PRESENTATION TO CITI AUSTRALIAN & NEW ZEALAND CONFERENCE

Transcription

1 PRESENTATION TO CITI AUSTRALIAN & NEW ZEALAND CONFERENCE October 2011 Bill Roest Chief Financial Officer Humes Pipelines, Auckland

2 Citi Presentation Fletcher Building October 2011 Page 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 releases, management commentary and analysts presentations, including those relating to the August 2011 Annual results announcement, are all available on the company s website and contain additional information about matters which could cause Fletcher Building s performance to differ from any forward looking statements in this presentation. Please read this presentation in the wider context of material previously published by Fletcher Building.

3 Citi Presentation Fletcher Building October 2011 Company & Market Overview Page 3 Investor Presentation COMPANY & MARKET OVERVIEW Christchurch, August 2011

4 Citi Presentation Fletcher Building October 2011 Company & Market Overview Page 4 Fletcher Building at a glance Revenue - year to 30 June 2011: NZ$7.4 billion Market Capitalisation: NZ$4.4 billion Employees: 20,000 Shareholders: (as at 30 June 2011) Revenues 2011 : (as at 30 June 2011) 6% 5% 14% 18% 38% New Zealand Australia North America Europe Asia 39% 47% New Zealand Australia Rest of World 33%

5 Citi Presentation Fletcher Building October 2011 Company & Market Overview Page 5 Fletcher Building key listing information Listed on the New Zealand and Australian stock exchanges New Zealand Second largest listed company by market capitalisation on the NZX Australia Ranked #58 on the ASX Fletcher Building gained inclusion in the S&P/ASX 200 index in March 2011 US Level I sponsored American Depository Receipt (ADR) programme launched December 2010 Citi act as depository bank Ticker: FCREY CUSIP:

6 Citi Presentation Fletcher Building October 2011 Company & Market Overview Page 6 Market leading businesses Building Products Crane Distribution Infrastructure Laminates & Panels Steel Plasterboard Insulation Roof Tiles Single Businesses: Aluminium Sinkware Pipelines Manufacture & Distribution Trade Distribution Australia and NZ Copper Tube Manufacture & Distribution Building Materials Distribution 62 PlaceMakers stores Construction Concrete: Cement Readymix Aggregates Concrete Products Concrete Pipes Quarries The Laminex Group MDF Particleboard LPM HPL Formica HPL Coated Steel Long Steel: Reinforcing bar, mesh and wire Scrap Distribution

7 Citi Presentation Fletcher Building October 2011 Strategy Page 7 Investor Presentation STRATEGY Formica for Tinderbox, UK

8 Citi Presentation Fletcher Building October 2011 Strategy Page 8 Strategy Improved earnings reliability through geographic and end-market diversification Decentralised business model Portfolio approach that creates value through application of proven operating model Target attractive industry positions in Australia and NZ Further opportunities to invest in Australia and NZ will be pursued, along with Formica growth in Asia

9 Citi Presentation Fletcher Building October 2011 Strategy Page 9 Fletcher Building has a vertically integrated value chain Pipes & Plumbing Laminates & Panels Building Products Steel Concrete Other Manufacturers Dedicated Distribution Shared Distribution Construction Other Distribution Markets

10 Citi Presentation Fletcher Building October 2011 FY2011 Financial Results Page 10 Investor Presentation FY 2011 FINANCIAL RESULTS The Cloud, Auckland waterfront

11 Citi Presentation Fletcher Building October 2011 FY2011 Financial Results Page 11 Strong underlying earnings growth in FY2011 despite economic headwinds, helped by initial contribution from Crane Group NZ$m June months June months % Change Sales 7,416 6, EBITDA ¹ EBIT ¹ Net earnings Unusual items after tax Net earnings EPS cps Dividend - cps EBITDA, EBIT, Net Earnings and EPS all before Unusual Items

12 Citi Presentation Fletcher Building October 2011 FY2011 Financial Results Page 12 Strong performances in Infrastructure and Laminates & Panels divisions EBIT NZ$million Building Products Distribution Infrastructure Property Laminates & Panels Steel 12 months ended Jun-11 Jun Earnings before interest, tax, and unusual items

13 Citi Presentation Fletcher Building October 2011 FY2011 Financial Results Page 13 Key ratios Total Shareholder Return (TSR) Percentage Debt/Debt Plus Equity Percentage Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun Return on Average Equity Percentage¹ Return on Average Funds Percentage² Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun Net earnings / average equity 2. Earnings before interest, tax, and unusual items / average funds Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

14 Citi Presentation Fletcher Building October 2011 Key Developments Page 14 Investor Presentation UPDATE ON KEY DEVELOPMENTS Iplex, Adelaide

15 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 15 Crane integration now completed Crane Division (FY11 in A$m, to nearest million) Aust. NZ Revenue EBIT Key Brands Pipelines Manufacturer and distributor of pipes and fittings from 15mm to 2,000mm in diameter with 20 manufacturing and distribution facilities across Australia and New Zealand Building applications include: civil works, houses and commercial buildings, on farm irrigation, telecommunications, and mining and industrial projects Trade Distribution Australia More than 240 stores under the Tradelink, Hudson Building Supplies, Northern s, Mico, Bathroom Basement and H&L brands Tradelink Plastic pipe and plumbing products distribution through a network of 220+ branches Hudson Hardware and timber supplies Trade Distribution New Zealand Nationwide network of 100+ branches primarily targeting trade MasterTrade Plumbing, bathroom, and electrical supplies Mico Pipelines, plumbing, and bathroom supplies Corys Electrical products Industrial Products Metals Distribution Distribution of non-ferrous metal products in Australia and New Zealand Crane Copper Tube Manufacturer of copper tube Inter-segment revenue eliminations / unallocated EBIT (146) (14) TOTAL 1,876 71

16 Percent Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 16 Estimated Crane Group revenue by end market (FY2011) Pipelines Group Trade Distribution Industrial Products Total Crane Division New Residential Residential A&A Commercial Manufacturing Mining Other Source: Management estimates

17 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 17 Canterbury earthquake rebuilding update Another major earthquake of magnitude 5.5 occurred on Sunday 9 October Government has confirmed that this will further delay rebuilding Non-availability of insurance for new construction activity is a major constraining factor NZ Treasury expectations are that rebuilding will not begin in earnest until second half of calendar 2012 EQR contract for residential repairs is progressing well: 20 hubs established, with over 900 accredited contractors $200m paid to date to contractors; payments currently running at $40m per month; 17,500 full scope repairs either completed or underway 27,000 emergency repairs completed

18 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 18 Weathertightness fixing leaky homes PWC report to government of March 2010 estimated 22,000 to 89,000 dwellings affected by weathertightness failures Consensus forecast is 42,000 dwellings require repair, at a total cost of $11.3 billion 10 years for complete remediation New scheme proposed from second half of 2011: Government to pay 25% cost of repair Local council to pay 25% cost of repair Home owner to pay remaining 50%, but supported by government guarantee of associated bank borrowing Enabling legislation passed by parliament in July 2011 and scheme has now commenced

19 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 19 Investor Presentation TRADING UPDATE & OUTLOOK Dimond Claudelands, Hamilton

20 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 20 Fletcher Building trading update 12 October 2011 New Zealand Continued low levels of activity in the residential and commercial construction sectors; Australia Recent modest uplift in residential consents has yet to flow through to activity levels Group businesses exposed to the residential and commercial markets have recorded lower earnings year over year; Further earthquakes have delayed Canterbury rebuilding Significant downturn in residential consents and continued weak approval levels in commercial construction have impacted earnings. Laminex earnings negatively impacted due to: High exposure to the new residential, and repairs & alterations sectors Sensitivity of earnings to volume changes Long steel exports to Australia impacted by surplus capacity globally and strong Australian currency

21 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 21 New Zealand residential consents in March and June quarters were at historically low levels Housing consents 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Houses Apartments Source: Australian Bureau of Statistics

22 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 22 Australian residential consents have slowed considerably in the last two quarters Total Dwellings 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Source: Australian Bureau of Statistics

23 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 23 Finance approvals for additions and alterations in Australia have been trending down Additions & Alterations loans (A$000 s) 550, , , , ,000 Source: Australian Bureau of Statistics

24 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 24 Long steel export margins have deteriorated due to global oversupply and high Australian dollar World total monthly crude steel production (million tonnes per month) World Steel Plant capacity (%) US$ per tonne AU$ per tonne 0 0 World Crude Steel Monthly Production and Capacity Utilisation Million tonnes/month and Percent. Jan 07- Aug 11 Source: World Steel Association China Export Rebar Price FOB Shanghai AU and US dollars per tonne Source: World Steel Association

25 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 25 Capital expenditure expected to remain in line with depreciation ¹ * 255 * Forecast excludes potential expenditure on: Business acquisitions other than small bolt-on s Formica expansion in China / SE Asia Capital Expenditure Depreciation * Forecast 1. Excludes acquisition of shares in Crane Group Ltd

26 Citi Presentation Fletcher Building October 2011 Trading Update & Outlook Page 26 Financial outlook FY2012 Based on: Current assessment of market conditions Unaudited internal forecasts Net earnings for the 2012 half year are expected to be around 10% lower than the 2011 result of $166 million Net earnings for the 2012 financial year are expected to be similar to the $359 million pre-unusuals result reported for FY2011

27 Citi Presentation Fletcher Building October 2011 Appendix Page 27 Investor Presentation APPENDIX Crane Cooper Tube, Adelaide

28 Citi Presentation Fletcher Building October 2011 Appendix Page 28 Building Products Plasterboard Winstone Wallboards New Zealand s sole manufacturer and leading supplier of gypsum plasterboard Insulation Fletcher Insulation Tasman Insulation NZ Forman Group Home&Dry Leading manufacturer in Australasia of bulk glasswool insulation market Roof Tiles AHI Roofing Decra Roofing Systems Major global supplier of metal roof tiles Single Businesses Fletcher Aluminium Tasman Sinkware

29 Citi Presentation Fletcher Building October 2011 Appendix Page 29 Building Products result NZ$m June Mths June Mths % Sales EBITDA EBIT Funds Employed EBITDA 1 /sales % EBIT 1 /sales % ROFE 1 % Plasterboard operating earnings adversely impacted by slowdown in residential housing starts and Christchurch earthquakes One off gain of $16m from sale and leaseback of Auckland factory Insulation earnings down 26% due to market disruption in Australia. Roof Tiles volumes up in Africa, Europe and Asia but down in NZ and USA. 1. Excluding unusual items

30 Citi Presentation Fletcher Building October 2011 Appendix Page 30 Distribution PlaceMakers The premier supplier of building materials to New Zealand s commercial and residential construction markets 62 outlets across New Zealand trading as PlaceMakers 33% market share of the core building materials sectors No.1 in key building materials Trade focus: 85% of sales Most outlets operated as joint ventures

31 Citi Presentation Fletcher Building October 2011 Appendix Page 31 Distribution result NZ$m June Mths June Mths % Sales EBITDA EBIT Funds Employed EBITDA/sales % EBIT/sales % Sales down 3% due to slowdown in residential and commercial building activity in the second half, and slowdown in Christchurch post earthquake Operating earnings rose 3% as a result of cost reductions. DIY segment weakened following GST increase, competitive activity intensified. ROFE %

32 Citi Presentation Fletcher Building October 2011 Appendix Page 32 Infrastructure Concrete New Zealand Firth Humes Pipeline Systems Golden Bay Cement Winstone Aggregates 15% of NZ aggregates markets 55% of NZ cement market 34% of NZ readymix concrete market 50% of NZ pre-cast and concrete pipe market Concrete Australia Rocla Quarry Products Rocla Pipeline Products 35% of Australian concrete pipe market Construction Fletcher Construction New Zealand s leading construction company Commercial (buildings) and Engineering (infrastructure) South Pacific (general) Property Fletcher Residential New Zealand s largest home builder

33 Citi Presentation Fletcher Building October 2011 Appendix Page 33 Infrastructure result NZ$m June mths June mths % Sales 2,052 2, EBITDA Concrete NZ Concrete Aust. Construction Property Total EBITDA EBIT Funds Employed 1,134 1, EBITDA/sales % EBIT/sales % ROFE % NZ Concrete Cement earnings up despite lower domestic volumes. Demand for concrete and related products typically weaker. Australia Concrete Improved margins through new product development and broadened business base Construction 5% decline in turnover, earnings flat. Costs incurred in relation to large contract tenders Includes management fee from EQC contract. Current backlog $764m.

34 Citi Presentation Fletcher Building October 2011 Appendix Page 34 Laminates & Panels Laminex Leading high pressure laminate & decorative surfaces Estimated Australasian market positions Decorated board No.1 Medium density fibreboard No.1 Particleboard No.2 Over 50 distribution outlets owned across Australasia Formica Global player, strongest brand internationally for high pressure laminate No. 2 in the US, No. 1 in Canada Market share leader in HPL in UK and Spain In Asia, focus is mainly on commercial applications

35 Citi Presentation Fletcher Building October 2011 Appendix Page 35 Laminates & Panels result NZ$m June mths June mths % Sales 1,979 1, EBITDA Laminex Formica Total EBITDA EBIT Funds Employed 1,745 1,695 EBITDA 1 /sales % EBIT 1 /sales % ROFE 1 % Laminex Australian revenues up strongly in first half due to new housing and govt education building programme Slowdown seen in second half across all sectors Prior year result included $16m one-off gains Formica Earnings up 65% due to efficiency gains and cost out. US and European markets remained weak. Asia revenues up 9% 1. Excluding unusual items

36 Citi Presentation Fletcher Building October 2011 Appendix Page 36 Formica: continued improvement in earnings, due to Asia growth and cost reduction programme EBIT NZ$m FY11 FY10 % Change Asia North America Europe Corporate EBIT $NZ

37 Citi Presentation Fletcher Building October 2011 Appendix Page 37 Steel Rollforming and Coated Steel Pacific CoilCoaters Stramit Building Products Dimond Approx. 24% of Australian market (Stramit) Major player in New Zealand roofing market (Dimond) Long Steel Pacific Steel Group Sims Pacific Metals (50%) No.1 in New Zealand market 50% shareholding in Sims Pacific Metals NZ s sole electric arc furnace Distribution Fletcher Easysteel CSP Coating Systems Fletcher Reinforcing Reinforcing bar, flats, rod and wire

38 Citi Presentation Fletcher Building October 2011 Appendix Page 38 Steel result NZ$m June Mths June mths % Sales 1,214 1, EBITDA EBIT Funds Employed EBITDA/sales % EBIT/sales % Strong performance in coated steel despite impacts of floods and earthquakes: Operating earnings up 32% to $58m Difficult market conditions in long steel with earnings down 61%. Strong recovery in distribution and services earnings, up 86% to $13m on prior year. ROFE %

39 Citi Presentation Fletcher Building October 2011 Appendix Page 39 New Zealand economic and fiscal data¹ Economic data March years Real GDP growth (annual average % change) Inflation (annual % change March quarter) day interest rate (March quarter) Unemployment rate (March quarter) Fiscal data June years Operating balance before gains and losses (% of GDP) Net debt (% of GDP) Gross sovereign-issued debt (% of GDP) ¹ NZ Government Budget estimates, May 2011

40 Citi Presentation Fletcher Building October 2011 Appendix Page 40 PRESENTATION TO CITI AUSTRALIAN & NEW ZEALAND CONFERENCE October 2011 Bill Roest Chief Financial Officer Humes Pipelines, Auckland