CSR Limited Results Presentation Half Year ended 30 September 2003 - - PDF document

▶
csr limited
SMART_READER_LITE
LIVE PREVIEW

CSR Limited Results Presentation Half Year ended 30 September 2003 - - PDF document

Apr 05, 2023 10 likes •133 views

TM CSR Limited Results Presentation Half Year ended 30 September 2003 19 November 2003 Highlights EBIT of $165 million slightly below 2002 Solid cash flow generation $137 million Interim dividend of 5 cents per share 70%

slide-1
SLIDE 1

CSR Limited

Results Presentation Half Year ended 30 September 2003

19 November 2003

TM

2

Highlights

EBIT of $165 million – slightly below 2002 Solid cash flow generation – $137 million Interim dividend of 5 cents per share 70% franked $75m investment in Tomago aluminium expansion confirmed $100m renewable energy project under way –

  • thers under review

Further streamlining of organisation to deliver

  • ver $15 million in ongoing annual savings
slide-2
SLIDE 2

3

  • 6.7
  • 6.8

Finance costs after tax

  • 43.5
  • 43.9

Tax expense on EBIT

  • 11.5
  • 14.3

Outside equity interest 10.6 100.0 165.0 218.9 1,110.7 2003 11.3 Earnings per share (cents) 0.8 217.2 EBITDA 106.3 168.0 1,096.2 2002

  • 5.9

Net profit

  • 1.8

EBIT 1.3 $ million unless stated Trading revenue % Change Half year ended 30 September

2003 performance in line with 2002

4

Significant reduction in net debt

15.4x 24.6x Interest cover 16.4% 11.8% Net debt: equity plus net debt 226 161 Net debt 1,149 1,200 Total shareholders’ equity 1,587 1,241 Total liabilities 2,736 2,441 Total assets

As at 30 Sep 2003 As at 31 March 2003

$ million unless stated

slide-3
SLIDE 3

5

Strong cash flow supports dividend yield

137

  • 34

19

  • 57
  • 7

7 65

25 50 75 100 125 150

Operating cash flow CapEx Divestments Dividends Interest Other Reduction in net debt

  • Strong cash flow continues to support high dividend payout

ratio combined with significant reduction in debt

$ million 6

  • 50.0

5.0 2.5 Property

  • 10.9 (2)
  • 9.8

Corporate Costs 19.1 61.1 72.8 Aluminium $m EBIT Half Year ended 30 Sept 168.0

  • 9.7

177.7 59.3 63.2 2002

  • 1.8

165.0 Total EBIT

  • 8.4

Restructure & Provisions (3)

  • 2.4

173.4 Subtotal

  • 17.9

48.7 Sugar (1)

  • 6.3

59.2 Building Products % Change 2003

1. Based on raw sugar price of $250 per tonne 2. Based on normalised costs assumed in the demerger scheme booklet. 3. Includes product liability costs and superannuation costs partly offset by write back of provisions

EBIT breakdown

slide-4
SLIDE 4

7

Review of EBIT movements

168

  • 4

12

  • 11
  • 3

1 1 165 150 155 160 165 170 175 180 HYES02 Building Products Aluminium Sugar Property Corporate Restructuring and Provisions HYES03 EBIT $ million

8

22 24 21 15 12 13

$0 $10 $20 $30 $40 $50

2001 2002 2003

$ Million

Operating CapEx Development CapEx HYES03 Depreciation

Operating capex significantly below depreciation

$37m $36m $34m

slide-5
SLIDE 5

9

59

  • 2
  • 4
  • 3
  • 9

15

  • 1

63 50 55 60 65 70 75 80 HYES02 Volume Price Costs SAP Plant Comm. Other HYES03 $ million

  • 3

637 619 Funds employed

  • 6

63 59 EBIT 1 80 81 EBITDA

  • 462

462 Trading revenue % 2002 2003 $m HYES

Building Products – price improvements partially offset softer market and higher costs

Small overall volume decline with stronger commercial market offsetting 13.7% decline in east cost detached housing starts Pricing improvements achieved across whole product range more than offset volume decline Cost increases due to inflation and higher levels of R&M aimed at lifting factory reliability Ongoing impact on EBIT from SAP amortisation Increased costs in roofing from Rosehill commissioning and operating multiple plants in NSW

10

Pricing improvements in all products

PRICE VOLUME

Insulation Bricks and Pavers Roofing

VOLUME INCREASED VOLUME DECREASED PRICE DECREASED PRICE INCREASED Insulation Asia

slide-6
SLIDE 6

11 Bricks & Pavers 2 1 % Roofing 19% Insulation 17% Other 2% Plasterboard & Fibre Cement 41%

HYES03 Trading Revenue - $462 million

Review of performance by product

Plasterboard – improved performance due to stronger prices and higher volumes Fibre Cement – some reduction in volume offset by improved product

  • mix. Successful launch of

compressed panel product for commercial sector Roofing – Decreased volume due to market downturn. Rosehill commissioning continues – products are well received by the market Bricks & Pavers – strong increase in pricing offset by volume reduction. Hebel performing particularly well in commercial market Insulation – good turnaround in performance due to increased prices and cost control

  • Asia – China performing well

with Malaysia and Singapore impacted by price competition

12 Source: ABS, HIA and BIS Shrapnel

Australian housing outlook

100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 Mar-81 Mar-82 Mar-83 Mar-84 Mar-85 Mar-86 Mar-87 Mar-88 Mar-89 Mar-90 Mar-91 Mar-92 Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000

Underlying Demand Actual Commencements HIA Forecast BIS Forecast

Forecast

slide-7
SLIDE 7

13

Product innovation focusing on the commercial sector

Compressed façade system designed for commercial market Allows for differential movement between sheets and vertical joints Easy to install Lightweight Minimises leaking and cracking Good commercial market acceptance since product launch in J une 2003

14

Paroc Panel systems

CSR has signed an exclusive distribution agreement with Paroc Panel Systems of Finland CSR to distribute Paroc Panel in Australia, NZ and in most of Asia Advanced sandwich panel system based on non- combustible core material between a coated steel outer shell Well suited for external and internal walls and ceilings that require fire ratings, strength, tightness and thermal insulation Strong global appeal with significant use in Europe – 10 million square metres sold to date Currently exploring manufacturing feasibility in Australia and Asia

slide-8
SLIDE 8

15

  • 27

303 221 Funds Employed 19 61 73 EBIT 16 72 84 EBITDA 4 215 223 Trading Revenue % 2002 2003 $m HYES Hedge Book in US$ millions

1 6 8 1 0 5 81 108 76 128 50 100 150 200

HYEM04 YEM05 Beyond US$ millions

Aluminium Currency Average forward currency rate in US cents Average forward aluminium price in US$ per tonne

Aluminium EBIT up 19.1%

EBIT improvement of 19% on 4% increase in revenues Decrease in alumina costs contributed to margin improvement Profits also benefited from hedging Tonnage sold increased by 2% to 81,782 World aluminium price increased to US$1,400 a tonne for HYES03 compared to US$1,353 for HYES02

0.542 0.535 1,492 1,453 0.532 1,445 16 804 677 623 293

  • 92
  • 244
  • 500

500 1,000 2001 2002 2003 2004 2005 2006 Tonnes ('000's)

Source: CRU International Ltd forecasts

Actual Forecast

Aluminium market environment

1 4 5 0 1423 1 4 2 7 1469 1575 1 3 6 4

1 2 5 0 1 3 0 0 1 3 5 0 1 4 0 0 1 4 5 0 1 5 0 0 1 5 5 0 1 6 0 0 2001 2 0 0 2 2 0 0 3 2004 2 0 0 5 2006 US$ per tonne Balance of Supply/ Demand LME 3 month price

slide-9
SLIDE 9

17

$75m expansion in Aluminium

  • Gove Aluminium Finance (CSR 70%

) to invest $75 million in upgrade (total cost $210 million)

  • Tomago production to increase by

70,000 tonnes per annum (GAF share 25,235 tonnes)

  • Construction to be completed over

the next three months

  • One of the world’s lowest cost

projects for increased aluminium capacity

18

  • 10

698 630 Funds Empl

  • 18

59 49 EBIT

  • 15

78 66 EBITDA 1 420 423 Trading Revenue

% 2002 2003 $m HYES

7 5 4 12 7 66 38 7 4 2

Ethanol Refining Milling HYES 2001 HYES 2002 HYES 2003 $79m $59m $49m

EBIT by Business

9.83 million tonnes of sugarcane milled, producing 1.45mt sugar, up from 1.43mt last year Trading revenue flat EBIT impacted by delayed STL dividend and reduced sugar hedging benefit Refining result down due to poor domestic trading conditions Ethanol result down due to reduced export prices Impact of sugar price movements: A$10 per tonne change in price impacts EBIT by $7 million

$71m

Estimated Full Year Result (Assumes $250 per tonne sugar price)

YEM 2004 YEM 2003

Difficult trading conditions in Sugar continue

slide-10
SLIDE 10

19

Dynamics of the sugar market

NY#11 Prompt Sugar Price

331 341 8.43 14.74% 1.32

2001

NA 250 6.76 14.35% 1.45

2003

274 CSR Final Pool Price (YEM) 250 CSR Pool Price – A$per tonne 5.86 NY11 Average US cents per lb 14.52% CCS%

  • f

Sugarcane 1.43 Raw Sugar Production (mt)

2002 Half Year ended Sept

  • Sugarcane crop and raw sugar production steadily recovering –

up 10% since 2001 - which is offset by significant drop- off in pricing

4 5 6 7 8 9 10 11 12 US cents per pound YEM01 YEM02 YEM03 20

$100m renewable energy project

$100m investment at Pioneer Mill announced in September 2003 Project is proceeding as planned with key contracts in line with budget Work plan in place to begin during the upcoming slack period Review of similar projects at

  • ther mills under way
slide-11
SLIDE 11

21

Property investments progressing well

Woodcroft: 35 hectare residential development in Sydney Site remediation to be completed in J anuary 2004 Mirvac development application lodged – home and land packages to be available in mid to late 2004 First payment to CSR expected in early March 2004 Erskine Park: 100 hectare industrial park Road construction has begun – other services (power, water) in process Land to be available for sale/ development in mid 2004 Penrith Lakes Development progressing to public exhibition of development plans in 2004 Small contribution expected from other land assets this year Enviroguard (50% J V with Brambles) operations also progressing well

22

Corporate restructuring

New Structure

Sugar Businesses

25% reduction in services headcount

Services

40% reduction in corporate headcount

BP Businesses

Corporate Head Office

Sugar HQ

Streamlining corporate

  • verheads to reduce costs by at

least $15 million per year One- off restructuring charge of up to $10 million to be taken this year Services function (IT, HR, accounts payable/ receivable) to be merged into one unit

slide-12
SLIDE 12

23

Outlook

Building Products – Housing market in next six months expected to be below last year, however price increases expected to positively impact second half results Aluminum – Returns are well hedged to provide stability in profits. Results over the next six months will be impacted by timing of shipments and some higher one- off costs at Tomago Sugar – Pricing outlook likely to be in the $230 - $250 a tonne range – down from $274 per tonne in YEM03. Final crop expected to be slightly ahead of last year. Full year result likely to be in line

  • r below half year result

Small contribution from Property this year Overall, based on weakening sugar price outlook and stronger Australian dollar, operating result likely to be at least 5% below YEM03, excluding the one- off restructuring charge

24

Summary

Following successful demerger of Rinker, CSR has made good progress on a number of initiatives: Improved the already strong balance sheet Lifted factory efficiencies and customer service Committed $176 million to launch two growth projects to create value from surplus cash flow Benefits of improvements in business performance, cost control and low risk growth should underpin dividend payout capacity in future years – full franking expected next year Capital management opportunities to provide additional value for shareholders