Fletcher Building Limited · NZX:FBU
Fletcher Building — Shareholder Meeting (October 2017)
44 slides from Fletcher Building's shareholder meeting presentation, Oct 25, 2017
Slide 1: 2017 Annual Shareholders' Meeting
Building communities, building lives. 2017 Annual Shareholders’ Meeting 25 October 2017 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 2: Chairman
Building communities, building lives. Sir Ralph Norris Chairman Fletcher Building Annual Shareholders’ Meeting 2017
Slide 3: Directors
Directors Sir Ralph Norris (Chairman) John Judge Dr Alan Jackson Bruce Hassall Tony Carter Cecilia Tarrant Steve Vamos 3 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 4: Meeting agenda
Meeting agenda FY17 review • Overview of FY17 financial performance • Construction Division update • Board actions • FY17 performance by Division • Progress on turnaround strategies FY18 outlook • CEO appointment • Strategic review • FY18 outlook and earnings guidance ASM procedures • Voting on reso
Slide 5: 2017 Performance Overview
Building communities, building lives. 2017 Performance Overview Fletcher Building Annual Shareholders’ Meeting 2017
Slide 6: 2017 financial performance overview
2017 financial performance overview Operating earnings before significant items Revenue $9,399m $525m 4% Total dividend per share 23% 39c Flat YoY Net earnings before significant items Basic earnings per share before significant items $321m 46.3c 23% 24% 6 Fletcher Building Annual Shareholders’ Meet
Slide 7: Divisional performances
Divisional performances EBIT¹ NZ$m Stripping out B+I, Group EBIT was up 20% YoY +6% and NZ EBIT was up c30% 252² 267 +10% +27% 193 +55% 169 176 133 130 84 78 (63) (30) (204) Building Products International Distribution Residential & Land Construction Corporate Development 1. Before significant items
Slide 8: Construction Division Update
Building communities, building lives. Construction Division Update Fletcher Building Annual Shareholders’ Meeting 2017
Slide 9: Construction in context
Construction in context LOCAL AND GLOBAL INDUSTRY FLETCHER CONSTRUCTION CHALLENGES CHALLENGES • Catch up following historical • Large growth in project pipeline underinvestment in infrastructure in short space of time and population growth creating • Core capability failings in B+I buoyant condition
Slide 10: What we said we would do, and what we have done
What we said we would do, and what we have done Improve business and → New financial management system in place for B+I, Infrastructure and South Pacific, 1 project governance with project reporting now standardised → Monthly reviews of all projects by Construction Leadership Team (CLT) → Monthly re
Slide 11: What we said we would do, and what we have done
What we said we would do, and what we have done Introduce more → Revised bidding process has been in place since the start of 2017 3 commercial rigour → Bid criteria established – focussed on what we can win and what will deliver/exceed around bids bid margins in today’s environment → Stage gate app
Slide 12: KPMG review findings: key projects
KPMG review findings: key projects → Highly challenging project with significant remaining risks International Convention Centre → High staff turnover has had major adverse impact / Hobson Street Hotel → New, stable leadership team is improving organisation and morale (B+I) → Forecast outcome materi
Slide 13: KPMG review findings: project governance
KPMG review findings: project governance → Need to implement standardised approach to tender process, project management, control environment, design management, and risk and opportunity management across B+I → Increased use of “design & build” contracts and design novation underscores importance of
Slide 14: Construction Division – future focus
Construction Division – future focus SAFETY All our people going home safe every day Strengthened project management talent, robust governance, DELIVERY clear accountabilities, client focus Attracting and retaining the best people in the industry, TALENT investment in leadership and capability Disci
Slide 15: Board Actions
Building communities, building lives. Board Actions Fletcher Building Annual Shareholders’ Meeting 2017
Slide 16: Board actions
Board actions 1 Board renewal → Appointment of a Director with deep construction and contracting experience will strengthen Board and Audit and Risk Committee → Additional Director will be appointed as part of standard renewal process 2 Director fee → Board resolved to reduce all Directors fees by 2
Slide 17: We have strong foundations
We have strong foundations People engagement Leadership capability Employee engagement index 69 85 3,000+ 66 67 Leadership program participants FY14-FY17 F B F Y1 6 F B F Y1 7 INDUSTRY FB TOP 25%** N O R M* Results of FBuSay employee engagement survey * Industry norm = composite of Manufacturing, He
Slide 18: We have strong foundations: safety performance
We have strong foundations Safety performance Total reportable injury frequency rate has reduced from 57.5 in 2006 to 6.8 in 2017. TRIFR* Major new safety initiative launched in 2017 – Protect. YEARS * Total reportable injury frequency rate, measured as the sum of lost time and medical treatment hou
Slide 19: FY17 Performance by Division
Building communities, building lives. FY17 Performance by Division Fletcher Building Annual Shareholders’ Meeting 2017
Slide 20: Fletcher Building's divisional structure
Fletcher Building’s divisional structure 20 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 21: Building Products Division
Building Products Division Chief Executive: Matt Crockett Approx. 3,900 people employed Local investment and Over 80 manufacturing sites in high quality standards a NZ and AU competitive advantage HIGHLIGHTS → Increased volumes, revenues and EBIT in NZ concrete and aggregates value chain → Solid gro
Slide 22: Distribution Division
Distribution Division Chief Executive: Dean Fradgley Approx. 6,000 people employed Over 330 retail sites in Customer leading focus a NZ and AU competitive advantage HIGHLIGHTS → Very good result across NZ building supplies, and NZ and AU steel distribution businesses – EBIT more than 20% higher than
Slide 23: International Division
International Division Interim Chief Executive: Approx. 5,500 people employed Mitch Quint Operations across Europe, North Significant focus on innovation America and Asia for competitive advantage HIGHLIGHTS → Formica group hitting $88m of EBIT, including a $21m positive swing in EBIT of Formica Eur
Slide 24: Residential and Land Development Division
Residential and Land Development Division Chief Executive: Steve Evans 11 developments* in Auckland Aspiration to deliver 1,000 5 developments* in Canterbury homes per year HIGHLIGHTS → Increase in residential units sold following investment in land and builds → Still very strong demand for new hous
Slide 25: Construction Division
Construction Division Chief Executive: Approx. 4,400 people employed Michele Kernahan Significant government focus on Higgins delivered 15% ROFE infrastructure investment in its first year post acquisition in NZ and AU HIGHLIGHTS → Infrastructure benefitted from completion of Waterview Tunnel plus M
Slide 26: Turnaround strategies progress
Turnaround strategies progress → AUSTRALIA → $27m turnaround over last two years due to restructured product offering, manufacturing site improvements and cost overhead reductions → Further upside now reliant on improved industry dynamics → EUROPE → $21m swing to positive EBIT in FY17 due to growth
Slide 27: CEO Appointment
Building communities, building lives. CEO Appointment Fletcher Building Annual Shareholders’ Meeting 2017
Slide 28: Introducing Ross Taylor
Introducing Ross Taylor → Starts 22 November 2017 → Impressive career in construction, real estate, manufacturing and engineering sectors → Worked across our core markets of NZ and Australia, plus Europe, Asia and USA → Most recently CEO of UGL, an international engineering, services, construction a
Slide 29: Strategic Review
Building communities, building lives. Strategic Review Fletcher Building Annual Shareholders’ Meeting 2017
Slide 30: Strategic review
Strategic review → CEO to lead review of Fletcher Building strategy, alongside Executive Team and Board → Executive Team and Board have commenced a review of current business performance and the competitive landscape to assist this process → We continually review our portfolio to ensure we are alloc
Slide 31: FY18 Outlook and Earnings Guidance
Building communities, building lives. FY18 Outlook and Earnings Guidance Fletcher Building Annual Shareholders’ Meeting 2017
Slide 32: FY18 outlook
FY18 outlook New Zealand → Overall market remains robust, but with low-growth – impacted by resource constraints, unusually wet weather in Q1, and anticipation of new government policy → Building materials and distribution businesses recording flat to low single-digit YoY growth → Strained supply ch
Slide 33: Earnings guidance
Earnings guidance Given the uncertainty in estimating the final outcomes of the major B+I projects, and the resulting impact on in-year earnings, Fletcher Building is separating guidance of the B+I business from the remainder of the Group’s earnings. FY18 earnings before interest & tax (EBIT)(1): Fl
Slide 34: Electronic voting instructions
Building communities, building lives. Electronic voting instructions Fletcher Building Annual Shareholders’ Meeting 2017
Slide 35: Handset instructions – inserting your smartcard
Handset instructions – inserting your smartcard • The smartcard should be inserted into your handset • If the smartcard is not inserted into your handset please do so now • Make sure the chip at the bottom of the smartcard is inserted and facing you • A welcome message will briefly appear when the c
Slide 36: Handset instructions – casting your vote
Handset instructions – casting your vote • When the chairman opens the poll, instructions will appear in the device screen. • Use the red triangle, green square and blue track ball to select/navigate through the screens. 36 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 37: Handset instructions – casting your vote
Handset instructions – casting your vote • Voting options will appear on the screen. Press: Button 1 to vote for Button 2 to vote against Button 3 to withhold your vote • Confirmation that your vote has been received will appear on the screen. 37 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 38: Handset instructions – casting your vote
Handset instructions – casting your vote • Confirmation that your vote has been received will appear on the screen • To change your vote, simply enter your new choice (1, 2 or 3) to overwrite your previous selection • If you wish to cancel your vote, press the ‘X’ button 38 Fletcher Building Annual
Slide 39: Voting via Lumi AGM app
Voting via Lumi AGM app • A voting icon will appear on the navigation bar • Select one of the options to cast your vote 39 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 40: ASM voting
ASM voting 40 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 41: Resolution 1: Election of Bruce Hassall as a director
Resolution 1: Election of Bruce Hassall as a director of the company 41 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 42: Resolution 2: Re-election of Cecilia Tarrant as a director
Resolution 2: Re-election of Cecilia Tarrant as a director of the company 42 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 43: Resolution 3: Auditor's remuneration
Resolution 3: Auditor’s remuneration 43 Fletcher Building Annual Shareholders’ Meeting 2017
Slide 44: Q&A
Building communities, building lives. Q&A Fletcher Building Annual Shareholders’ Meeting 2017
Fletcher Building — Shareholder Meeting (October 2017) on 6ix