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RESULTSPRESENTATIONFull year ended 31 March 2019
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Agenda
2
Details
1. Overview – Rob Sindel, Managing Director, CSR Limited
2. Financial Results – David Fallu, Chief Financial Officer, CSR Limited
3. Business Unit Performance – Rob Sindel
4. Market & Outlook – Rob Sindel
5. Q&A
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Rob Sindel, Managing Director
OVERVIEW
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Strong operational and financial position
4
Operational and financial performance
› Completed sale of Viridian Glass consistent with strategy to deliver targeted returns of 15% ROFE
› Network optimisation to reduce volumes from higher cost plants in line with market activity
› Locked in energy contracts over next 2-3 years to secure pricing and supply
Portfolio optimisation
Building ProductsReturn on funds employed 1
Strong financial positionNet cash/(debt)
› 25% improvement in safety in YEM19
› YEM19 NPAT (continuing operations before significant items) of $181.7m –down 14% due to lower Aluminium earnings
› $65m final dividend (13.0 cents per share) 50% franked
12.0%15.0%
19.4%22.8% 23.8%
22.1%
YEM14 YEM15 YEM16 YEM17 YEM18 YEM19
1. All ROFE calculations are based on EBIT (before significant items) for the 12 months to 31 March divided by average funds employed which excludes cash and tax balances and certain other non-trading assets and liabilities as at 31 March.
-28.5
68.4 70.9
-11.4 -14.3
50.0
YEM14 YEM15 YEM16 YEM17 YEM18 YEM19
ROFE %
Net cash (debt) A$m
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Building Products and Property represent 87% of Group earnings
51. Excludes Corporate costs.2. All ROFE calculations are based on EBIT (before significant items) for the 12 months to 31 March divided by average funds employed which excludes cash and tax
balances and certain other non-trading assets and liabilities as at 31 March. YEM19 excludes Viridian Glass.
CSR Group EBIT Building Products and Property business now represents 87% of group earnings1
Sale of Viridian improves group ROFE
Aluminium reset at a lower level of earnings with new electricity contract
-50
0
50
100
150
200
250
300
350
YEM13 YEM14 YEM15 YEM16 YEM17 YEM18 YEM19
A$ m
illion
BP Property Aluminium Viridian
ROFE 2 5.0% 20.7% 21.6% 23.2% 21.8%9.9% 18.4%
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David Fallu, Chief Financial Officer
FINANCIAL RESULTS
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Group results for the year ending 31 March 2019
7
Results summary
1. All references are for continuing operations before significant items.
CSR Group EBIT1 down 17% largely due to lower Aluminium earnings following the step-up in electricity related costs
Revenue up 4% following growth in all businesses4%
A$m (unless stated) YEM19 YEM18 change
Trading revenue from continuing operations 2,322.8 2,237.7 4%
EBIT from continuing operations
Building Products 206.5 214.1 (4%)
Property 38.8 47.8 (19%)
Aluminium 36.6 79.5 (54%)
Corporate (16.9) (21.1) 20%
Group EBIT from continuing operations 265.0 320.3 (17%)
Net finance income (costs) 0.1 (1.2)
Tax expense (74.7) (90.5) 17%
Non-controlling interests (8.7) (18.0) 52%
Net profit after tax from continuing operations 1 181.7 210.6 (14%)Significant items after tax from continuing operations (42.8) (11.6)
Statutory net profit after tax from continuing operations 138.9 199.0 (30%)
Statutory net loss after tax from discontinued operations (60.9) (10.2)
Total statutory net profit after tax 78.0 188.8 (59%)
146.5166.0
183.8210.6
181.7
YEM15 YEM16 YEM17 YEM18 YEM19
CSR Group NPAT (pre sig items) A$m
Note: YEM18 and YEM19 exclude the Viridian Glass business
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EBIT overview by business
8
Building Products (A$m) Property (A$m) Aluminium (A$m)
› Solid performance across most products and segments with some moderation in volumes in the second half of the year
› Includes $14m in long-term growth investments including digital platforms and Inclose façade systems
› Includes Stage 1 of industrial property at Horsley Park, NSW and settlements from the residential development at Chirnside Park, VIC
› Ongoing investment in a number of major projects in Western Sydney
› Higher realised aluminium price offset by significant step-up in electricity costs
119.7
167.6
202.8 214.1 206.5
YEM15 YEM16 YEM17 YEM18 YEM19
30.2
23.3
15.0
47.8
38.8
YEM15 YEM16 YEM17 YEM18 YEM19
104.3 104.193.1
79.5
36.6
YEM15 YEM16 YEM17 YEM18 YEM19
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Strong cash flow supports dividends, investment in growth projects and Property
9
Operating cash flow
1. Cash conversion based on operating cash flow (pre-tax, asbestos and significant items) divided by EBITDA excluding asset disposals. Viridian included until 31 January 2019.
A$m YEM19 YEM18 change
EBITDA 348.5 408.2 (15%)
Net profit on asset disposals 44.3 51.2
EBITDA excluding asset disposals 304.2 357.0 (15%)
Net movement in working capital (44.5) (14.7)
Movement in provisions/other 5.2 2.5
Operating cashflows(pre tax, asbestos & sig. items) 264.9 344.8 (23%)
Asbestos payments (29.1) (31.7)
Tax paid (12.1) (40.6)
Significant items (16.4) (23.3)
Operating cashflows(post tax & sig. items) 207.3 249.2 (17%)
Reduced cash flow from Aluminium
Cash conversion1 of 87% following working capital increases to manage plant consolidation and scheduled maintenance
Property capex continued to be self funding in YEM19, with $110m cash inflow from committed sales at Horsley Park, NSW and Rosehill, NSW expected in the second half of YEM20
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Final dividend of $65m (13.0 cents per share) 50% franked. CSR policy to maximise the distribution of
franking credits to shareholders
The lower level of franking for the final dividend represents the impact of tax losses realised following the sale of Viridian Glass
Future dividends expected to be in line with CSR’s target dividend payout ratio of 60-80% of full year net profit after tax (before significant items)
Consistent dividend returns
10
Payout ratio
Dividends
Total dividend
50% franking
50% franking
75% franking
100% franking
0% franking
0% franking
0% franking
0% franking
0% franking
X0% franking
8.5 11.5 13.0 13.5 13.0
11.5
12.013.0 13.5 13.0
YEM15 YEM16 YEM17 YEM18 YEM19
Interim
Final
$101m $119m $131m $136m
69% 71% 71% 64%
20.0
23.526.0 27.0 26.0
$131m
72%
50% franking
50% franking
75% franking
100% franking
0% franking
0% franking
0% franking
0% franking
0% franking
50% franking
Note YEM18 and YEM19 payout ratio excludes the impact of discontinued operations.
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Major Building Products projects include: Hebel – $75m expansion at Somersby, NSW
completed in April 2019
AFS – Rediwall expansion at Minto, NSW and new AFS site purchased in Victoria
Bradford – site purchased in WA
$18m of capex from Hebel project to be included in YEM20
Excluding Hebel, Building Products capex expected to be in line with depreciation in YEM20
Investments to support growth in Building Products
11
Capital expenditure 1 (ex property & acquisitions, A$m)
3243 37 39 37
24
2927
4439
YEM15 YEM16 YEM17 YEM18 YEM19
Op capex Dev capex Depreciation
56
7264
83
105
Hebel29
1. YEM19 excludes Viridian Glass.
Depreciation
$78m $83m $89m $84m $65m
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68.4 70.9
-11.4-14.3
50.0
YEM15 YEM16 YEM17 YEM18 YEM19
Strong financial position going into YEM20
12
Net cash / (debt) A$m YEM19 net cash of $50m
Additional cash to be received in YEM20 $110m from two Property settlements
$78.5m from Viridian deferred settlement
$100 million share buyback launched in March 2019 $9m purchased to date
Share buyback to continue during YEM20
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Rob Sindel, Managing Director
BUSINESS UNIT PERFORMANCE
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Building Products revenue up 1% with growth from new products
14
EBIT Margin %
1. EBITDA and EBIT (before significant items).2. Excludes cash and tax balances and certain other non-trading assets and liabilities as at 31 March.3. Refer note on slide 5.
EBIT A$m
Revenue up 1% with higher pricing and improved product mix offsetting the moderate reduction in volumes in the second half of the year
Includes $14m in growth investments in CSR Connect digital platform, new product development and Inclose façade systems
10.2 12.1 14.0 13.9 13.1
9.510.7
11.6 11.6 11.1
YEM15 YEM16 YEM17 YEM18 YEM19
1H 2H
9.9%11.4%
12.9% 12.8% 12.2%
214.1
3
16
410
206.5
YEM18 Volume and price Market Incrementalgrowth investment
Cost saving andother
YEM19
A$m unless stated 1 YEM19 YEM18 changeRevenue 1,695.9 1,672.2 1%
EBITDA 258.9 265.4 (2%)
EBIT 206.5 214.1 (4%)
Funds employed2 947.4 919.1 3%
EBIT/revenue 12.2% 12.8%
Return on funds employed3 22.1% 23.8%
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Growth and resilience of the Building Products portfolio
15
Building Products EBIT A$m Lightweight Systems (including Gyprock and Cemintel) have grown by a CAGR of 13% since YEM14 - ahead of housing starts CAGR up 5%
Rest of Building Products CAGR of 26% since YEM14 includes the benefit of acquisitions and industry consolidation in bricks
YEM14 YEM19Gyprock Cemintel Rest of BP New business development
BP EBIT $206.5m
BP EBIT $91.5m
Gyprock and Cemintel 13%Rest of BP 26%Housing starts 5%
5 year CAGR
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47%
5%13%
35%
Broader revenue base from wider addressable market
16
YEM14 Building Products revenue YEM19 Building Products revenue
Lightweight SystemsConstruction SystemsBricksEnergy and Roofing Solutions 39%
13%18%
30%
Revenue $1.0bn
Revenue $1.7bn
16
Lightweight Systems Construction Systems Bricks Energy and roofing solutions
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Continued strength in Property earnings
17
A$mProperty EBIT A$m
1. EBIT (before significant items).2. Excludes cash and tax balances and certain other non-trading assets and liabilities as at 31
March.3. Refer note on slide 5. ROFE varies due to timing of projects.
EBIT of $38.8m includes Stage 1 Horsley Park, NSW and sales at Chirnside Park, VIC.
Chirnside Park project has delivered $44 million in EBIT to date (including $12.5m in YEM19). Marketing and construction continuing on the
townhouses and duplexes in Stage 6 during YEM20 and YEM21
A$m unless stated 1 YEM19 YEM18 changeEBIT 38.8 47.8 (19%)
Funds employed2 224.5 185.7 21%
Return on funds employed3 18.9% 29.2%
30.223.3
15.0
47.8
38.8
YEM15 YEM16 YEM17 YEM18 YEM19
5 year average
$31m
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Major residential projects in Western Sydney
18
Schofields, NSW Bringelly, NSW
Size › 70ha – future residential› Approximately 1,250+ lots › 92 hectares
Zoning › Public exhibition closed in September 2018› Rezoning due for completion in mid 2019
› Future residential (approximately 1,000 lots)› 1.8km south of future Western Sydney CBD
aerotropolis
Area› Rapidly growing area in northwest Sydney› Richmond Road upgrade completed to South Street› North West Rail Link underway – opening in 2019
› Southwest Sydney growth centre › North South Rail link announced
Timing › Stage 1 (approximately 400 lots) to begin development in YEM21 › Rezoning in process for the area
Redevelopment works
› Quarry rehabilitation completed› Masterplan for local planning (roads, lots,
infrastructure)› Studies commencing on rezoning
Market outlook› Infill location, well located in growth area › Marketing to begin in 1.5+ years based on market
outlook
› Residential, key growth area› Government focus on infrastructure spendF
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Major industrial projects in Western Sydney
19
Horsley Park, NSW Badgerys Creek, NSW
Size › 30 hectares – industrial (current surplus)› 20 hectares – current operating factory › 200 hectares
Zoning › Zoned industrial› Stage 1 – registration and title due for completion in
mid 2019› Future zoning Flexible Employment / Urban land
Area› Established industrial area› Adjacent to Oakdale Industrial Park (Goodman
development)
› Located within the Western Sydney Aerotroplis release area
Timing› Stage 1 – 10 hectares sold in YEM19 for EBIT of
$32 million› Stage 2 – 20 hectares
› Subject to final government rezoning and infrastructure availability – 5 + years
Redevelopment works › Land rehabilitation continues › Applications with government for rehabilitation works
Market outlook › Strong demand from both institutional investors and owner occupiers
› Located adjacent to the future Western Sydney CBD with solid growth prospects once rezoned
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79.5
0
60
1222
61
8
36.6
YEM18 Volume PriceA$/t inchedging
A$ alumina Cokeand rawmaterials
Energyrelatedcosts
Other YEM19
Aluminium – earnings impacted by higher electricity costs
20
1. EBITDA and EBIT (before significant items). 2. Includes hedging and premiums.3. Excludes cash and tax balances and certain other non-trading assets and liabilities as at 31 March.4. Refer note on slide 5.
EBIT A$m
Higher coke and pitch costs due to supply
constraints
12 months of new energy contract
and delivered coal costs
Revenue up 11% following 11% increase in realised aluminium price
Delivered EBIT of $36.6m despite $61m in increased electricity related costs (including $27m in delivered coal costs)
Raw material costs including coke and pitch up by $22m offset by the higher realised aluminium price
A$m unless stated 1 YEM19 YEM18 changeSales (tonnes) 213,280 212,801 ̶A$ realised price2 2,939 2,657 11%Revenue 626.9 565.5 11%EBITDA 48.3 97.1 (50%)EBIT 36.6 79.5 (54%)Funds employed3 140.3 120.0 17%EBIT/revenue 5.8% 14.1%Return on funds employed4 28.2% 61.8%
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US$ aluminium prices traded in a wide range during the year with the average US cash price per tonne of US$2,035 down slightly from prior year
Australian dollar averaged 72.95 US cents during the year down from 77.36 US cents
Alumina costs higher due to weaker A$
A new two-year contract is now in place for 50% of alumina volumes linked to the US$ aluminium price
A contract for the balance of GAF’s requirements is expected to be finalised within the first half of YEM20
Secured new alumina contract
21
As of 30 April 2019 YEM20 YEM21Average price A$ per tonne (excludes premiums) A$ 2,718 A$ 2,976
% of net aluminium exposure hedged 71% 15%
LME 3m US$ and A$ price per tonne
GAF aluminium hedge book
1,400
1,800
2,200
2,600
3,000
3,400
1-Apr-14 1-Apr-15 1-Apr-16 1-Apr-17 1-Apr-18 1-Apr-19LME 3m US$/t LME 3m A$/t
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MARKET AND OUTLOOKRob Sindel, Managing Director
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60
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-200
7
Sep-
2007
Mar
-200
8
Sep-
2008
Mar
-200
9
Sep-
2009
Mar
-201
0
Sep-
2010
Mar
-201
1
Sep-
2011
Mar
-201
2
Sep-
2012
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-201
3
Sep-
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-201
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Sep-
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-201
5
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Mar
-201
6
Sep-
2016
Mar
-201
7
Sep-
2017
Mar
-201
8
Sep-
2018
Mar
-201
9
A$ b
n (M
AT)
Commercial Social
Support for construction demand over the longer-term
23
Increased demand for construction tradesNon-residential construction growth
Australian population growth Stability in detached housing market
Source: ABS cat 8731, 3101, 6291, 6354
0
5
10
15
20
25
30
800
850
900
950
1,000
1,050
Nov
-200
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ar-2
010
Jul-2
010
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-201
0M
ar-2
011
Jul-2
011
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-201
1M
ar-2
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012
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ar-2
013
Jul-2
013
Nov
-201
3M
ar-2
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Jul-2
014
Nov
-201
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ar-2
015
Jul-2
015
Nov
-201
5M
ar-2
016
Jul-2
016
Nov
-201
6M
ar-2
017
Jul-2
017
Nov
-201
7M
ar-2
018
Jul-2
018
Nov
-201
8
Vaca
ncie
s 000
s
Empl
oym
ent 0
00s
Full time employment Vacancies
050000
100000150000200000250000300000350000400000450000
Mar
/201
0Ju
n/20
10Se
p/20
10D
ec/2
010
Mar
/201
1Ju
n/20
11Se
p/20
11D
ec/2
011
Mar
/201
2Ju
n/20
12Se
p/20
12D
ec/2
012
Mar
/201
3Ju
n/20
13Se
p/20
13D
ec/2
013
Mar
/201
4Ju
n/20
14Se
p/20
14D
ec/2
014
Mar
/201
5Ju
n/20
15Se
p/20
15D
ec/2
015
Mar
/201
6Ju
n/20
16Se
p/20
16D
ec/2
016
Mar
/201
7Ju
n/20
17Se
p/20
17D
ec/2
017
Mar
/201
8Ju
n/20
18Se
p/20
18
Popu
latio
n
Natural increase Net Overseas Migration
0
50000
100000
150000
200000
250000
300000
Mar
-200
5
Mar
-200
6
Mar
-200
7
Mar
-200
8
Mar
-200
9
Mar
-201
0
Mar
-201
1
Mar
-201
2
Mar
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appr
oval
s (M
AT)
Unit 4+ storey Medium density Detached
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Property
Outlook for year ending 31 March 2020 (YEM20)
24
• Volumes in the first month of YEM20 remain consistent with the final quarter of YEM19. Mixed economic signals make it difficult to predict building activity levels for the year ahead. CSR is making changes to its operating footprint and overheads to mitigate the impact on earnings.
.
Building Products
• Whilst the quantum of earnings may fluctuate due to the timing of transactions, the ongoing development of a number of major projects will underpin Property earnings over the next 10 years.
Aluminium • Currently 71% of net aluminium exposure for YEM20 is hedged at an average price of A$2,718 per tonne (excluding ingot premiums) as of 30 April 2019.
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Year ended 31 March 2019
APPENDICES
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Further reductions in asbestos liability
26
Asbestos provision - A$m Product liability provision of A$268m
Provision includes a prudential margin of A$35.7m
Cash payments A$29m during the year37.9 38.4
34.7 33.831.1
27.629.4
31.729.1
449 442424
369351
335312 289 268
0
5
10
15
20
25
30
35
40
45
50
0
50
10 0
15 0
20 0
25 0
30 0
35 0
40 0
45 0
YEM11 YEM12 YEM13 YEM14 YEM15 YEM16 YEM17 YEM18 YEM19
A$ payments A$ provision
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Review of significant items
27
Additional information on significant items is contained in Note 3 in the full year report.
$million 2019 2018Significant items from continuing operations:Impairment of Roofing assets (32.8) ―Restructuring costs (11.6) (0.9)Remediation, supply disruption and other costs (4.0) (7.6)Significant items from continuing operations before finance costs and income tax (48.4) (8.5)
Discount unwind and hedging relating to product liability provision (8.0) (8.3)Income tax benefit on significant items from continuing operations 13.5 5.0Significant items after tax from continuing operations (42.9) (11.8)Significant items attributable to non-controlling interests 0.1 0.2Significant items from continuing operations attributable to shareholders of CSR Limited (42.8) (11.6)Loss from discontinued operations after tax attributable to shareholders of CSR Limited (65.3) (12.3)Significant items and discontinued operations loss attributable to shareholders of CSR Limited (108.1) (23.9)Net profit attributable to shareholders of CSR Limited 73.6 186.7Significant items and discontinued operations loss attributable to shareholders of CSR Limited 108.1 23.9Net profit from continuing operations before significant items attributable to shareholders of CSR Limited
181.7 210.6
Earnings per share from continuing operations attributable to shareholders of CSR Limited before significant items
Basic (cents per share) 36.1 41.9Diluted (cents per share) 36.1 41.6F
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CSR exposure across construction segments
28
NSW/ACT39%
Vic/Tas29%
Qld17%
SA/NT5%
WA4%
NZ5%
Other1%
Detached52%
Medium density
12%
High density
11%A&A7%
Non-res17%
Other1%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
Mar
-07
Sep-
07M
ar-0
8Se
p-08
Mar
-09
Sep-
09M
ar-1
0Se
p-10
Mar
-11
Sep-
11M
ar-1
2Se
p-12
Mar
-13
Sep-
13M
ar-1
4Se
p-14
Mar
-15
Sep-
15M
ar-1
6Se
p-16
Mar
-17
Sep-
17M
ar-1
8Se
p-18
Mar
-19
Net sales indices CSR BP Work done
Source: ABS-CSR analysis.Note: CSR Building Products revenue normalises impact of the PGH Bricks JV. Work done –weighted index based on CSR estimate of exposures to constructions market segments.
End market exposure
Regional exposure
Indexes CSR Revenue vs Market Activity (Work Done)
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