Fletcher Building Limited · NZX:FBU
Fletcher Building — FY2005 Earnings Presentation
48 slides from Fletcher Building's earnings presentation, Aug 10, 2005
Slide 1: Fletcher Building Limited Annual Results 2005
Fletcher Building Limited Annual Results 2005 10 August 2005
Slide 2: This Annual Results presentation dated 10 August 2005 provides additional comment on the media
This Annual Results presentation dated 10 August 2005 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
3 Highlights Strong Earnings Net profit up 38% to $330 million Growth Increasing Returns TSR of 61% 7th consecutive dividend increase To Shareholders Full year dividend up 28% Further 20 million new shares issued at Equity Raising a discount of less than 1% Growth Acquisition of Amatek Holdings Annu
Slide 4: Summary of Results
4 Summary of Results Jun Jun % 2005 2004 YOY $m 12 Mths 12 Mths Change Revenue 4663 3958 +18 EBITDA 737 582 +27 EBITA 609 471 +29 EBIT 596 460 +30 Net Earnings 330 240 +38 EPS (cents) 73.8 55.7 +32 Dividend cps 32.0 25.0 +28 Annual Results 2005
Slide 5: Profit Up In All Divisions
5 Profit Up In All Divisions 250 +35% +44% 200 150 EBIT $m 222 +8% 100 196 +11% 164 136 50 95 103 73 81 0 Building Products Distribution Infrastructure Laminates & Panels Jun-04 Jun-05 Annual Results 2005
Slide 6: Building Products Results
6 Building Products Results Jun ¹ Jun ² % 2005 2004 YOY $m 12 Mths 12 Mths Change Revenue 1338 927 +44 EBIT 222 164 +35 Margin 16.6% 17.7% -6 Funds 878 560 +57 Return on Funds 27.3% 31.0% ³ -12 1 Includes 4 months of Amatek 2 Includes 9 months of Tasman 3 Proforma return based on full 12 months of
Slide 7: Building Products: Plasterboard
7 Building Products Plasterboard Market share maintained at 94% Record volumes and earnings achieved from strong market ‘House-lot’ ordering being extended – new Auckland warehouse under construction with Christchurch to follow New products based on GWF technology launched in New Zealand, Au
Slide 8: Building Products: Insulation
8 Building Products Insulation Amatek’s insulation business in Australia acquired and combined with existing business Synergies on track to exceed original estimates Approximate glasswool market shares are 70% in New Zealand and 66% in Australia Record earnings assisted by strong markets Ann
Slide 9: Building Products: Rollforming
9 Building Products Rollforming Amatek’s rollforming business (Stramit) acquired All business units – Dimond, Stramit, and Pacific Coil Coaters benefited from strong markets BlueScope and New Zealand Steel supply agreements under negotiation- annual purchases now in excess of 300,000 tonnes An
Slide 10: Building Products: Metal Roof Tiles
10 Building Products Metal Roof Tiles Malaysian plant acquired, upgraded and commissioned July 05 Domestic market underpinned by strong demand Export markets performing well despite the strong NZ$ USA operation had outstanding results due to unusually strong storm induced demand Overall ex
Slide 11: Building Products: Long Steel Products
11 Building Products Long Steel Products Excellent earnings in scrap JV Record production through steel plant Cyclone acquired to increase wire market share in NZ Reinforcing had a record year on the back of good market conditions Wire products still under pressure from low rural demand an
Slide 12: Building Products: Other Businesses
12 Building Products Other Businesses Steel Distribution, Fletcher Aluminium, Tasman Sinkware and Access Flooring all performed well on the back of generally strong markets EasySteel a dramatic improver aided by uplift in steel inventory value in H1 Aluminium and Tasman Sinkware benefited from
Slide 13: Distribution Results
13 Distribution Results Jun Jun % 2005 2004 YOY $m 12 Mths 12 Mths Change Gross Revenue 920 863 +7 EBIT 81 73 +11 Margin 8.8% 8.5% +4 Funds 120 106 +13 Return on Funds 67.5% 68.9% -2 Annual Results 2005
Slide 14: Distribution
14 Distribution Revenue up 7% in strong market Upgraded Riccarton and new Lunn Avenue, Auckland and Queenstown stores opened Upgrades at Paraparaumu, Kaiwharawhara, New Plymouth underway Kerikeri and Invercargill new stores underway, with six more stores planned for upgrade this year Excel
Slide 15: Infrastructure
15 Infrastructure Jun ¹ Jun % 2005 2004 YOY $m 12 Mths 12 Mths Change Revenue 1442 1161 +24 EBIT 196 136 +44 Margin 13.6% 11.7% +16 Funds 672 364 +85 Return on Funds 33.3% ² 37.4% -11 ¹ Includes 4 months of Amatek ² Proforma return based on 12 moths of Amatek Annual Results 2005
Slide 16: Infrastructure: Golden Bay Cement
16 Infrastructure Golden Bay Cement Sixth consecutive year of domestic market growth Cement kiln upgrade completed to 2000tpd Further upgrade in progress to 2400 tpd due in July 2006 Upgrade project up to $20m higher and 9 months longer to meet new air quality standards On completion total
Slide 17: Infrastructure: Firth
17 Infrastructure Firth Ready mix volumes increased again due to strong market Margin improvement assisted earnings record New plant sharing agreement with Allied will replace old Penrose plant Completed another section of Auckland Airport runway. Further runway work in 2006 Annual Results 2
Slide 18: Infrastructure: Winstone Aggregates
18 Infrastructure Winstone Aggregates Hunua quarry upgrade increased capacity to two million tonnes per annum Redevelopment of Whitehall quarry to be commissioned in January 2006 Significant upgrade to Helensville sand extraction Overall excellent result Annual Results 2005
Slide 19: Infrastructure: Humes and Stresscrete
19 Infrastructure Humes Strong demand plus margin improvement resulted in a substantial earnings lift to a record for the business Joint Venture to manufacture plastic pipes now operational Stresscrete Another beneficiary of the uplift in construction work with strong demand and record result
Slide 20: Infrastructure: Rocla Quarries and Pipelines
20 Infrastructure Rocla Quarries and Pipelines Acquired on 1 March Results just ahead of expectations Quarry growth opportunities in NSW and Victoria are under negotiation Pipelines growth is in non-pipeline products (water management, railway sleepers, electricity poles) Annual Results 2005
Slide 21: Infrastructure: International
21 Infrastructure International Fiji Small operation, trading up to expectations Peru Another small operation, profit and cash positive on limited growth Exit still the preferred course if opportunity arises Annual Results 2005
Slide 22: Infrastructure: Construction
22 Infrastructure Construction Overall EBIT of $54m up from $42m last year The result includes Commercial, Engineering, Residential and Property (some land sales) Annual Results 2005
Slide 23: Commercial Building & Engineering
23 Infrastructure Commercial Building & Engineering Exceptionally strong market conditions Commenced Auckland University Business School, Northern Busway, Pohukura Gas Treatment Plant Backlog at year end $743m with a further $150m under negotiation Annual Results 2005
Slide 24: Infrastructure: Residential
24 Infrastructure Residential Record earnings for fourth consecutive year Demand and margins still holding Land positions the key to future earnings: Auckland Queenstown Schnapper Rock ▪ Jack’s Point Beachlands Wattle Cove Howick Lunn Ave Annual Results 2005
Slide 25: Laminates & Panels Results
25 Laminates & Panels Results Jun Jun % 2005 2004 YOY $m 12 Mths 12 Mths Change Revenue 960 994 -3 EBIT 103 95 +8 Margin 10.7% 9.6% +11 Funds 774 789 -2 Return on Funds 13% 12% +8 Annual Results 2005
Slide 26: Laminates & Panels
26 Laminates & Panels Strong performance despite adverse currency for exports and softening new residential market in Australia Improved results in New South Wales through new distribution centre New Zealand benefited from full year of savings from integration with Laminex Annual Results 2005
Slide 27: Laminates & Panels
27 Laminates & Panels Taupo and Kumeu outputs much improved through benchmarking/technical assistance from Australia Operational improvements and margin management overcame lower revenue, reduced export earnings and higher resin prices Joint Ventures – Wespine and Dynea – also had record resul
Slide 28: Profit After Tax
28 Profit After Tax Jun Dec Jun 2005 2004 2004 $m 12 Mths 6 Mths 12 Mths EBIT 596 288 460 Interest -77 -33 -75 Tax -167 -82 -124 Minority Interests -22 -12 -21 Profit After Tax 330 161 240 Annual Results 2005
Slide 29: Simplified Balance Sheet
29 Simplified Balance Sheet Jun Jun 2005 2004 NZ$m NZ$m Assets Current Assets 1439 1022 Fixed Assets 1392 1,023 Intangibles & Goodwill 433 342 Provision for Deferred Taxation 154 86 Investments 171 159 Total Fletcher Building Assets 3589 2632 Liabilities Current Liabilities 961 666 Net Debt 793 448
Slide 30: Key Ratios: Total Shareholder Return
30 Key Ratios Total Shareholder Return (TSR)² 70% 61 60% 43 50% 33 40% 24 30% 20% 6 10% 0% Jun 01 ¹ Jun 02 Jun 03 Jun 04 Jun 05 ¹ June 01 is the return for the 3 months from separation date ² TSR calculated ((Gross Dividend Paid + Movement in Share Price)/Opening Share Price) Annual Results 2005
Slide 31: Key Ratios: Debt/Debt Plus Equity
31 Key Ratios Debt/Debt Plus Equity % 80 70 60 49.2 49.9 43.1 43.5 50 40.2 40 30 20 10 0 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Annual Results 2005
Slide 32: Key Ratios: Return on Average Equity
32 Key Ratios Return on Average Equity¹ % 26.6 23.0 24.3 30 16.9 20 10 0 -10 -20 -30 -43.8 -40 -50 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 ¹ Net earnings/shareholders funds Annual Results 2005
Slide 33: Key Ratios: Return on Average Funds
33 Key Ratios Return on Average Funds¹ % 28.5 30 24.4 24.7 23.1 25 20 15 10 5 0 -8.6 -5 -10 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 ¹ EBIT/(Average net debt+equity+capital notes) - deferred tax asset Annual Results 2005
Slide 34: Key Ratios: Interest Cover
34 Key Ratios Interest Cover¹ 12 9.6 10 7.8 7.3 8 5.8 (times) 6 3.1 4 2 0 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 ¹ EBITDA pre unusuals/interest paid including capital note interest Annual Results 2005
Slide 35: Net debt movement
NZ$ Millions 0 100 200 300 400 500 600 700 800 900 -100 1000 Opening Debt 448 Annual Results 2005 Cash from ops (536) Working capital 57 Capex 214 Acquisitions 590 (net of cash) Divestments (19) Dividends 100 Minority 31 Distribution Capital (90) Notes/Equity FX on AUD Debt (2) Closing Debt 793 Net
Slide 36: Operational & Strategic Update
Operational & Strategic Update
Slide 37: Strategic Agenda
37 Strategic Agenda Earnings Reliability Internal Growth External Growth Annual Results 2005
Slide 38: Earnings Reliability
38 Earnings Reliability Cycle not just residential but total construction including non-residential and infrastructure For New Zealand Infometrics estimates of Total Market For Australia BIS estimates of total market Annual Results 2005
Slide 39: Earnings Reliability
39 Earnings Reliability Forecast 18000 16000 +9% -3% +2% 14000 +14% 12000 +9% +8% NZ Value of Work Completed NZ$m 10000 8000 +17% +8% +2% Total Construction Work (NZ) 6000 0% 0% -2% Nov 2004 est 4000 -2% 2000 -17% -3% 0 01 02 03 04 05 06 07 Forecast 18000 +6% +8% 16000 +3% -1% -2% 14000 +12% +8% +8%
Slide 40: Earnings Reliability
40 Earnings Reliability $b 120 Engineering c onstruc tion Non- residential 9% 2% 100 -4% 10% Residential 80 11% 17% 8% -7% Dec 2004 60 23% 12% -1% -3% 40 Forecasts of 20 2% 0% -2% -2% building and 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 construction Year ended June f f f f work
Slide 41: Internal Growth
41 Internal Growth Significant capex to continue in 2006 – up to $100m more than depreciation 250 200 122 105 150 100 109 123 50 0 2005 2006F Stay in Business Growth & Productivity Annual Results 2005
Slide 42: External Growth Opportunities
42 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 to find the right opportunity Annual Results 2005
Slide 43: External Growth Opportunities: Amatek Reminder
43 External Growth Opportunities Amatek Reminder Acquired 1 March 2005 Comprises four businesses: Rocla Pipeline Products (steel reinforced concrete pipe and precast products) Rocla Quarry Products (sand quarries) Stramit (steel roofing and purlins) Insulation Solutions (glasswool and fo
Slide 44: Amatek Reminder (cont.)
44 External Growth Opportunities Amatek Reminder (cont.) Purchase price A$530 million (NZ$581 million) 20 million new shares issued at NZ$7.05 Inclusive of tax loss benefit at NPV and $10 million of synergies, EBITDA purchase multiple was 4.7 Annual Results 2005
Slide 45: External Growth Opportunities
45 External Growth Opportunities Since listing $1.6b+ spent on external growth opportunities Acquisitions NZ$m¹ Laminex 782 Tasman 272 Amatek 581 ¹ Includes earnout and transaction costs Annual Results 2005
Slide 46: Outlook
46 Outlook NZ and Australia residential markets will soften further this year, but off record high levels We expect A&A to strengthen in New Zealand Non–residential outlook is strong for next 2-3 years in New Zealand and 1-2 in Australia Infrastructure spend will also be strong for at least
Slide 47: Outlook
47 Outlook IFRS would increase this year’s NPAT by about 5-6% Some incremental benefit from Amatek Expect on balance to have another satisfactory full year result in 2006 Annual Results 2005
Slide 48: Building
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