Fletcher Building Limited · NZX:FBU
Fletcher Building — Corporate Update (May 2020)
18 slides from Fletcher Building's corporate update, May 20, 2020
Slide 1: Fletcher Building update on trading and organisation reset
Fletcher Building update on trading and organisation reset Auckland, 20 May 2020: Fletcher Building today provided an update on trading and measures it is taking to respond to the impact of COVID-19 on the Group, including a proposal to reduce the number of people it employs. Fletcher Building chief
Slide 2: Market outlook and resetting the business (press release continued)
significant items across May and June, though at lower levels than normal due to the gradual ramp-up in activity and ongoing COVID-19 restrictions. Residential house sales by Fletcher Living, which were not possible under the Level 4 lockdown, have now restarted. There is no change to the constructi
Slide 3: Workforce reduction, redundancy support and capex outlook
“While we looked at all parts of our business to remove costs, regrettably we believe we will not be able to support the same number of people. We have to make some very difficult decisions which include looking at reducing the number of people we employ by approximately 10%. This will equate to aro
Slide 4: Conference call to be held today
Conference call to be held today Fletcher Building management will host a briefing for all investors and analysts today at 10:30am NZT / 8:30am AEST to discuss the trading update. Participants can register for the conference by navigating to the following link: https://s1.c-conf.com/diamondpass/1000
Slide 5: Fletcher Building FY20 Trading update
FOCUS Fletcher Building FY20 Trading update ROSS TAYLOR — Chief Executive Officer BEVAN MCKENZIE — Chief Financial Officer 20 May 2020
Slide 6: 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 7: COVID-19 operational impacts
COVID-19 operational impacts Feb March April May In New Zealand • Full shutdown from 25 March to 27 April (Level 4) • Impacts linger into May (Level 3 and 2) as both the company and our customers ramp up New Zealand • Shut down and ramp up completed safely across 400+ sites • Social distancing and c
Slide 8: COVID-19 trading impacts
COVID-19 trading impacts FBU New Zealand FBU Australia • Pre-COVID-19 trading to plan / • Pre-COVID-19 trading to plan / guidance guidance • Nil revenue for majority of NZ • Revenues c90% of pre-COVID-19 budget businesses during Level 4 lockdown through April and May • May revenues at c80% of pre-CO
Slide 9: Immediate actions taken to reduce costs and preserve liquidity
FY20 trading update Immediate actions taken to reduce costs and preserve liquidity • FY20 interim dividend cancelled • On-market share buyback programme suspended • FY20 capex reduced by c$60m - expect FY20 capex to be c$240m vs. pre-COVID-19 expectation of c$300m • Strong focus on working capital m
Slide 10: Despite cost savings achieved, 4Q20 earnings materially impacted
FY20 trading update Despite cost savings achieved, 4Q20 earnings materially impacted • June quarter typically represents 40-45% of FBU’s annual earnings due to factors including high seasonal trading and construction activity ahead of winter, large number of house sales completed and receipt of year
Slide 11: Balance sheet position remains robust
FY20 trading update Balance sheet position remains robust Leverage (Net Debt / EBITDA) 1 • Net debt (unaudited) was c$650m at end of April • Leverage of 0.8x, below bottom end of target range 2.0x • Liquidity at end April of c$1.5bn, comprised of cash on hand of c$970m and undrawn credit of $525m Ta
Slide 12: Revenue and earnings more weighted to residential market
Market outlook Revenue and earnings more weighted to residential market FBU Gross Revenue by Market NZ (%) • Building and construction markets are tightly aligned to broader economic activity Infra 31% • Group revenue is c50% exposed to residential Resi activity, however Group EBIT is more $6bn 48%
Slide 13: Positioning New Zealand businesses for market downturn of c20%
Market outlook Presently positioning New Zealand businesses for market downturn of c20% NZ Historical and Forecast Residential Consents (#) Residential 35k 37k 36k -30% • Key driver of FBU NZ’s profitability 33k • FBU base case is for residential consents to decline 25k c30% in FY21 and a further 10
Slide 14: Positioning Australia businesses for market downturn of c15%
Market outlook Presently positioning Australia businesses for market downturn of c15% AU Historical and Forecast Residential Approvals (#) Residential 232k • Key driver of FBU AU’s profitability 188k -16% • FBU base case is for residential approvals to decline 173k 154k c15% in FY21, then stabilise
Slide 15: Significant restructuring programme targeting FY21 cost reduction
Resetting our businesses for the future Significant restructuring programme targeting FY21 cost reduction FY21 in-year cost-out benefit Key Focus Areas • Operating efficiencies including footprint and supply chain, ceasing unprofitable product lines, fewer warehouses and depots Other 25% • Other inc
Slide 16: Resetting our businesses for the future: Our people
Resetting our businesses for the future Our people • While we looked at all parts of our business to remove costs, regrettably we believe we will not be able to support the same number of people • Unfortunately, the level of future market activity and the speed it will move to these levels means we
Slide 17: These actions will ensure Fletcher Building remains strongly positioned
These actions will ensure that Fletcher Building remains strongly positioned into the future Actively repositioning our businesses to address new market reality • Decisive actions taken to keep costs under control and preserve liquidity through lockdown and restart in New Zealand • Detailed plans ma
Slide 18: Q&A
FOCUS Q&A Fletcher Building Trading Update Presentation 2020