Fletcher Building Limited · NZX:FBU
Fletcher Building — Investor Presentation (March 2005)
46 slides from Fletcher Building's investor presentation, March 2005
Slide 1: March 2005
March 2005 Ralph Waters 11 August 2004 Chief Executive Officer
Slide 2: Disclaimer
2 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
Slide 3: Fletcher Building
3 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 2005
Slide 4: Company Dimensions
4 Company Dimensions Revenue: NZ$5.0 billion (including Amatek) Market cap: >NZ$3.2 billion No.3 on NZX Employees: Over 14,000 (including Amatek) Shares: 462 million Daily average turnover ≈1,500,000 Shareholders: NZ 47% Aust 30% USA 13% Other 10% March 2005
Slide 5: Earnings
5 Earnings Net Earnings $m 300 240 168 161 200 93 100 0 Jun 02 Jun 03 Jun 04 Dec 04 March 2005
Slide 6: Total Shareholder Return
6 Total Shareholder Return* % 60 50 43 50 33 40 24 30 20 10 0 Jun 02 Jun 03 Jun 04 Dec 04 * TSR calculated ((Gross Dividend Paid + Movement in Share Price)/Opening Share Price) March 2005
Slide 7: A Broader Revenue Base
7 A Broader Revenue Base 2004 Year Annualised Adjusted for 12 months Amatek Other Other Australia 4% 4% 25% Australia 35% New New Zealand Zealand 61% 71% March 2005
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 2005
Slide 9: March 2005
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: Infrastructure - Concrete
10 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 pre cast market 30% NSW and 80% of WA sand market March 2005
Slide 11: Infrastructure - Construction
11 Infrastructure - Construction New Zealand’s leading construction company Commercial (Buildings) Engineering (Infrastructure) South Pacific (General) Residential (NZ largest home builder) March 2005
Slide 12: Building Products
12 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 2005
Slide 13: Building Products - Steel
13 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 2005
Slide 14: Laminates & Panels
14 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 2005
Slide 15: Distribution
15 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 2005
Slide 16: Summary of Results
16 Summary of Results Jun Jun Jun Dec $m 2002 2003 2004 2004 Revenue 2966 3221 3958 2171 EBITDA 299 429 582 349 EBITA 217 338 471 294 EBIT 210 331 460 288 Net Earnings 93 168 240 161 EPS (cents) 27.0 43.4 55.7 36.7 Dividend cps 14.0 19.0 25.0 15.0 March 2005
Slide 17: EBIT/Sales
17 Financial Performance Again Improved Across All Divisions +17% % 25 21.0 20 18.0 +7% +17% +5% EBIT/Sales 15 12.5 11.7 11.2 9.6 10 8.5 8.9 5 0 Building Products Distribution Infrastructure Laminates & Panels Jun-04 Dec-04 March 2005
Slide 18: Performance Measurement: Return on Average Funds
18 Performance Measurement Return on Average Funds* % 40 30.3 30 23.1 24.4 24.7 20 10 0 Jun 02 Jun 03 Jun 04 Dec 04 * EBIT/(Average net debt + equity + capital notes) – deferred tax asset March 2005
Slide 19: Performance Measurement: Return on Average Equity
19 Performance Measurement Return on Average Equity* 28.1 % 30 24.3 23.0 16.9 20 10 0 Jun 02 Jun 03 Jun 04 Dec 04 * Net earnings/shareholders funds March 2005
Slide 20: Performance Measurement: Economic Value Added
20 Performance Measurement Economic Value Added $m 180 200 139 150 100 65 46 50 0 Jun 02 Jun 03 Jun 04 Dec 04 March 2005
Slide 21: Simplified Balance Sheet
21 Simplified Balance Sheet Dec Jun 2004 2004 NZ$m NZ$m Assets Current Assets 1182 1022 Fixed Assets 1048 1023 Intangibles & Goodwill 334 342 Provision for Deferred Taxation 83 86 Investments 163 159 Total Fletcher Building Assets 2810 2632 Liabilities Current Liabilities 810 666 Net Debt 374 448 Ca
Slide 22: Key Ratios
22 Key Ratios Debt/Debt Plus Equity % 80 70 60 53.2 49.2 49.9 48.4 47.2 50 40.2 43.1 38.7 40 30 20 10 0 Jun Dec Jun Dec Jun Dec Jun Dec 01 01 02 02 03 03 04 04 March 2005
Slide 23: Strategic Agenda
23 Strategic Agenda Earnings Reliability Internal Growth External Growth March 2005
Slide 24: Earnings Reliability
24 Earnings Reliability Our spread of activities has reduced earnings volatility Decline forecast in residential is not overwhelming and not universal across Australia/New Zealand Non-residential and infrastructure markets will still be strong in 2006 Continue to improve earnings other than
Slide 25: New Zealand Value of Work Commenced
25 New Zealand Value of Work Commenced NZ$ million Forecast 16000 +9% +2% -3% 14000 +14% Infrastructure +9% +8% 12000 10000 +17% Non 8000 +8% +2% Residential 0% 6000 0% -2% A&A 4000 +2% -17% -3% Residential 2000 0 97 98 99 00 01 02 03 04 05 06 07 Source : Infometrics March 2005
Slide 26: Australia Value of Work Commenced
26 Australia Value of Work Commenced Forecast 60 50 +6.9% -6.1% - 1.7% 40 A$Billion 30 20 10 2005f 2006f 2007f 2001 2003 2004 2000 2002 1995 1999 1996 1997 1998 Dwelling (Incl A&A) Non-Dwelling Source : BIS Shrapnel Building in Australia December 2004 Update March 2005
Slide 27: Internal Growth Opportunities
27 Internal Growth Opportunities Lifting capacity in a number of business units Cement R.M.C. Aggregates Roof Tiles Insulation Steel Particle Board & MDF March 2005
Slide 28: External Growth Opportunities
28 External Growth Opportunities We have the financial capacity Amatek acquisition achieved Other options but not short term March 2005
Slide 29: Transaction Overview
29 Transaction Overview Amatek comprises four businesses operating in Australia: Rocla Pipeline Products (steel reinforced concrete pipe & precast products) Rocla Quarry Products (sand quarries) Stramit (steel roofing and purlins) Insulation Solutions (glasswool and foil insulation) Rocl
Slide 30: Consistent with our acquisition criteria
30 Consistent with our acquisition criteria 9 Leading market positions and recognised brands 9 Good industry structure 9 Complementary to existing Fletcher Building operations 9 Good management in place 9 Attractive acquisition parameters and positive financial impact March 2005
Slide 31: Overview of Amatek
31 Overview of Amatek Revenue Contribution by State (2004A) Estimated Revenue by Sector (2005E) Other Other WA 3% 5% 10% Rural New Residential QLD 15% 35% SA 27% 5% VIC 23% NSW Non-residential Residential A&A 32% 30% 15% March 2005
Slide 32: Strong Market Positions
32 Strong Market Positions Sinkware 100% 80% 45% 35% 30% 30% 33% Concrete Spun NSW WA SA Steel roofing, purlins Glasswool pipes concrete and other roll formed Insulation poles products One of two national Strong regional sand One of two national steel Combined with our concrete pipe supplier
Slide 33: Strong track record of earnings growth expected to continue
33 Strong track record of earnings growth expected to continue Amatek Years ended 30 June A$m 20031 20041 2005(E)2 External sales 659 743 808 EBITDA 3 60 77 86 EBITA 41 59 64 Notes: 1. Combined normalised results for Rocla Pipeline Products, Rocla Quarry Products, Stramit and Insulation Solutions as
Slide 34: Estimated synergies and growth opportunities
34 Estimated synergies and growth opportunities Synergies Identified growth opportunities Total synergies estimated at Rocla Pipeline Products A$10m p.a. – New products under development – A$4m p.a. immediately from – Concrete sleeper demand through corporate cost savings railroad upgrades – Fur
Slide 35: Composition of Acquisition Cost
35 Composition of Acquisition Cost $Am $NZm 1 Fixed Assets 242 266 Net Working Capital 76 84 Goodwill and Intangibles 2 158 172 Deferred Tax Asset 60 66 Investments 4 5 2 Total Acquisition Cost 540 593 Notes: 1. Assumed exchange rate A$0.91 2. Includes transaction costs (stamp duty, fees and expense
Slide 36: Attractive Acquisition Valuation Metrics
36 Attractive Acquisition Valuation Metrics 2005 2005 A$m Estimate Adjusted 1 Purchase Price 2 530 470 Amatek EBITDA 3 86 86 EV / EBITDA multiple (pre synergies) 6.2x 5.5x EV / EBITDA multiple (post synergies) 4 5.5x 4.9x Notes: 1. Adjusted to exclude future tax benefits acquired (at the estimated d
Slide 37: Appropriate Financing Mix
37 Appropriate Financing Mix Acquisition Funding 1 Effect on FBU Capital Structure Equity ˜ NZ$135m 22.8% Equity Equity ˜ NZ$1,361m NZ$1,226m 52.5% 61.3% Debt ˜ NZ$458m Debt Debt ˜ NZ$1,232m 77.3% NZ$774m 38.7% 47.5% Acquisition NZ$593m 2 Pre transaction Post transaction (A$530m +A$10m transaction c
Slide 38: Conclusion
38 Conclusion 9 Amatek meets all of our acquisition criteria 9 Highly complementary businesses to existing portfolio 9 Continues selective expansion outside New Zealand to diversify and increase reliability of earnings Positive financial impact 9 – EPS accretive pre synergies after new equity raisin
Slide 39: Outlook
39 Outlook NZ and Australia residential markets will soften this year, but from record high levels Non–residential and infrastructure outlook is strong for next two to three years in New Zealand Full year outlook $525-545 million EBIT excluding Amatek March 2005
Slide 40: Ralph Waters Chief Executive Officer
Ralph Waters 11 August 2004 Chief Executive Officer
Slide 41: Real GDP Annual Average % Change
41 Real GDP Annual Average % Change 6.0% Average '99-'03 (Dec years) 5.0% Latest (Sep 04 year) F/C '05-'07 (Dec year average) 4.0% 3.0% 2.0% 1.0% 0.0% NZ AUS March 2005
Slide 42: Inflation Annual % Change
42 Inflation Annual % Change 4.0% Average '00-'04 (Dec years) 3.5% Latest (Dec 04 year) 3.0% F/C '05-'07 (Dec year average) 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% NZ AUS March 2005
Slide 43: Unemployment Rate
43 Unemployment Rate 8.0% Average '00-'04 (Dec years) 7.0% Aus F/C is ’05-’06 average Latest (Dec 04 year) 6.0% F/C '05-'07 (Dec year average) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% NZ AUS March 2005
Slide 44: Ten Year Bond Interest Rates
44 Ten Year Bond Interest Rates Quarterly Average Level 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% NZ 4.0% AUS 3.5% 3.0% 00 01 02 03 04 05 06 07 March 2005
Slide 45: Fiscal Balance As a % of GDP
45 Fiscal Balance As a % of GDP 6.0% Average '00-'04 (June years) 5.0% Latest (June 04 year) F/C '05-'07 (June year average) 4.0% 3.0% Aus F/C is ’05-’06 average 2.0% 1.0% 0.0% NZ AUS March 2005
Slide 46: Current Account Balance As a % of GDP
46 Current Account Balance As a % of GDP 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% Average '99-'03 (Dec years) -7.0% Latest (Sep 04 year) Aus F/C is ’05-’06 average F/C '05-'07 (Dec year average) -8.0% NZ AUS March 2005
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