FIRST HALF 2017 RESULTS PRESENTATION 18 AUGUST 2017 CAPRAL LIMITED - PowerPoint PPT Presentation

FIRST HALF 2017 RESULTS PRESENTATION 18 AUGUST 2017 CAPRAL LIMITED 1 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

About Capral Darwin Capral is Australia's leading supplier of Aluminium products and solutions. Cairns Our core business is the manufacture and distribution of Aluminium extrusion. In addition, we distribute other associated products including rolled Townsville Mackay aluminium products (sheet and plate). We manufacture in fjve plants with eight extrusion presses, four paint lines and an anodising line. Sunshine Coast Brisbane Bremer Park We supply to customers from our plants and through a network of 19 Gold Coast distribution centres. Our key markets are; residential and commercial construction, and industrial. Newcastle Wangara Sydney Angaston Penrith Perth Parramatta Our products are used in the fabrication of a wide range of products including; Canning Vale Erskine Park Adelaide Minto Bibra Lake windows and doors, security and shower screens, fencing, balustrades, louvres, transport, marine, signage and general manufacturing applications. Melbourne Extrusion site Campbellfield Warehouse/ Aluminium Centre Dandenong Corporate office Austex Dies Hobart 2 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

Agenda • 1H17 Highlights • Financials • Update on Initiatives and Outlook • Q&A • Appendices 3 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

1H17 Highlights Tony Dragicevich, CEO "Investing in technology to optimise cost structure and improve our long-term competitiveness" 4 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

1H17 Performance Highlights • On track to meet full-year guidance • Trading EBITDA 1 of $6.6m (2016: $10.0m), EBITDA of $7.7m (2016: $10.2m) down compared to an unseasonally high 1H16 • Margins impacted by rising Aluminium costs (LME) • H ousing market to remain strong, despite slowing from record levels • I ndustrial sector relatively strong and outlook is robust • In itiatives to drive effjciencies are well advanced • Automated packing/product handling to commence in 2018 • E-Store and CRM system operational • Dumping measures imposed against Vietnam and Malaysia • Sa fety performance improved and remains a key focus. TRIFR 2 at 12.7 (2016: 16.7) 2 TRIFR is total reportable lost time and medically treated injuries per million work hours 1 See Important Note (page 10) 5 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

Volume Breakdown Channels to Market (Volume) Diverse industry exposure Extrusion via Distribution Centres Extrusion Direct 41% ex Mill Residential 44% Industrial Building 41%** 45%* Rolled via Distribution Centres 15% Non Source: Capral Residential Building 14% Volume Seasonality '000t Source: Capral 35 Unseasonably strong demand * Residential building additions and alterations ** Industrial includes transport, marine and other manufacturing 30 25 • ~85% of total volume is extruded in our Mills 20 • ~1 5% of total volume is rolled (sheet and plate) and 15 predominantly used in Industrial applications 10 • Normal seasonality in 1H17 compared to 1H16 5 • Import competition and surplus domestic capacity 0 1HY13 2HY13 1HY14 2HY14 1HY15 2HY15 1HY16 2HY16 1HY17 continuing to impact volumes Source: Capral 6 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

Residential market is moderating ANNUAL DWELLING MONTHLY COMMENCEMENTS UNITS 22,000 ‘000 250 20,000 227 225 215 216 18,000 200 16,000 181 175 175 14,000 163 163 150 12,000 145 10,000 125 8,000 100 6,000 75 4,000 Approvals 50 Commencements 2,000 Forecast 25 0 June Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 0 Source: ABS and BIS Oxford Economics 2010 2011 2012 2013 2014 2015 2016E¹ 2017F¹ Source: BIS Oxford Economics July 2017 Detatched Housing Multi-Res Low Rise Multi-Res High Rise (2 Quarters Delayed), ABS • Residential sector commencements slowing • Despite the slow down, there is a strong pipeline in • Detached housing, Capral's primary market, fell 3% in residential work, which accounts for around 45% of volume 12 months to June 2017 1 • Weakness in Western Australia and North Queensland • Multi-Residential decreased by 13% 1 housing markets has contributed to a slower 1H17 1 Source: BIS Oxford Economics July 2017 forecast 7 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

Extrusion demand remains relatively strong ‘000 • The extrusion market grew in 2016 and ALUMINIUM EXTRUSION MARKET SALES VOLUME Tonnes PA is expected to be marginally lower through 200 200 Forecast 2017 due to a slowdown in residential 184 186 construction 179 183 175 • Non-residential building demand will 173 171 165 improve by an estimated 5% 1 160 161 156. 150 • Key industrial sectors (manufacturing, Source: Capral marine and transport) have improved (Forecast based on BIS Oxford Economics forecasts and GDP projections) 125 CAPRAL EXTRUSION PRODUCTION VOLUME Note: 80 • Capral has an estimated 29% share of the Australian Aluminium extrusion market 62.0 59.1 60 53.8 52.4 • Import market share has fallen to around 50.6 45.7 45.9 45.4 42.2 42.8 34%, from a high of 40% 40 32.7 30.3 28.8 28.1 29.3 26.9 26.9 26.725.7 • Excess domestic extrusion capacity still 24.7 22.7 23.2 23.0 23.0 22.4 22.5 22.7 21.7 22.2 20.6 20.5 20 exists but utilisation has improved 0 1 Source: BIS Oxford Economics July 2017 forecast 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e Source: Capral H1 H2 FY 8 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

1H17 Financials Tertius Campbell, CFO "Financial fundamentals and cash position remains strong" 9 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

First half result down on prior period H1 H1 2016 2017 Sales Volume - External (‘000 tonnes) 29.6 31.5 • 1H17 half Trading EBITDA 1 continues historical pattern of $m $m lower fjrst half return Sales Revenue 210.2 207.6 • V olume down 6% against prior period which had benefjted from Trading EBITDA¹ 6.6 10.0 anti-dumping measures and a very strong residential market LME Revaluation² 1.1 0.4 Other one off costs² (0.2) - • Imports from SE Asian countries continue to put downward EBITDA 10.2 7.7 pressure on domestic pricing Depreciation/Amortisation (2.9) (2.9) EBIT 4.8 7.3 • Margin compression in 1H17 due to: Finance Cost (0.4) (0.5) • Aluminium price (LME) increasing by ~22% from an average of Profit/(Loss) after Tax 4.4 6.8 $US 1,525 in 1H16 to $US 1,855 in 1H17 1 See Important Note • Lower capacity utilisation due to lower volumes 2 Included in other expenses • 1H17 earnings also materially impacted by reduction in WA Trading EBITDA 1 $ '000 demand Unseasonably strong 1H16 performance 10 8 Important Note 6 1 Trading EBITDA is presented with reference to the ASIC Regulatory Guide 230 “Disclosing non-IFRS 4 fjnancial information” issued in December 2011. Trading EBITDA is Statutory EBITDA adjusted for signifjcant items that are material items of revenue or expense that are unrelated to the underlying 2 performance of the business. Capral believes that Trading EBITDA provides a better understanding of its fjnancial performance and allows for a more relevant comparison between fjnancial periods. These items 0 are LME and Premium revaluations, and costs relating to restructuring and are non-recurring in nature. 1HY13 2HY13 1HY14 2HY14 1HY15 2HY15 1HY16 2HY16 1HY17 -2 Source: Capral 10 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

Increased Aluminium cost signifjcantly impacted profjt $’000 12 10.0 (0.9) 10 (2.6) 8 • Reduction in extrusion volume - $0.9m 1.8 6.6 (1.7) • Diffjculty in fully recovering higher metal 6 cost - $2.6m • C ost savings were able to ofgset the 4 infmationary impact 2 0 Sales Overheads 1H16 Volume Metal Cost increase Inflation Cost 1H17 Trading under recovery Savings Trading 1 1 EBITDA EBITDA 1 See Important Note (page 10) 11 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS

Balance Sheet remains strong Jun 17 Jun 16 $m $m Current Assets Inventory 76.0 73.0 Trade Receivables 73.2 70.3 Net Cash & Equivalents 22.4 21.9 • Low risk capital structure with no net debt Other 2.4 2.6 174.0 167.8 • Current ratio better than 1H16 Current Liabilities • Stock holding in tonnes reduced by 10% Trade Payables (73.5) (74.8) Provisions (11.8) (12.0) • I nventory and Receivables impacted by (0.6) (0.2) Other higher aluminium costs of ~ $7.5m (85.9) (87.0) Net Current Assets 88.1 80.8 Non Current Assets 41.6 41.6 Non Current Liabilities (5.6) (4.9) Net Assets 124.1 117.4 Net Tangible Asset Value (NTA) 121.2 114.4 Underlying NTA per share 25.4 c 24.1 c Franking Credits 25.9 27.1 Accumulated Unrecognised tax losses 287.7 292.6 12 18 AUGUST 2017 CAPRAL HALF YEAR RESULTS