Fletcher Building Limited · NZX:FBU
Fletcher Building — FY2021 Earnings Presentation
43 slides from Fletcher Building's earnings presentation, Aug 18, 2021
Slide 1: Full Year Results to 30 June 2021
Fletcher Building Full Year Results to 30 June 2021 18 August 2021 Fletcher Building Limited
Slide 2: Important Information
Important Information This presentation has been prepared by Fletcher Building Limited and its group of companies (“Fletcher Building”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This presentation provides addi
Slide 3: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Markets and Divisions Ross Taylor New Zealand Operations - Building Products Hamish McBeath - Distribution Bruce McEwen - Concrete Nick Traber - Residential and Development Steve Evans - Construction Peter Reidy Australia
Slide 4: FY21 performance delivered
FY21 performance delivered Delivering on strategy, strong financial performance and returns to shareholders ➔ Delivered strong financial performance and ongoing operational improvements in FY21: ➔ EBIT before significant items $669m ➔ EBIT Margin up 100bps from FY191 to 8.2% ➔ Net earnings attributa
Slide 5: FY21 results at a glance
FY21 results at a glance Strong growth in earnings, margins and returns Revenue ($b) EBIT1 ($m) FY21 trading highlights 8.3 8.1 669 ➔ Strong revenue in businesses exposed to NZ residential, partly 7.3 598 offset by softer AU commercial and civil markets 2.9 2.7 2.7 1.6 1.3 1.3 ➔ Earnings and margins
Slide 6: FY21 results at a glance
FY21 results at a glance Strong cash flow and balance sheet, well-positioned for continued strategy execution Free Cash Flow1 ($m) Trading Cash Flow2 ($m) FY21 trading highlights 929 ➔ Strong cash flows and net debt reduction: driven by earnings 652 growth and tight management of working capital and
Slide 7: FY21 results at a glance
FY21 results at a glance Final dividend of 18.0 cents per share declared, total dividend of 30.0 cents per share for FY21 Net Earnings ($m) EPS (cps) FY21 trading highlights 305 37.0 ➔ Net Earnings up strongly; include Significant Items charges of 231 28.8 $128m relating to final phase of restructur
Slide 8: Balanced Scorecard
Balanced Scorecard Progressing safety strategy and driving culture; improving employee engagement an important focus Safety: Driving zero serious injuries Total Recordable Injury Serious Injuries 2 ➔ Good progress on safety with 85% sites injury free; TRIFR down Frequency Rate 1 6.9 33 ➔ Delivered s
Slide 9: Balanced Scorecard
Balanced Scorecard Verified science based target for carbon reduction of 30% by 2030; driving customer focus Sustainability: Driving 30% carbon reduction from FY18 ➔ GBC waste tyre completed (but additional shutdown to allow this Carbon (CO2) Emissions (thousand Tonnes) resulted in a one-off lowerin
Slide 10: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Markets and Divisions Ross Taylor New Zealand Operations - Building Products Hamish McBeath - Distribution Bruce McEwen - Concrete Nick Traber - Residential and Development Steve Evans - Construction Peter Reidy Australia
Slide 11: Income Statement
Income Statement EBIT before significant items $669 million, material uplift on prior years Jun 2019 Jun 2020 Jun 2021 12 months 12 months 12 months NZ$m pro forma1 reported reported Revenue 8,308 7,309 8,120 EBITDA 957 530 1,032 EBIT before significant items 598 160 669 Significant items (94) (276)
Slide 12: Margins
Margins 100bps improvement in EBIT margin since FY19, driven by efficiency programmes in Core Divisions EBIT Margin1 (%) ➔ Efficiency programmes commenced in FY18: focused initially on Australia, then on New Zealand +100bps 8.2% 7.2% ➔ Gross cost-out (overheads and COGS; fixed and variable) of >$250
Slide 13: Significant items
Significant items Restructuring costs lower than prior guidance; Rocla impairment in line with agreed sale price FY21 significant items (Profit and Loss Charges) ➔ Significant items charges in FY21 mainly related to final phase of NZ$m 1H21 2H21 FY21 Australia restructuring programme - lower than in
Slide 14: Cash flow
Cash flow Cash flows driven by effective working capital management & lower inventories in NZ Core and housing Jun 2020 Jun 2021 Change NZ$m 12 months 12 months $m EBIT before significant items 160 669 509 Depreciation and amortisation 370 363 (7) Lease principal payments and lease interest paid (24
Slide 15: Working Capital
Working Capital Well positioned with operating disciplines embedded, rebuild of NZ Core and housing inventories expected in FY22 Cash flow working capital movements Jun 2020 Jun 2021 NZ$m 12 months 12 months Residential and Development 50 105 Construction excluding legacy projects 16 (72) Materials
Slide 16: Investment FY21
Investment FY21 FY21 capex focused on enabling investments and new WWB plant FY21 capex (NZ$m) Jun 2020 Jun 2021 ➔ FY21 capex programme focused on maintenance as well as NZ$m 12 months 12 months enabling investments for strategy, especially digital, manufacturing NZ Core (ex WWB new plant) 102 82 ef
Slide 17: Investment FY22+
Investment FY22+ Targeted capex, working capital & OPEX investments to drive growth & improve systems environment Amount Timing c.$200-250m ➔ Includes $50-100m p.a. growth capex, $25-40m Base Capex Envelope ongoing Key p.a. to create fit for purpose systems environment Organic Remaining WWB Plant Ca
Slide 18: Net debt
Net debt Reduction through strong trading cash flows Net Debt: Jun-20 to Jun-21 (NZ$m) 52 929 24 99 52 211 104 497 63 173 Net Debt Legacy projects Capex Funding costs Dividend Share buyback Other 1 Trading cash Significant items Net Debt Jun-20 trading cash Jun-21 1. Other is comprised of Minority d
Slide 19: Leverage
Leverage Strong balance sheet, well-positioned to support continued execution of strategy Leverage (Net Debt / EBITDA) ➔ Cash generation has supported strong balance sheet position and a sustained reduction in leverage 2.0x ➔ Investments in FY22-23 in growth capex, new WWB plant, residential land &
Slide 20: Funding
Funding Drawn debt low, while maturity and liquidity profiles remain strong Debt maturity profile ($m) Debt facilities and drawings ($m) Facilities Drawings 14 NZ$m 30 Jun 21 30 Jun 21 Syndicate 925 - USPP 459 459 Capital Notes 361 361 400 Other 19 19 525 459 Total 1,764 839 ➔ $764m gross debt repai
Slide 21: Dividend and share buyback
Dividend and share buyback Final dividend of 18.0 cents per share to be paid in September Dividends (cps) Dividends ➔ Final Dividend of 18.0 cents per share, to be paid on 17 September 2021 30.0 ➔ 60% pay-out ratio1 reflects imputation credit position, no credits currently available, expect to imput
Slide 22: Summary
Summary Strong delivery against financial targets, investing for growth ➔ +100bps EBIT1 margin improvement since FY19 to 8.2%, driven particularly by targeted efficiency programs Margins ➔ Path to c.10% EBIT margin1 in FY23 ➔ Base capex $200-250m p.a., Residential investment c.$200m FY22, targeted O
Slide 23: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Markets and Divisions Ross Taylor New Zealand Operations: - Building Products Hamish McBeath - Distribution Bruce McEwen - Concrete Nick Traber - Residential and Development Steve Evans - Construction Peter Reidy Australia
Slide 24: Divisional performance summary
Divisional performance summary Strong finish to year by all divisions Division Gross Revenue EBIT1 Divisional trading ➔ Strong trading momentum; customer preference for local Building $1,401m $197m manufacturing; input cost pressures in resin, steel, paper, freight and Products FY20: $1,173m FY20: $
Slide 25: NZ markets look favourable and “stronger for longer”
NZ markets look favourable and “stronger for longer” Residential supportive, solid Commercial and Infrastructure pipeline Historical and Forecast Residential WPIP ($b) ➔ NZ Residential is 48% of NZ FB revenue ➔ Strong residential demand across both new build and renovation, supported by historic 18.
Slide 26: Australia macro backdrop supportive for growth
Australia macro backdrop supportive for growth Residential strong outlook, Commercial softer while delays in key segments impact Infrastructure Historical and Forecast Residential Work Done (A$b) ➔ AU Residential is 62% of FB AU revenue 80.6 76.0 ➔ FY21 saw robust activity in detached housing and re
Slide 27: Building Products
Building Products FY21 results overview: all business units delivered strong growth in strong market Gross Revenue ($m) EBIT ($m)1 FY21 trading performance 1,401 197 ➔ Revenue up 19%: strong demand from residential and 1,314 1,173 167 infrastructure sectors, plus share gains; improved pricing discip
Slide 28: Building Products
Building Products Deliver performance and growth through maintaining EBIT margin at c.14% Business Unit Operational highlights and looking ahead to FY22 ➔ New WWB plant construction on track, Customer Specific Quote application launched ➔ New Laminex website with increased digital and electronic tra
Slide 29: Distribution
Distribution FY21 results overview: strong customer demand delivering top line and earnings growth Gross Revenue ($m) EBIT ($m)1 FY21 trading performance 127 ➔ Revenue up 17%: good demand across all customer segments, with 1,596 1,714 115 1,471 strong growth in Auckland and lower North Island 85 ➔ E
Slide 30: Distribution
Distribution Deliver ongoing margin expansion through top-line sales growth, pricing disciplines & cost efficiencies Business Unit Operational highlights and looking ahead to FY22 ➔ Enhanced e-tools launched with personalised pricing, live stock availability, >30% of trade customers registered, now
Slide 31: Concrete
Concrete FY21 results overview: solid improvement from revenue to profit & margin through to cash flow Gross Revenue ($m) EBIT ($m)1 FY21 trading performance 802 849 113 ➔ Revenue up 15%: solid volume and pricing discipline across all 740 89 segments owing to differentiated offering, asset renewal a
Slide 32: Concrete
Concrete Performance and growth by driving both margin expansion and above market growth Business Unit Operational highlights and looking ahead to FY22 ➔ Topline: differentiation of products and solutions, benefit of asset renewal programme ➔ Bottom line: footprint and supply chain optimisation, lea
Slide 33: Residential and Development
Residential and Development FY21 results overview: performance improvement driven by measured growth Gross Revenue ($m) EBIT ($m)1 FY21 trading performance 734 ➔ Revenue up 58%: strong market driven by low mortgage rates and 639 combination of new and well-established development locations; 57 466 5
Slide 34: Residential and Development
Residential and Development Continue to deliver performance and growth from very strong base Business Unit Operational highlights and looking ahead to FY22 ➔ Strong housing market, $600k-900k homes proving popular with first home buyers and investors, house typologies optimised to meet customer pric
Slide 35: Construction
Construction FY21 results overview: good progress maintained, returned to profitability Gross Revenue ($m) EBIT ($m)1 FY21 trading performance 1,702 51 ➔ Revenue up 10%: $0.9b Infrastructure services and minor capital 1,456 31 1,318 works (BPC, Higgins, South Pacific), $0.5b major projects (roads, c
Slide 36: Construction
Construction FY22 focus to deliver performance and growth: strong forward quality revenue secured with better EBIT margin Business Unit Operational highlights and looking ahead to FY22 ➔ Progress on major infrastructure & building projects continues, Commercial Bay, Biolabs and Te Nīkau Grey Hospita
Slide 37: Australia
Australia FY21 results overview: material profit and margin improvement Gross Revenue ($m) EBIT ($m)1 FY21 trading performance 3,024 2,802 103 ➔ Revenue down 2% with the residential market broadly flat and 2,758 77 commercial, civil & infrastructure segment activity lower. Pipes businesses down 18%
Slide 38: Australia Building Products
Australia Building Products FY22 focus to deliver performance and growth from quality earnings base Business Unit Operational highlights and looking ahead to FY22 ➔ Market share gains in key decorative category with strong momentum in gross margin performance, strong vitality evidenced, pleasing dig
Slide 39: Australia Distribution and Steel
Australia Distribution and Steel FY22 focus to deliver performance and growth from quality earnings base Business Unit Operational highlights and looking ahead to FY22 ➔ Profitable market share gains underpinned by SME plumber weighting of total revenue growing from 34% to 46%, own brand penetration
Slide 40: Agenda
Agenda 1. Results Overview Ross Taylor 2. Financial Results Bevan McKenzie 3. Markets and Divisions Ross Taylor New Zealand Operations - Building Products Hamish McBeath - Distribution Bruce McEwen - Concrete Nick Traber - Residential and Development Steve Evans - Construction Peter Reidy Australia
Slide 41: FY22 outlook
FY22 outlook Continue to drive performance and growth ➔ New Zealand: activity pipeline continues to look “stronger for longer,” especially in Residential; supply chain and labour constraints mean Residential sector is currently at or near capacity, likely to mean extended period of building activity
Slide 42: Appendix
Appendix Fletcher Building Limited
Slide 43: Divisional revenue exposure and FB revenue by market
Divisional revenue exposure and FB revenue by market Divisional Revenue Exposure by Sector Total FB Revenue by Market (%) AU Infrastructure Building Resi, 46% Com, 24% Infra, 30% AU NZ Products Commercial 4% Residential 8% Resi, 77% Com, 23% 33% Distribution AU 19% Residential Concrete Resi, 48% Com