Building on 150 years CSR 1855-2005 CELEBRATING 150 YEARS CSR - - PDF document

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Building on 150 years

CSR Limited Results Presentation

Half year ended 30 September 2005

8 November 2005 CSR 1855-2005 CELEBRATING 150 YEARS

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Highlights

Diversity of portfolio mitigated impact of delay in sugar milling returns Half year profit of $115 million Gearing returned to target range Upgrade to full year profit

• utlook

$249m returned to shareholders through capital management and dividends Full year profit to be about 10% ahead of last year Progress with growth projects continues $100+ million invested in growth projects in the last six months

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• 9.3
• 8.5

Corporate costs 81.8 17.0 30.9 Property

• 10.8

72.9 65.0 Aluminium $m EBIT Half year ended 30 September 217.7

• 2.8

229.8 79.4 60.5 2004

• 13.8

187.7 Total EBIT

• 3.9

Restructure and provisions 2

• 12.9

200.1 Subtotal

• 45.1

43.6 Sugar 1 0.2 60.6 Building Products % Change 2005

Note: Results for the half year ended 30 September 2005 are reported under Australian equivalents to international reporting standards (“A-IFRS”). The comparative results for the previous half year are restated to comply with A-IFRS requirements. 1. Assumes raw sugar price of $280 per tonne for HYES05 and $250 for HYES04 2. Includes product liability provision and superannuation.

Diversity of portfolio mitigated impact of delay in sugar returns

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Gearing increased to target range following capital return

$182m $182m ca capital pital return h return has s shifted gearin shifted gearing back back to target to target range range Gearing Gearing now now 32.9% - 32.9% - up from p from 17.7% 17.7% at Ma at March rch 05 05 Fund unds employ s employed has ed has incr creas eased d by 27% si by 27% since the nce the demer merger er fol follo lowi wing ng si signif ificant i ant inves vestment ment du during ng last last two two ye years ars St Strong cash ng cash f flow

• w pr

prov

• vides

es flexibility f exibility for future r future growth growth projects projects

21.5% 49.0% Net debt: equity 17.7% 32.9% Net debt: Net debt + equity $1,527 $1,743 Funds employed 30.4x 18.1x Net interest cover $1,256.1 $1,169.3 Total equity $270.1 $573.1 Net debt 31 Mar 2005 30 Sept 2005

($ in million unless stated)

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Lifting operational performance and seeking

• pportunities for value creating growth

Strategy to maximise shareholder returns:

Aggressively pursue operational performance improvement in Building Products and pursue sensible growth Build Sugar into self-sustaining business through growth in stable, higher value businesses (refining, renewable energy, ethanol) Take advantage of hedging to lock in stronger raw sugar prices as opportunities arise Increasing value of Aluminium by improving Tomago operational performance, creeping capacity and lifting value added production while maintaining ongoing hedging program Establish Property as a sustainable earnings source

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15 4 6 61 10 20 30 40 50 60 70 80

HYES04 Volume Price Inflation OIP cost reduction OIP market initiatives Other HYES05 $ million

12.3% 12.2% EBIT Margin 61 61 EBIT 1 490 496 Trading revenue % 2004 2005 $m HYES

Building Products – returns steady despite slower housing market

• Operational improvements offset

lower volumes due to slowdown in housing market

• 55% of exposure to NSW and Qld

markets Move Movements in ments in EB EBIT IT

(1) $6m benefit from other items relates to one-off expenses incurred last year.

(1)

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Gy Gyproc

• ck,

Fi Fibre Ce Cement 41% 41% Ot Othe her 1% 1% In Insulation, He Hebe bel, Pane nels ( (inc nc As Asia) 24 24% Roof

• ofing

19% 19% Bri Bricks a and Pa Pavers 15% 15%

HYES0 HYES05 Tr Trad ading ing Reven Revenue - ue - $49 $496 6 million llion

Gyprock™ – delivered planned cost reductions while maintaining margins Cemintel™ Fibre Cement – volumes steady despite slowdown in some key markets Monier ™ and Wunderlich ™ Roofing – revenue lower due to reduced volumes as residential market slowed CSR Bricks & Pavers – PGH™ returns impacted by significant fall in demand in NSW and Qld Bradford Insulation ™ – profitability increased with higher prices and cost improvements

• Asia – volumes increasing in China

following completion of two expansion projects Hebel ™ – Returns impacted by softer demand in NSW multi-residential sector partly offset by demand from other markets

All Building Products businesses targeting new products and markets

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Operational improvement (OIP) on track to deliver $75m over three years

$- $10 $20 $30 $40 $50 $60 $70 $80 YEM04 YEM05 YEM06 YEM07

Half year 30 September 2005 $19 million in OIP initiatives generated in last six months includes: $15 million in cost reduction $4 million in market initiatives

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Paroc Panel™ increasing sales in the commercial market

Paroc Panel™ non combustible panel system is increasing sales to the commercial market Distribution networks established throughout Australia and in New Zealand and Asia $20m construction of manufacturing facility to begin in southern China – completion targeted for Jan 2007

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30.4% 27.8% EBIT Margin

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73 65 EBIT

• 3

240 234 Trading Revenue % 2004 2005 $m HYES

Aluminium EBIT down 11% due to higher A$/US$ and increased production costs

Trading revenue down 2.5% due to lower shipments in the first half of the year EBIT down 10.8% due to higher A$/US$ exchange rate and higher aluminium production costs

A$2,156 A$2,388 A$2,384 A$ ave spot price per tonne 0.649 0.712 0.764 US$/A$ average rate $1,701 88,735

2004

$1,400 81,782

2003

$1,821 87,275

2005

LME US$ price per tonne GAF sales in tonnes HYES

10 10 ye year ar a alum uminiu inium p price ice

1,000 1,500 2,000 2,500 3,000 3,500 2

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1,000 1,500 2,000 2,500 3,000 3,500

US$/tonne A$/tonne

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Hedging program continues in YEM06 and beyond as opportunities arise

Approximately 90% of net exposure to aluminium and currency hedged for the remainder

• f YEM06

Active hedging program continues with 65% of net aluminium exposure now hedged for YEM07

Hedge Book Hedge Book in US$ in US$ milli millions

• ns

as o as of 31 31 Oc October 200 ber 2005

48 48 10 102 154 154 30 30 84 84 13 131 20 20 40 40 60 60 80 80 10 100 12 120 14 140 16 160 18 180

HY HYEM EM06 06 YEM07 Beyond US$ m millio illions

Al Aluminium Curre rrency Averag Average e fo forward rward alum alumin iniu ium p m price in US$ per to ice in US$ per tonne 0. 0.617 1, 1,687 0. 0.565 1, 1,582 0. 0.657 1, 1,682 Ave Averag age forward forward curr currency rate cy rate in US ce in US cents nts 12

27.4 9.5 12.1 Capital investment 81.8 17.0 30.9 EBIT 60.1 15.3 24.5 Total revenue % 2004 2005 $m HYES

Pro Propert erty EB EBIT IT -

• $m

27 27.1 75. 75.0 15 15.9 9. 9.2 28 28.8 10 10 20 20 30 30 40 40 50 50 60 60 70 70 80 80 YEM02 Y 2 YEM03 YEM04 Y 4 YEM05 YEM06

Property activities continue to grow

EBIT improved to $30.9 million after reaching agreements on property transactions Announced today the sale of 16.7 hectares at Erskine Park to Australand to generate a net return of approximately $23 million Full year profit for Property to be around $75 million following handover

• f land to BlueScope Steel and sale to

Australand – both expected by March 2006

Forecast Note: YEM05 and YEM06 are calculated under A-IFRS while previous years have not been re-stated.

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Erskine Park plan Erskine Park plan

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Market Outlook

Chris Grubb EGM bricks and pavers

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NSW Approvals Monthly & Moving Annual (Seasonally Adjusted)

1 2 3 4 5 6 D e c . 1 9 9 9 J u n . 2 D e c . 2 J u n . 2 1 D e c . 2 1 J u n . 2 2 D e c . 2 2 J u n . 2 3 D e c . 2 3 J u n . 2 4 D e c . 2 4 J u n e . 2 5 Starts (000's) 10 20 30 40 50 60 Starts (000's)

NSW experiencing the sharpest slowdown in housing approvals this year

Source HIA, BIS Shrapnel, ABS, NIEIR

MAT Approvals (RHS) Monthly Approvals (LHS)

• Jan-Jun 2005 Approvals

average = 3,037

• Jul-Sep 2005 Approvals

average = 2,743 16

Qld Approvals Monthly & Moving Annual (Seasonally Adjusted)

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 D e c . 1 9 9 9 J u n . 2 D e c . 2 J u n . 2 1 D e c . 2 1 J u n . 2 2 D e c . 2 2 J u n . 2 3 D e c . 2 3 J u n . 2 4 D e c . 2 4 J u n e . 2 5 Starts (000's) 5 10 15 20 25 30 35 40 45 50 Starts (000's)

Queensland market also softened

Source HIA, BIS Shrapnel, ABS, NIEIR

MAT Approvals (RHS)

• Jan-Jun 2005 Approvals

average = 3,217

• Jun-Sep 2005 Approvals

average = 3,130 Monthly Approvals (LHS)

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Demand & Activity Cycle (YEM Basis)

100 125 150 175 200 1 9 8 1 1 9 8 3 1 9 8 5 1 9 8 7 1 9 8 9 1 9 9 1 1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 1 2 3 2 5 2 7 2 9 2 1 1

Thousands

Residential Starts

Future outlook positive as housing market expected to rebound

BIS View

Source HIA, BIS Shrapnel, ABS, NIEIR

HIA View 18

Progress continues with expansion of Oxley, Qld plant

Progress continues on $34 million project to expand low cost capacity at Oxley by 35 million bricks Project is proceeding on time and on budget – due for completion in July 2006 When completed, high cost brick capacity at Strathpine, Qld will be mothballed Strathpine capacity to remain available through the housing cycle and will be re-lit if there is sufficient demand as the housing market improves

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Operational improvement to enhance returns

$4m million expansion completed of New Lynn factory near Auckland Additional 16m bricks to increase capacity by 60% Market share recovering to historical levels Installing automated packaging system at the Cooroy, Qld plant $5m investment reduces manual handling and lowers labour expense

Completed NZ expansion New fleet of trucks servicing Sydney Increasing productivity

$4.5m investment to develop an in-house distribution capability New fleet began servicing the Sydney market in April 2005

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BrickHomes – Built for Living. Built for Life™

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Sugar Performance

Ian McMaster CEO CSR Sugar

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CSR Sugar strategy

Playing a leading role in industry restructuring and deregulation Performance improvement through the whole raw sugar value chain Spread risk away from the volatile Australian raw sugar milling business by seeking growth in refining, cogeneration, ethanol Take advantage of hedging to lock in stronger raw sugar prices as opportunities arise Longer term, capitalise on biotechnology research to increase sugarcane yield and create new product opportunities

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Fuel ethanol market growing

CSR supports efforts by the Australian and Queensland Governments, major oil companies and automobile manufacturers to promote fuel ethanol CSR is one of the two largest ethanol producers in Australia and supplies over 130 petrol stations Detailed engineering work is nearing completion for a capital project to expand fuel ethanol production at CSR’s Sarina, Qld distillery Final approval of the project expected in the near future

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• 2
• 2

10 10 10 10 3 14 14 HY HYES04 HY HYES05 Etha hano nol Re Refine ned s sugar Raw Raw su sugar Ot Other

17.0% 6.9% EBIT Margin

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79 44 EBIT 35 468 633 Trading Revenue

% 2004 2005 $m HYES

EB EBIT b IT by Busi sines ness Unseasonable wet weather has delayed returns to second half of the year Raw sugar price estimated to be in excess of $280 per tonne (compared to $255 in YEM05) Refining result down slightly due to lower food and beverage demand Ethanol result down due to higher molasses costs

Sugar returns delayed to second half of the year

$79 $79m $44 $44m

Sugar grant payment Sugar grant payment

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Sugar production down in the first half due to wet weather

255 250 7.37 14.2% 1.59

2004

229 250 6.76 14.4% 1.45

2003

NA 280 9.30 13.8% 1.17

2005

CSR Final Pool Price (YEM) Half year pool price assumption NY11 Average US cents per lb CCS% of Sugarcane Raw Sugar Production (mt) Half year ended Sept

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YE YEM05 YEM06 To Tonne nnes of c cane ne c crus ushe hed d (millions)

Full y ll year s sugar c r crop

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Ca Cane ne c crus ushe hed at hal d at half y year ar

72% of crop crushed at half year in YEM05 55% of crop crushed at half year in YEM06. 75% of crop crushed by the end of October.

• Only 55% of sugar crop crushed in the first six months of

the year compared to 72% last year

• By the end of October, 75% of this year’s sugar crop is now

crushed

26 200,000 400,000 600,000 800,000

YEM07 Average position per year for YEM08-10 Tonnes (net to CSR) Net Exposure Actual hedges

Hedging of sugar price for YEM07 and beyond

CSR hedging a significant portion

• f net sugar exposure in YEM07

and beyond 28% of YEM07 crop hedged at A$296 On average, 16% of each year of YEM08-10 crop hedged at A$308

Sugar hedge Sugar hedge book position book position as o as of 31 31 Oc October 200 ber 2005

A$ p A$ price of

• f su

sugar gar hedged hedged 16% 16% A$308 A$308 28% 28% A$296 A$296 % of n % of net produ production hedg

• n hedged

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US cents per pound

Outlook for the sugar price

I ndia’s 2 0 0 3 / 0 4 crop in question I ndia’s 2 0 0 3 / 0 4 crop in question W et w eather in Brazil W et w eather in Brazil Brazil crop behind schedule Brazil crop behind schedule Short term

• versupply

and fund liquidation Short term

• versupply

and fund liquidation

2 0 0 6 Rising ethanol dem and in Brazil W eather shocks EU Reform Brazilian grow th 2 0 0 6 Rising ethanol dem and in Brazil W eather shocks EU Reform Brazilian grow th

Raw sugar dem and from I ndia and Pakistan Raw sugar dem and from I ndia and Pakistan Speculative fund activity Speculative fund activity 28

Financial Results

Warren Saxelby CFO

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• 14

14.7 12.6 Earnings per share (cents) 1

• 20
• 20

Net finance expense

• 48
• 37

Tax expense

• 15
• 16

Outside equity interest 22% 115 188 244 1,363

2005

24% Effective tax rate

• 8

266 EBITDA 135 218 1,199

2004

• 15

Net profit 1

• 14

EBIT 14

($ million unless stated)

Trading revenue

% Change

Half year ended 30 September

1 Excluding significant items

Results for the half year ended 30 September 2005

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• 4.7
• 6.2

Product liability 1.2 2.4 Superannuation

• 3.9
• 3.0

Incentives $m EBIT Half year ended 30 September

• 2.8

0.7

• 9.3
• 5.4

2004

• 3.9

Total restructure and provisions

• 0.1

Other

• 8.5

Total corporate costs

• 5.5

Corporate costs 2005

Breakdown of corporate costs and provisions

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1.1 4.3 Capitalised interest

• 10.6
• 10.4

Discounting of non-current provisions and debtors Half year ended 30 September

• 19.5
• 10.0

2004

• 20.1

Total financing costs

• 14.0

Net interest expense 2005

($ million unless stated)

Review of financing costs and funding position

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13 Profit before significant items 19 Expensed insurance litigation costs 6 Lower depreciation due to asset writedowns Profit restatements in YEM05 (after tax) 4 Superannuation fund contributions not expensed under A-IFRS

• 2

Employee shares now expensed 4 Lower other depreciation and amortisation

• 77

Decrease in net assets 1 Other 32 Profit after significant items 31 Fair value of hedge

• 24
• 84

$m (after tax) Other Asset writedowns due to change in recoverable amounts test Balance sheet adjustments at 1 April 2005

Impact of A-IFRS on financial statements

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A-IFRS adjustments to year ended 31 March 2005

318.9 31.8 287.1 Net profit after significant items 104.9 18.6 86.3 Significant items (net of tax) 214.0 13.2 200.8 Net profit before significant items (33.5)

• (33.5)

Minority interests (26.4) (13.1) (13.3) Net finance cost (after tax) (84.7) (10.3) (74.4) Income tax 358.6 36.6 322.0 Total EBIT (2.7) 26.7 (29.4) Restructuring provisions (16.9)

• (16.9)

Corporate costs 27.1 (1.5) 28.6 Property 141.9

• 141.9

Aluminium 36.7 1.9 34.8 Sugar – ethanol and refining 61.1 6.1 55.0 Sugar – milling 111.4 3.4 108.0 EBIT Building Products A-IFRS Compliant YEM05 Adjustment As reported YEM05

Year ended 31 March 2005

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Outlook

Alec Brennan Managing Director

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Outlook by business

Building Products Housing market is slower than anticipated earlier in the year Total number of new dwellings now expected to fall by around 8% Based on this revised estimate, we are still working on a result broadly in line with last year Aluminium Lower A$ returns to reduce EBIT by 5-10% Sugar While there is a risk that wet weather at the end of the harvesting season may restrict the size of the final crop, we are forecasting for Sugar EBIT to be at least 10% ahead of last year Property Result expected to be around $75 million Overall EBIT result expected to be about 10% ahead of last year