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RESULTS PRESENTATION YEAR ENDED 31 DECEMBER 2019 26 FEBRUARY 2020 - PowerPoint PPT Presentation

RESULTS PRESENTATION YEAR ENDED 31 DECEMBER 2019 26 FEBRUARY 2020 Adelaide Brighton | Results presentation for the year ended 31 December 2019 RESULTS SUMMARY AND BUSINESS REVIEW Nick Miller Chief Executive Officer Adelaide Brighton |


  1. RESULTS PRESENTATION YEAR ENDED 31 DECEMBER 2019 26 FEBRUARY 2020 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  2. RESULTS SUMMARY AND BUSINESS REVIEW Nick Miller Chief Executive Officer Adelaide Brighton | Results presentation for the year ended 31 December 2019

  3. RESULTS SUMMARY AND BUSINESS REVIEW RESULTS SUMMARY Subdued market conditions › Focus on safety initiatives has resulted in a 36% improvement in TRIFR › FY19 revenue of $1.5 billion, down 7.0% due to challenging market conditions in the residential and civil construction market and competition in SA and Qld markets › Underlying EBIT of $186.4 million, down 31.8% also driven by rising raw material, shipping, transport and fuel costs › Underlying NPAT of $123.0 million, down 35.6% on the pcp, in line with guidance. Underlying EPS of 18.9 cps › Reported net profit after tax of $47.3 million included an after tax non-cash impairment charge of $69.8 million › Net debt of $423.3 million, leverage at 1.5 times › Underlying return on funds employed remains robust at 11.2%, ahead of the cost of capital › Full franked final dividend of 5.0 cents per share declared › Outlook • 2020 construction materials market expected to remain challenging – monetary stimulus and infrastructure spend expected to impact demand in 2021 • Cost initiatives to deliver $30 million in savings, offsetting cost headwinds of $20 million • 2020 NPAT expected to be 10% lower than underlying 2019, based on early assessment of markets 3 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  4. RESULTS SUMMARY AND BUSINESS REVIEW FINANCIAL SUMMARY UNDERLYING EBIT 1 ($M) UNDERLYING NPAT 1 ($M) REVENUE ($M) 273.5 1630.6 1517.0 191.0 186.4 123.0 FY18 FY19 FY18 FY19 FY18 FY19 UNDERLYING ROFE 1 (%) UNDERLYING EPS 1 DPS (CENTS) (CENTS) Ordinary Special 16.6 28.0 29.4 8.0 11.2 18.9 20.0 5.0 FY18 FY19 FY18 FY19 FY18 FY19 1 “Underlying” EBIT, NPAT, ROFE and EPS exclude significant items. Refer slide 15 for reconciliation of reported earnings 4 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  5. RESULTS SUMMARY AND BUSINESS REVIEW SAFETY ‘STEP CHANGE’ PROGRAM TRIFR* 38.9 33.8 30.1 25.5 16.2 2015 2016 2017 2018 2019 › Sustained focus on safety and injury reduction delivering results › Total Recordable Injury Frequency Rate (TRIFR) 16.2 at December 2019, 36% improvement over the last 12 months › Safety “Step Change” – newly staged program to deliver next phase of continuous improvement in health and safety *Total Reportable Injury Frequency Rate (TRIFR) is the number of recordable injuries per million man hours worked Adelaide Brighton’s TRIFR includes employees and contractors. 5 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  6. RESULTS SUMMARY AND BUSINESS REVIEW OPERATING CONDITIONS tonnes US$/oz Construction GOLD PRODUCTION & PRICE RESIDENTIAL APPROVALS (000’S) › Decline in both detached and multi- 350 1,500 140 residential approvals impacted revenue 300 120 1,400 › Access to funding and lower 250 100 consumer confidence impacted 1,300 200 80 residential demand 150 60 1,200 › Delays have pushed out infrastructure 100 40 project timelines, adversely impacting 1,100 2019 demand for construction 20 50 materials 0 1,000 0 2018 2019 2018 2019 Detached Multi Production Price Source: ABS Mining ENGINEERING WORK DONE LIME SALES (000’S T) › 2019 has seen multi-year highs for the (EX MINING) ($B) US dollar gold price and record highs 80 1,200 for the Australian dollar gold price. 70 › Market responding to global economic 1,000 slowdown and geopolitical uncertainty 60 800 › Gold exploration rose by 50 approximately 15% year on year with 40 600 WA exploration accounting for almost 30 70% of total gold exploration spend 400 20 › Mining supported increases in lime 200 and cement volumes in WA and NT 10 › Alumina production and sales 0 0 volumes remained stable in 2019 2018 2019 2018 2019 *Forecast 6 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  7. RESULTS SUMMARY AND BUSINESS REVIEW CEMENT REVENUE ($M) 620 565 2018 2019 Volumes and prices › Cement sales volumes decreased 6.1% on pcp › Competitive pressures from imports in South Australia impacted impacted by competitive volumes and pricing, stabilising in 2H19 pressures in South Australia › Lower east coast construction activity impacted volumes in NSW, and Queensland, combined Qld and Victoria w ith residential demand. › Mining supporting demand in WA and the NT, with improved volumes in 2H19 Mining and infrastructure › Margin compression due to lower price and volumes combined with expected to support higher raw material, shipping and fuel costs demand for cement in 2020 › 1Mt milestone for use of refuse derived fuel at Birkenhead plant 7 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  8. RESULTS SUMMARY AND BUSINESS REVIEW LIME REVENUE ($M) 169 161 2018 2019 Lime volumes supported by › Lime sales volumes increased 1.9% compared to pcp, driven by gold and alumina demand infrastructure projects and › Pricing improved above inflation. Contract price moves with a lag resource sector activity, to energy costs particularly in Western › Near-term fundamentals remain positive from expansion of gold Australia and nickel capacity and long-term potential for increased alumina capacity 8 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  9. RESULTS SUMMARY AND BUSINESS REVIEW CONCRETE AND AGGREGATES REVENUE ($M) 680 616 2018 2019 Slow ing demand in east › Concrete volumes decreased by 10.8% compared to pcp › Demand slowed across all markets – NSW most impacted coast markets impacted › Margins impacted by higher concrete raw materials costs that volumes. Higher raw exceeded price increases material input costs › Scotchy Pocket Quarry (Sunshine Coast in Qld) commenced (aggregates) and transport production in 2H19 and continues to ramp-up to full capacity costs further impacted › Cost-out program looking to “right-size” for lower demand environment margins 9 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  10. RESULTS SUMMARY AND BUSINESS REVIEW CONCRETE PRODUCTS REVENUE ($M) 145 140 2018 2019 Lower residential demand › Volumes declined on the back of softer activity in the residential and commercial construction markets, particularly in Qld and NSW drove concrete product › Volumes grew in Vic, SA and Tas where several one-off volumes commercial projects have bolstered underlying demand › Lower production volumes impacted plant efficiencies and unit costs › Operational efficiency, investment in product innovation, lower cost and sustainable curing and energy systems, and cost reduction initiatives continue to be our focus 10 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  11. RESULTS SUMMARY AND BUSINESS REVIEW JOINT VENTURES EARNINGS ($M) 37.4 31.5 2018 2019 Pressures on volume in › Independent Cement and Lime (ICL) contributed $14.2 million, down 20.2% on pcp on lower volumes and higher costs in 2H19 Australia’s east coast › Sunstate Cement contributed $10.2 million, 12.1% down on pcp as markets impacted joint shareholder volumes declined in late 2H19 venture contributions › Mawson Group contributed $5.6 million, down 22.3% on pcp, with lower project volumes › Aalborg Portland Malaysia contributed $1.6 million, up 128.6% as a result of efficiencies and demand from Malaysia and Asia 11 Adelaide Brighton | Results presentation for the year ended 31 December 2019

  12. FINANCIAL REVIEW Theresa Mlikota Chief Financial Officer Adelaide Brighton | Results presentation for the year ended 31 December 2019

  13. FINANCIAL REVIEW INCOME STATEMENT – UNDERLYING* › Revenue down by 7.0% with slowing demand CHANGE PCP 12 MONTHS ENDED 31 DECEMBER 2018 2019 for construction materials, particularly % residential construction Revenue 1,630.6 1,517.0 (7.0) › Import competition, particularly in SA, impacted cement pricing, partially offset by Earnings before depreciation, 360.9 280.0 (22.4) amortisation, interest and tax higher concrete and aggregate pricing Depreciation, amortisation and › Underlying EBIT reduced by 31.8% to (87.4) (93.6) 7.1 impairment $273.5 million Earnings before interest and tax 273.5 186.4 (31.8) › Margins impacted by lower volumes, pricing pressures and higher costs. Profit before tax 259.1 167.9 (35.2) › Cost increases across raw materials (clinker and purchased aggregates), shipping, Tax (expense) (68.2) (45.0) (34.0) transport and fuel costs Minority interests 0.1 0.1 - › Interest expense higher following adoption of new leasing standard. Higher borrowings, Net profit attributable to members 191.0 123.0 (35.6) offset partially by lower market interest rates › Underlying effective tax rate of 26.8% Basic earnings per share (cents) 29.4 18.9 (35.7) › Underlying net profit after tax of $123.0 * Underlying earnings exclude significant items. Refer slide 15 for reconciliation to reported earnings million, results in EPS of 18.9 cents per share 13 Adelaide Brighton | Results presentation for the year ended 31 December 2019

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