F O C U S 2019 Annual Shareholders’ Meeting 28 November 2019 Fletcher Building Limited Annual Shareholders’ Meeting 2019
F O C U S Bruce Hassall Chair Fletcher Building Limited Annual Shareholders’ Meeting 2019
Directors Martin Brydon Tony Carter Barbara Chapman Peter Crowley Rob McDonald Doug McKay Cathy Quinn Steve Vamos 3 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Meeting agenda Chair’s address Chief Executive Officer’s address Voting on Resolutions General Q&A Refreshments 4 Fletcher Building Limited Annual Shareholders’ Meeting 2019
FY2019 results at a glance Revenue Net Earnings/(Loss) EBIT* EPS* $9,307 m $164 m $631 m 43.0 c FY2018 $9,471m FY2018 ($190m) FY2018 $50m FY2018 (8.1c) * Before significant items * Before significant items Return on Funds Cash Flow from Net debt Leverage ratio Employed operating activities $325 m 0.4 x 11.8 % $153 m FY2018 $1.3b FY2018 4.8x FY2018: 0.9% FY2018: 396m Note: All metrics include discontinued operations RTG and Formica which were sold during the year 5 Fletcher Building Limited Annual Shareholders’ Meeting 2019 Measures before significant items are non-GAAP measures used by management to assess the performance of the business and has been derived from Fletcher Building’s financial statements for the year ended 30 June 2019. Details of significant items can be found in note 2 of the financial statements. Leverage ratio is Net Debt/EBITDA
Returns to shareholders: dividend reinstated, share buyback underway • Dividend policy to pay dividends in the range of 50%-75% of net earnings before significant items Dividends Share buyback of up to and having regard to available cash flow 1 23c $300 m • Return of capital to shareholders via share buyback is tax effective for shareholders and increases the relative earnings per share FY2018 nil $106m spent so far 1 Available cash flow = Free cash flow less cash interest 6 Fletcher Building Limited Annual Shareholders’ Meeting 2019
FY2019 performance – continuing operations EBIT 1,2 External Revenue $8,308 m $549 m Group FY2018 $8,211m FY2018 ($28m) $5,375m $532m New Zealand Divisions FY2018 $5,239m FY2018 ($97m) $2,933m $57m Australia Division FY2018 $2,972m FY2018 $114m 1 Before significant items 7 Fletcher Building Limited Annual Shareholders’ Meeting 2019 2 Includes Corporate costs of $40m
FY2019 balanced scorecard Safety Engagement Total Recordable Injury Frequency Rate 1 Employee Engagement Rating 71% 70% 67% 66% 6.9 6.7 5.1 5.0 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Sustainability Customer Net Promoter Score 3 Carbon Emission Intensity 2 41 149 33 24 143 141 139 FY17 FY18 FY19 FY16 FY17 FY18 FY19 1 TRIFR = Total no. of recorded injuries per million man hours worked. 8 Fletcher Building Limited Annual Shareholders’ Meeting 2019 2 Carbon Emission Intensity = FBU Co2 Tonnes for every $1m of revenue. Restated per ISO 14064-1, previously overestimated; increase in FY18 is due to Higgins acquisition 3 Net Promoter Score calculated as % Promoters (9 - 10) minus % Detractors (0 - 6).
Sustainability strategy • Significant focus on health and safety through Protect safety reset • Diversity and inclusion • Science-based target for reducing our carbon emissions • Dow Jones Sustainability™ Australia Index inclusion 9 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Governance Board Skills Matrix • Strengthened governance, including revitalised delegated financial authorities, implementation of golden rules and policy refresh • Comprehensive induction of the new Board and the re-organisation and composition of board committees Diversity Industry • Adoption of the new NZX listing rules • Systematic review of the company’s approach to health and safety • Emphasis on stakeholder relationships Expertise Geography • Strength and depth of skills on Board to effectively govern Fletcher Building Limited • Board performance review underway 10 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Ihum ā tao 11 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Delivering the strategy FY2019 FY2020 FY2021–23 REFOCUS AND STABILISE PERFORMANCE GROWTH 1. Refocus on NZ Businesses strong and growing NZ Businesses strong and growing the NZ core Complete B+I projects 2. Stabilise Construction turnaround complete Construction turnaround complete Construction Return division to profit Performance improvement Performance improvement Set-up for 3. Strengthen Australia turnaround Profitable market share Profitable market share 4. Exit non-core Roof Tile Group and businesses Formica divested 12 Fletcher Building Limited Annual Shareholders’ Meeting 2019
F O C U S Ross Taylor Chief Executive Officer Fletcher Building Limited Annual Shareholders’ Meeting 2019
Firmly focused on our future To be the undisputed leader in New Zealand and Australian building solutions – with products and distribution at our core 14 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Positions us well to drive shareholder returns into the future FY23 TARGETS Focus • Revenue growth above background market growth Consistency Leveraged to upside • Core business margin improvements in NZ and Australia Strong balance sheet, strong cash flows • Return on Funds Employed (ROFE) >15% Well positioned for macro trends 15 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Medium term market outlook is forecast to be supportive Australia Market New Zealand Market AU Historical and Forecast Market Outlook (AU$b) 1 NZ Historical and Forecast Market Outlook (NZ$b) 1 300 40 CAGR CAGR 1.1% 9.2% 35 250 30 200 25 150 20 15 100 Population Population 10 growing at growing at 50 1.2% 1.5% 5 20-23 20-23 CAGR CAGR 0 0 FY13 14 15 16 17 18 19 20F 21F 22F 23F FY13 14 15 16 17 18 19 20F 21F 22F 23F Key: Residential Non-Residential Infrastructure / Other 16 1 Work put in place. Source: Infometrics, Oxford Economics Fletcher Building Limited Annual Shareholders’ Meeting 2019
Focus now on driving consistent performance and setting up for growth FY2020 FY2021–23 PERFORMANCE GROWTH Get all NZ core NZ businesses strong and growing 1. Strengthen and grow the NZ core businesses performing 2. Profitable growth in Residential and NZ businesses strong and growing Development Complete B+I projects Complete Construction turnaround 3. Stabilise and reset Construction and overall repositioning Maintain profits Set-up for turn 4. Turnaround and grow Australia Performance improvement and profitable market share growth around 17 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Executive Team well positioned to drive and lift performance Operational Heads HAMISH BRUCE IAN STEVE PETER DEAN MCBEATH McEWEN JONES EVANS REIDY FRADGLEY Chief Executive Chief Executive Chief Executive Chief Executive Chief Executive Chief Executive Building Products Distribution Concrete Residential & Construction Australia Development Functional Heads BEVAN CLAIRE ANDREW DAVID WENDI McKENZIE CARROLL CLARKE MOSS CROFT Chief Financial Chief People & Company Secretary & Acting Chief Chief Health & Officer Communications General Council Information Officer Safety Officer Officer 18 Fletcher Building Limited Annual Shareholders’ Meeting 2019
NZ core has good market positions, but margins under pressure Gross Revenue And Margin FY14-FY19 Current Position Building • #1 or #2 position in all businesses 5,000 12.0% Products • Revenue has grown in good market Distribution 10.0% 4,000 conditions 8.0% Concrete • Margin compression through input cost 3,000 6.0% pressures and competitive markets 2,000 • 4.0% Limited recent new product innovation or moves into logical adjacencies 1,000 2.0% - 0.0% FY14 FY15 FY16 FY17 FY18 FY19 Revenue ($NZ millions) EBIT Margin % 19 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Positioning the NZ core for margin improvement and growth Key Focus Areas What We Are Doing 1 Operational excellence 2 Product innovation 3 E-commerce, digitisation and automation 4 Logical adjacencies and opportunities 20 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Highly successful Residential and Development division Residential Units Sold FY14-FY19 Current position Residential and • #2 house builder in New Zealand Development • New home sales mainly priced $600- 800 700 900k 600 • 755 residential units sold in FY19 500 • Strong operating disciplines 400 300 • Strong customer focus 200 • c5,000 future lots under control, c5 100 0 years’ supply FY14 FY15 FY16 FY17 FY18 FY19 Low/Medium Density High Density Sections 21 Fletcher Building Limited Annual Shareholders’ Meeting 2019
Ability to scale Residential further Key Focus Areas What We Are Doing 1 Grow to 1,000 units pa 2 Land Dev continues at $25m pa 3 Clever Core panelisation plant drives speed and quality 4 Scale our apartment business 22 Fletcher Building Limited Annual Shareholders’ Meeting 2019
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