Analysts Presentation: Sydney March 2008 - Fletcher Building · > Cost containment Rondo...

Analysts Presentation: SydneyMarch 2008

Chris Ellis, Chief Executive, Building Products

This confidential 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 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.

Analysts Presentation and Sydney Site TourMarch 2008

Cautionary Statement

02

Fletcher Building Products Division

Thermal

Accoustic

Warmth and comfort

A group of building products positioned for growth with energy efficiency and “Green Build” practices

Building Products Division: “Building Sustainability”


03

The Building Products Division comprises three major groupings and several individual businesses. During the year we acquired DVS ventilation and divested our mouldings business

Plasterboard> Winstone Wallboards DVS Ventilation

> No. 1 in New Zealand

> Sole manufacturer in New Zealand, leading market share

> Increased earnings despite falling consent levels

Insulation> Fletcher Insulation Tasman Insulation

> No. 1 in Australasia

> Australian business performing better following merger

> Australia 64% share

> New Zealand sole manufacturer 75% market share

Metal Roof Tiles> AHI Roofing Decra Roofing Systems

> No. 1 Worldwide

> New Zealand 75% share

> New Hungarian Plant being constructed for production mid 2009

Strong Market Positions, Good Industry Structure


04

Forman Group (Acquired December 2006) > Distributor and installer of commercial insulation, ceiling and wall systems > No 1 in New Zealand market > Strong product brands > Commercial demand in NZ forecast to be strong

Fletcher Aluminium > No. 2 in the New Zealand market > Innovative product range

Tasman Sinkware > No. 1 in Australian market > Australia’s sole sink manufacturer > Strong brands in premium and mid-range products

Tasman Access Floors > No. 1 in Australasia > >70% market share in Australian east coast

Plyco Doors > Sole New Zealand manufacturer of interior doors

Strong Market Positions, Good Industry Structure: Other Businesses


05

Key Residential Products and Brands


06

Key Commercial Products and Brands


07

Building Products

Notes:

> The Tasman Building Products Group was acquired on 30 September 2003

> Insulation Solutions was acquired on 1 March 2005

> The Forman Group was acquired on 1 December 2006

Notes:

> All Steel products such as rollforming, steel painting, long steel and steel

merchants were reorganized from the Building Products division to form the Steel

division in October 2006. The above numbers have been fully adjusted to exclude

such steel products from the Building Products numbers since 2003

> EBITDA reference excludes unusual items

1. Proforma return adjusted for acquisition

$m % 1H08 1H07

Sales 9.3 376 344

EBIT 2.8 74 72

Margin % -5.7 19.7 20.9

Funds 2.7 572 557

Return on Funds % 6.8 25.9 27.81


08

Historical Earnings

180

160

140

120

100

80

60

40

20

0

35

30

25

20

15

10

5

02003 2004 2005 2006 2007 2008

EBITDA H1

EBITDA H2

EBITDA Margin

Building Products

Plasterboard

> Business stable

Insulation

> Overall strong despite NSW weakness

Metal Roof Tiles

> Strong volumes offset by FX translation

Other

> Mouldings business divested


09

Sales Volumes Change H1 2008 vs H1 2007

15%

10%

5%

0%

-0.5%Plasterboard Glass Wool Roof Tiles

0.0% 1.4%

11.0%

Market Statistics Change H1 2008 vs H1 2007

7%

6%

5%

4%

3%

2%

1%

0%

New Zealand Australia

1.6%

2.7%

6.1%

5.4%

Consents

Residential WPIP

Key Strategies

Market driven operational excellence

Geographic and product diversification

> Manufacturing plant efficiencies

> Logistics

> Lean manufacturing and waste reduction

> Metal Roof Tiles – EU plant

> Product Development

> Fletcher Aluminium – A1 Curtain wall

Growth of energy efficient, sustainable products and services

> DVS acquisition

> Insulation and Windows and Doors thermal bundle

> Gypsum recycling initiative


10

Plasterboard> Product differentiation – Performance board mix

> Increasing average house size

> DVS - Indoor air quality

Insulation> Energy efficiency

> Regulatory changes

> Recovery in NSW

Metal Roof Tiles> Japan/Europe penetration

> US Distributor growth

Building Products:Key Growth Drivers


11

PlasterboardWinstone Wallboards, DVS


12

Plasterboard:Progress

New Christchurch Warehouse

> Improved service offer to South Island market

New Christchurch Bulk Gypsum Shed

> Improved environmental performance

Lighter paper

> Cost containment

Rondo distribution to Residential Market

> Improved margin

Price increase in August 2007

> Maintained margin in face of energy and raw material cost increases


13

DVS:Home Comfort / Indoor Air Quality Systems

The DVS acquisition provides an entry vehicle to the emerging health, comfort and indoor air quality market

> Over 55% of New Zealand’s 1.4 million homes lack proper thermal control

DVS is the No. 2 player in the ventilation market

Current range

> Air Ventilation Systems

> Heat Pump Systems - Fujitsu distribution agreed

Future Product Extension

> Free Heat Systems - Solar - Phase change materials

> Natural Lighting - Sola-tube - Roof window

> Home Automation - Usage monitors - Integrated controllers

> Air Purification - As an in-line upgrade to air ventilation

> Heat Exchange Systems - Heated, fresh air

> HERS Ratings - HERS = home energy rating system (EECA driven)


14

InsulationFletcher Insulation, Tasman Insulation


15

Insulation:Progress

Impact of Australian Merger behind us

> Key leadership changes complete

> Supply chain management delivering cost reductions and improved service levels

> Holding market share in New Zealand and Australia

> Manufacturing efficiency and IFOT improvements

> Sales team fully staffed and stable

Demand vs Capacity

> Low home commencements in NSW

> Regulatory change and consumer awareness of insulation’s importance in reducing energy consumption driving demand

> We are developing capacity expansion options to met expected future demands

> High AUD and NZD creating favourable conditions for imports

> Improved energy efficiency

> Lower operating costs

> Lower maintenance costs – less refractory’s

> More flexible – melter can be idled at lower power

> In NZ Electricity is 80% renewable and therefore more sustainable

> Both projects completed on time and within budget

Furnace Upgrades at Dandenong and Auckland Plants


16

Insulation:Regulation likely growth driver


17

The Australian insulation market was relatively flat through the 90s. However, improving building codes drove rapid growth from the late 1990s through to 2005, particularly in new dwellings. Growth slowed from 2005 to 2008, as new build stalled.

Note: BIS Shraprel overstates residential A&A: R-values have been assumed to remain constant between 1992 and 2008E

Source: BIS Shraprel: Building Materials and Fittings in Australia, 1996–2001 and 2004/05–2007/08, Volume 2: Insulation; FI Estimates; L.E.K. Analysis

Estimated Glasswood Insulation Market by Building Activity (1992–08E)

Kilo

tonn

es

50

40

30

20

10

0

1992 1995 1998 2001 2005 2008E

CAGR% CAGR% CAGR%

(1992–98) (1998–05) (2005–08)

Total 2.5 9.8 2.7

Commercial 3.0 3.7 13.6

Residential A&A 5.7 6.9 4.3

and Retrofit

New Multi-res 1.8 9.9 (4.7)

Dwellings

New Detached (0.4) 12.3 (1.0)

Dwellings New

Dw

ellin

gs

Metal Roof TilesAHI Roofing, Decra


18

Metal Roof Tiles:Progress

New Plant being built in Hungary

> Improving service to European customers

> Increased penetration in high margin markets

> Capacity expansion to meet growth expectations

Products tailored to individual market

> Expanded concealed fastener range in US

> Increased penetration of US distribution

> New profiles to meet market needs in Japan, Europe

Nilai plant improvement

> Reviewing options to increase production capacity in Malaysia

High NZ $ and steel price increases

> Spread of plants will reduce New Zealand dollar cost base

> Prices lifted in response to steel movement


19

Metal Roof Tiles:Hungarian Plant

New AHI Roofing plant to be constructed in Várpalota, Hungary:

> Supply current EU volumes and provide for growth

> Permitting process is nearing completion

> Construction due to commence in April

> Plant will be in full production by July 2009


20

Other Businesses

> New General Manager appointed following retirement of previous owners

> Number of large projects in the pipeline

> Acquired AAL which is an aluminium partitioning systems business

> Press Handling system bedded in and increasing plant efficiency and reducing waste

> New product websites being developed and launched

> Consumer brand websites being refreshed

> Nu Petite product range launched

> Press shop realigned

> Number of large projects being tendered in next 6–18 months

> Benefiting from Green Star projects and Under-floor Air


21

Key FactsProducts


01

Key Facts:Plasterboard

Products

> Plasterboard

> Compounds/Accessories

> Systems

> Rondo residential products

Comments

> Sole manufacturer of plasterboard in New Zealand, leading market share

> 2 manufacturing plants (Auckland and Christchurch)

> Distribute through merchants, including all major groups

> 270 employees

Auckland

Wellington

Christchurch


02

Factory

Distribution Centre

Key Facts:Insulation

Insulation has superior competitive infrastructure, technology and brands including:

> Manufacturing facilities – 4 out of 5 of the Glasswool (GW) plants in Australasia, plus 2 laminated foil plants

> An exclusive License Agreement with Owens Corning (the world’s leading Glasswool manufacturer)

> Strong Brands: Pink Batts®, Pinkfit Sisalation® and Fat Batts®

> A modernised branch distribution network

> New ERP system (SAP) with a high level of technology deployment

> 650 employees


03

Key Facts:Insulation

Insulation has most of the Plants: 4 of 5 Glasswool Plants and a comprehensive Branch structure

GW Plants Annual Tonnes (Capacity)

Auckland 10,000 12%

Christchurch 4,000 5%

Sydney 12,000 15%

Melbourne 25,000 31%

CSR 30,000 37%


04

Fletcher Insulation:

Glasswool

Foil

Branch

CSR:

Glasswool

Glasswool (under construction)

Foil

Rockwool

Auckland

Brisbane

Sydney

Melbourne

Christchurch

Key Facts:Metal Roof Tiles

Employees = 385

Volume = 17m tiles p.a.

= 8m sq metres roofing


05

FBL Plants

AHI Roofing Plants

Los Angeles

Europe

Middle East

Hungary (under construction)

Malaysia

Japan

Auckland

Africa

Key Facts:Forman Group

Comments

> Distributors and installers of Insulation, Ceiling and Wall Systems

> Manufacturers of Insulation and Foam Systems

> Leading market position in the commercial and industrial building markets for insulation and Ceiling and Wall Systems

> National distribution and installation coverage across New Zealand – 21 outlets

> 270 employees


06

Auckland

Hamilton

Rotorua

New Plymouth

Palmerston North

Napier

Whagarei

Wellington

Christchurch

Dunedin

Queenstown

Invercargill

Forman Commercial Interiors

Forman Building Systems

Forman Insulation

Forman Manufacturing

Group Head Office

Key Facts:Fletcher Aluminium

Comments

> Vertically integrated manufacturing plant. Extruders of exclusively designed aluminium profiles that are powder coated or anodised, packaged on site and dispatched throughout New Zealand

> Revenue 70% – windows and doors 30% – extruded shapes

> No. 2 in the New Zealand window and door market

> Employees: 250+

> The distribution network is made up of 78 fabricators

> Consumer Brands: Fisher, Nebulite, Rylock and Vistalite

South Island

20 fabricators including 2 fabricators with

a combination of residential and high

performance commercial capabilities

North Island

55 fabricators including 2 exclusive high

performance commercial fabricators


07

57

21

Key Facts:Tasman Sinkware


08

Employess = 100

Head Office and Maunfacturing Plant (Adelaide)

Branch Offices (Brisbane, Sydney, Melbourne)

Australian Agents (Canberra, Darwin, Hobart, Perth, Townsville, Wagga Wagga)

US Warehouses / Offices (Corona, Ohio)

Overseas Agents (NZ, Canada, UK, Hong Kong, Singapore)

Analysts Presentation: Sydney March 2008 - Fletcher Building · > Cost containment Rondo...

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