Fletcher Building Limited · NZX:FBU
Fletcher Building — NZSE Australian Financial Media Briefing (November 2002)
24 slides from Fletcher Building's conference presentation, Nov 26, 2002
Slide 1: NZSE Australian Financial Media Briefing
NZSE Australian Financial Media Briefing 26 November 2002 Ralph Waters Chief Executive Officer
Slide 2: Fletcher Building
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 • NZ$3.7 billion revenue; NZ$1.3 billion market capitalisation • FBU is listed on NZSE and ASX • Strong market shares in all its building sectors •
Slide 3: The Business
The Business Corporate Building Construction Concrete Laminex Distribution Products 2
Slide 4: What is Fletcher Building?
What is Fletcher Building? Earnings Make Up Concrete/ Building Products Construction & Laminex Distribution 10% 75% 15% • Not a construction company • Not a distribution business • A building materials manufacturer with two special channels to market 3
Slide 5: Why Like This?
Why Like This? • NZ market size too small for normal distribution methods and thus PlaceMakers - a composite distributor for FB and others • Construction is an important channel that also – has high returns – maximises FB share of materials – is defensive against imported materials • Laminex reduces
Slide 6: Concrete
Concrete • One of two domestic cement producers: 600 ktpa (50% share) • Leading position in ready mix and concrete products (33% share) • Leading national aggregates supplier (25% share) • Specialist piping products: concrete and plastic, for infrastructure and irrigation • Leading provider of roadi
Slide 7: Building Products
Building Products • Sole NZ producer of plasterboard (94% share) • MDF particleboard & decorative board manufacture; doors and mouldings • Furniture & joinery distribution • Aluminium extrusion: window & door systems • One of two NZ suppliers of painted steel coils • Roll forming manufacturing: roof
Slide 8: Distribution
Distribution Over $700m revenue through: • Leading domestic building materials supplier (trade emphasis); 51 stores nationally 45 are joint ventures • Low cost building supplies retail outlet; 12 stores nationally • “Hire a Hubby” franchise business 7
Slide 9: Construction
Construction • Major contractor of choice in NZ & South Pacific • Commercial, industrial and engineering • Extensive portfolio of completed projects; established in early 1900’s • General contractor on many recent NZ landmark projects: – Sky Tower – Auckland Hospital – Manukau Waste Water Treatment
Slide 10: Operating Earnings
Operating Earnings 12 Months June June NZ$millions 2002 2001 Operating Earnings (EBIT) Building Products 85 58 Concrete 60 31 Construction 30 5 Distribution 34 18 * Corporate -4 -6 EBIT Total Pre Unusuals 205 106 Unusual Items 5 -181 Restatement for Distribution -12 * Interest -51 -36 Taxation -54 -
Slide 11: Returns
Returns June NZ$millions 2002 Return on Funds Employed (1) 23% Return on Equity (2) 17% (1) EBIT pre unusuals/(net debt-deferred tax assets + equity + capital notes) (2) Net earnings after net capital notes interest / (average total equity excl minority interests and capital notes) 10
Slide 12: Financial Position
Financial Position Proforma Including Laminex June June NZ$millions 2002 2002 Equity incl Minority Interest 591 720 Capital Funds 230 380 Total Equity and Cap Funds 821 1100 Net Interest Bearing Liabilities 168 617 Total Funds Usage 989 1717 Gearing % 40% 58% 11
Slide 13: 2001/02 Strategies
2001/02 Strategies • Portfolio Management – concentration to fewer higher return businesses • Grow in New Zealand – support core businesses and grow where opportunities arise • Achieve Australian Expansion – decrease volatility in earnings and provide path for future growth 12
Slide 14: Australian Expansion / Criteria
Australian Expansion / Criteria • No adverse competitive response • Leading market position (No.1 or No.2 in sector) • Good industry structure and sustainable market position • Capable local management • Attractive financial parameters and strong cash flow generation Laminex Industries fully satisfi
Slide 15: Laminex provides…
Laminex provides… • A scale entry to Australia, in a favourable industry structure • Leading market position with strong “icon” brands • Capable management team • Synergies from integration with existing FBU panels manufacturing & distribution, and fixed cost efficiencies • Larger and diversified ea
Slide 16: Transaction Overview
Transaction Overview • Purchase price is A$645m (NZ$750m), with contingent payment up to A$20m, based on Laminex FY03 EBITDA performance • Financing – Equity placement of 43.7 million shares which raised approximately NZ$129 million – Debt to include NZ$150 million of Capital Notes • Acquisition exp
Slide 17: Laminex Overview
Laminex Overview • Leading producer, distributor and marketer of premium decorated boards in Australia and New Zealand • Six production facilities providing operational efficiency and flexibility • 50% interest in two joint ventures in West Australia – Wespine (sawmill), DIWA (resin manufacture) • D
Slide 18: Laminex – Key Facilities
Laminex – Key Facilities Welshpool - MDF 112k m3 Gympie - LPM 2.0 million m2 - MDF 220k m3 - LPM 2.0 million m2 Papakura - HPL 3.0 million m2 - Treating 13.0 million m2 Dardanup - Particleboard 220k m3 - LPM 7.5 million m2 - Treating 26.3 million m2 Ballarat Cheltenham - LPM 5.0 million m2 - HPL 3.4
Slide 19: Fletcher Wood Panels
Fletcher Wood Panels FWP Penrose Fletcher Wood Panels Penrose – Annual revenue c $200m Plyco Doors Hardboard mfg FWP Hamilton Hamilton LPM FWP FWP Kumeu Decorating Kumeu Particleboard Particleboard mfg mfg Particleboard Particleboard flooring flooring mfg FWP Taupo MDF mfg FWP Christchurch Particleb
Slide 20: Laminex Earnings
Laminex Earnings Years ended 30 June A$million 2000(A) 2001(A) 2002(A) Sales 380.1 438.0 608.1 EBITDA (before unusuals) 67.7 64.1 88.1 EBIT (before unusuals) 50.3 40.3 57.6 Capex 17.0 10.0 21.0 Notes: 1. Wesfi acquired by Laminex in February 2001 for A$193 million 2. FY01 result adversely impacted b
Slide 21: Total Shareholder Return
Total Shareholder Return TSR on FBU shares from 26 Mar 2001 to 19 Nov 2002: 70.1% FBU share price movement over the same period: 47.7% ($2.20 to $3.25) NZSE40 TSR over the same period: 4.9% Source: NZSE data Key assumptions in calculating gross returns include: • The value of imputation credits or D
Slide 22: Fletcher Building Dividends
Fletcher Building Dividends • Pay out around 60% of NPAT • Full NZ tax credits attached to the dividend • Dividend withholding payment credit means that for non-NZ holders they have an ex NZ cash return of 85% of the aggregate of the cash dividend and the tax credit (i.e. 6c/share dividend gives 7.6
Slide 23: Outlook for Fletcher Building
Outlook for Fletcher Building • EBIT 2001 2002 $106m $205m Further improvement on strong 2002 result in 2003 • First half EBIT around $140m excluding Laminex – 80% up on prior year 22
Slide 24: Building
aw, Building
Fletcher Building — NZSE Australian Financial Media Briefing (November 2002) on 6ix