 347 1. Restated for IFRS March 2006
Slide 27: Simplified Balance Sheet
27 Simplified Balance Sheet Dec Jun¹ 2005 2005 NZ$m NZ$m Assets Current Assets 1445 1433 Fixed Assets 1417 1392 Intangibles & Goodwill 520 514 Provision for Deferred Taxation 45 86 Investments 126 119 Total Fletcher Building Assets 3553 3544 Liabilities Current Liabilities & Provisions 939 977 Net D
Slide 28: Key Ratios
28 Key Ratios Total Shareholder Return (TSR)2 % 70 61 60 50 43 40 33 30 24 20 13 10 6 0 Jun 01¹ Jun 02 Jun 03 Jun 04 Jun 05 Dec 05 (6 mths) 1. June 01 is the return for the 3 months from separation date 2. TSR calculated ((Gross Dividend Paid + Movement in Share Price)/Opening Share Price) March 200
Slide 29: Key Ratios
29 Key Ratios Debt/Debt Plus Equity % 80 70 60 53.2 49.2 49.9 48.4 50 47.2 43.1 44.4 40.2 40.9 40 30 20 10 0 Jun Dec Jun Dec Jun Dec Jun Jun Dec 01 01 02 02 03 03 04 05¹ 05 1. Restated for IFRS March 2006
Slide 30: Key Ratios
30 Key Ratios Return on Average Equity¹ % 40 29.5 26.0 30 23.0 24.3 20 16.9 10 0 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05² Dec 05 -10 -20 -30 -40 -50 -43.8 1. Net earnings after capital notes interest/shareholders funds 2. Restated for IFRS March 2006
Slide 31: Key Ratios
31 Key Ratios Return on Average Funds¹ 30 % 29.3 26.5 24.4 24.7 25 23.1 20 15 10 5 0 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05² Dec 05 -5 1. EBIT/(Average net debt+equity+capital notes) - deferred tax asset -10 -8.6 2. Restated for IFRS March 2006
Slide 32: Key Ratios
32 Key Ratios Interest Cover¹ 12 (times) 10.6 9.6 10 8.8 9.0 7.6 7.8 8 7.3 5.8 6 4.6 4 3.1 2 0 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 01 01 02 02 03 03 04 04 05 05 1. EBITDA pre unusuals/interest paid including capital note interest March 2006
Slide 33: Operational & Strategic Update
Operational & Strategic Update Ralph Waters 11 August 2004 Chief Executive Officer
Slide 34: Strategic Agenda
34 Strategic Agenda Earnings Reliability Internal Growth External Growth March 2006
Slide 35: Earnings Reliability
35 Earnings Reliability Our earnings reliability strategy has passed a major test in the period Company outlook should be cognizant of both the product and geographic diversity For New Zealand - Infometrics estimate of total work commenced For Australia – BIS estimate of total market March 2
Slide 36: New Zealand Value of Work Commenced
36 New Zealand Value of Work Commenced Forecast 20000 +7% 18000 +7% +4% -2% 16000 -3% +8% 14000 +8% +7% +12% +13% 12000 NZ$m 10000 +4% +2% -7% -4% -2% +2% 8000 +2% +2% +18% 0% +2% 6000 +1% 4000 0% -3% -12% +12% +11% 2000 0 01 02 03 04 05 06 07 08 09 10 Residential A&A Non-residential Infrastructure
Slide 37: Australia Value of Work Commenced
37 Australia Value of Work Commenced $b 120 Engineering construction 6% 1% 9% 100 Non-residential 12% 80 Residential 18% 18% 13% 3% 60 14% 15% 9% 1% 40 20 5% -2% -2% -3% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 f f f Year ended June - current prices Source : BIS Shrapnel Buildin
Slide 38: Internal Growth Opportunities
38 Internal Growth Opportunities Building Products Tempcore upgrade 1Q 2006 Stramit branch upgrades + 2 new branches Tasman Sinkware – new product range for U.S - mid Mar 2006 EasySteel southern distribution centre – Jul 2006 March 2006
Slide 39: Internal Growth Opportunities
39 Internal Growth Opportunities Building Products (cont.) Metal technology investment – EMW, Galvanising – Jan 2006 Insulation furnace upgrades - Jan 2007 South Island distribution centre for WWB to support onsite delivery – Jan 2007 Metal roof tile capacity expansion possibility March 2006
Slide 40: Internal Growth Opportunities
40 Internal Growth Opportunities Distribution New outlets Kerikeri opening Mar 2006 Te Rapa opening Feb 2006 Whitianga opening Aug 2006 Wanaka opening Aug 2006 Takanini opening Jul 2006 Richmond opening Sep 2006 Acquisition Several discussions in progress for infill opportunities M
Slide 41: Internal Growth Opportunities
41 Internal Growth Opportunities Infrastructure Cement upgrade: Final upgrade to 2500 tpd due for completion in Jul 2006 Firth plant upgrades and additions in East Tamaki, Christchurch, Queenstown Hunua expansion on stream 2Q 2006 Belmont capacity upgrade Jul 2006 March 2006
Slide 42: Internal Growth Opportunities
42 Internal Growth Opportunities Infrastructure (cont.) Whitehall expansion on stream 2Q 2006 Helensville barge upgrade Mar 2006 Christchurch sleeper factory Jul 2006 Rocla quarry expansion Calga Mar 2006 Western Australia Feb 2006 Boss plastic pipe JV Jul 2006 March 2006
Slide 43: Internal Growth Opportunities
43 Internal Growth Opportunities Laminates & Panels Particle board upgrade Kumeu - 76,000m3 to 88,000m3 complete first half 2006/07 Dardanup - 250,000m3 to 300,000m3 complete 2007/08 Resin JV New plant on Gympie MDF site operational 2007/08 March 2006
Slide 44: Internal Growth Opportunities
44 Internal Growth Opportunities Laminates & Panels (cont.) Componentry Ballarat components plant now at full capacity with significant growth opportunities HPL Restructuring local operations and looking to Asian sourcing capabilities and investment Wespine sawmill upgrade 390,000m3 of sawlog
Slide 45: External Growth Opportunities
45 External Growth Opportunities We have the financial capacity Limited opportunities in total Our acquisition criteria narrows that further We continue to seek and evaluate options March 2006
Slide 46: Outlook
46 Outlook As previously forecast Residential in New Zealand and Australia will soften further Non-residential outlook is strong for next one to two years Infrastructure spend will also be strong for at least the next three years, particularly in New Zealand where we are stronger June 2006 E
Slide 47: Earnings Forecast
47 Earnings Forecast Operating Earnings 800 630-650 612 600 460 NZ$m 400 331 205 200 335 94 0 Jun 01¹ Jun 02¹ Jun 03 Jun 04 Jun 05² Jun 06 Estimate 1. Pre Unusuals 2. Restated for IFRS March 2006
Slide 48: Ralph Waters, Chief Executive Officer
Ralph Waters 11 August 2004 Chief Executive Officer