FLETCHER BUILDING LIMITED — AGM Information 2014

Oct 20, 2014

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2014 Annual Shareholders’ Meeting

21 October 2014

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Fletcher Building Annual Shareholders’ Meeting | © October 2014

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Ralph Waters Chairman

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Directors

Ralph Waters (Chairman) Tony Carter

Dr Alan Jackson John Judge Mark Adamson (Managing Director) Sir Ralph Norris Kathryn Spargo Cecilia Tarrant Gene Tilbrook

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Fletcher Building Annual Shareholders’ Meeting | © October 2014

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Meeting agenda

Chairman’s overview

• 2014 financial performance

• Board changes

Chief Executive Officer’s address

• Progress on strategic priorities Trading and financial outlook

General business Voting on resolutions

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Fletcher Building Annual Shareholders’ Meeting | © October 2014

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Results Overview Revenue – underlying revenue growth of 4%

	Revenue growth rates Geographic segments in local currency New Zealand +5% Australia +2% Rest of World +5% $8,401million REVENUES down 1%

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Results Overview Net earnings

339 million $

• Reported net earnings up 4% to $339m

NET EARNINGS up 4%

362 million $ NET EARNINGS before significant items up 11%

• Net earnings before significant items were up 11% to $362m

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Results Overview Operating Earnings before significant items

• 624 million

• $

OPERATING EARNINGS before significant items up 10%

• Operating earnings excluding significant items up 10%

• Within guidance range of $610m - $650m

• Excluding foreign currency translation impacts, EBIT would have been up 15%

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New Zealand residential consents at highest level since 2007

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24,000
23,000
Long run average (2001-2014)
22,000
21,000
20,000
19,000
18,000
17,000
16,000
15,000
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14
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Total residential consents 12 month rolling – New Zealand

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Source: Statistics NZ, Infometrics

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New Zealand operating earnings up 27%

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EBIT¹
NZ$m
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362
286
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New Zealand

1. Before significant items

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Year ended June 2013

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Year ended June 2014

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Fletcher Building Annual Shareholders’ Meeting | © October 2014

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Australian residential consents up 21% multi-unit dwellings up strongly

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110,000
100,000
90,000
80,000
70,000
60,000
50,000
Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14
Standalone Multi residential
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Total residential consents 12 month rolling – Australia

Source: Australian Bureau of Statistics

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Fletcher Building Annual Shareholders’ Meeting | © October 2014

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Australian operating earnings impacted by currency translation and lower volumes

EBIT¹ NZ$m

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203
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171
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Australia

1. Before significant items

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Year ended June 2013

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Year ended June 2014

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Rest of World operating earnings rose by 14%

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EBIT¹
NZ$m
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91
80
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Rest of World

1. Before significant items

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Year ended June 2013 Year ended June 2014

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Every division increased operating earnings

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EBIT¹
NZ$m
229
222
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135 122 120 124 105 87 51 42 17 8 Infrastructure Building Laminates & Distribution NZ Distribution Construction Products Products Panels Aus

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12 months to June 13 12 months to June 14

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1. Before significant items

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Results Overview Dividend

36 c DIVIDEND PER SHARE up 6%

• Dividend Policy: target dividend pay-out in the range of 50% to 75% of net earnings

• Final dividend per share – 18 cents

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Total shareholder return: 9% for year to 30 June 2014

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Total Shareholder Return (TSR)
Percentage
51
24
14
9
Jun-10 Jun-11 Jun-12 Jun-13 Jun-14
-27
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Maintaining a strong balance sheet

Net Debt/Net Debt Plus Equity Percentage

Gearing target range of net debt to net debt plus equity of 30% to 40%

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37
33
32
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Jun-12
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Jun-13
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Jun-14

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Fletcher Building Annual Shareholders’ Meeting | © October 2014

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Progress on strategic priorities

Review of business portfolio: divestment of Pacific Steel and Hudson Building Supplies $25m in benefits from FBUnite Expansion of NZ residential development business New Formica plant in China commissioned Employee development and engagement

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Board changes

Ralph Waters will retire from the board at conclusion of 2014 Annual Shareholders’ Meeting

Sir Ralph Norris appointed Chairman to succeed Ralph Waters

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Mark Adamson Chief Executive Officer

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Earnings mix reflects economic performance of key markets

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Revenue

(12 months to June 2014)

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13%
48%
39%
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New Zealand Australia Rest of World

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EBIT¹

(12 months to June 2014)

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15%
27% 58%
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New Zealand Australia Rest of World

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1. Before significant items

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Strategic priorities

Productivity improvement • FBUnite business transformation programme Active portfolio management Organic growth opportunities Investment in people capability

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Productivity improvement through FBUnite

Transforming how Fletcher Building operates • Reducing operating cost base through centralisation of common functions

Developing future strategies and platforms for growth Multi-year programme

Expecting pre-tax benefits of $100 million per annum by 2018 financial year

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FBUnite 2014 achievements

$25m in benefits delivered in FY2014 Procurement function delivered significant cost savings

Centralised property management team addressing 1,000 properties across New Zealand & Australia Manufacturing excellence programme – establishment phase completed IT and digital strategy completed Financial Shared Services: deployment to be phased with ERP upgrades

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Managing the portfolio of business

Pacific Steel sold to Bluescope/NZ Steel • Sale followed strategic review of steel manufacturing Secured the future of long steel manufacturing in New Zealand Sale of Hudson Building Supplies completed in September 2014

Crane Copper Tube closure – unable to compete with imports and product substitution

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Delivering growth from existing business portfolio

Organic growth delivered through: • Market share gains • Margin expansion • Product innovation • Geographic expansion

Capturing growth from economic cycle: NZ operating earnings¹ up 27% Strong volume increases in most NZ businesses

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1. EBIT before significant items

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New Zealand Residential strategy update

Broader offering of stand-alone and terrace homes, and apartments

Goal to increase number of homes sold each year to 1,000

Land acquisition has increased in Auckland for future development Stonefields development will be largely built out by end of FY15

New sites also contracted in Canterbury

Fletcher Living, Stonefields

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Fletcher Living, Stonefields

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Construction backlog up from $1 billion to $1.8 billion

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Waterview Tunnel

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McKay to Peka Peka

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Christchurch Justice and Emergency Services Precinct

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Tradelink: Operating earnings up strongly

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New Formica plant commission in JuiJiang, China

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Investing in our people

Fletcher Building Learning Academy provides targeted employee development:

Leadership development Sales force effectiveness Talent assessment framework

FBUsay: Annual Employee engagement survey

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Continued improvement in Safety performance

Total recordable injury frequency rate*

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14.0
11.1
8.5
6.8
6.0
2010 2011 2012 2013 2014
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• Total injuries per million employee and contractor hours

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Canterbury update

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• Fletcher EQR: nearing completion of 70,000 permanent home repairs

• Infrastructure repairs now half completed

 Commercial rebuild gaining momentum with Government anchor projects now starting

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Priorities for 2015

Capture growth from the cycle Improve operational performance through manufacturing excellence programme Further investment in lifting effectiveness of sales and marketing activities Pursue further $25 million in benefits from FBUnite Improve cash generation through focus on capex and working capital

Active portfolio management

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Ralph Waters

• Chief Executive Officer 2001-2005

 Non-Executive Director 2005-2010

• Chairman 2010-2014

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Ralph Waters Chairman

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Outlook New Zealand and Australia

New Zealand

• Continued strong residential construction activity

• Residential consents expected to track above long term trend

• Civil infrastructure driven by ongoing government investment

• Positive trend in commercial consents will underpin nonresidential sector

Australia

• Improvement in stand-alone house consents will assist volumes

• Non-residential outlook less positive:

• Declining mining investment

• Reduced government expenditure on core infrastructure

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Outlook Rest of World

North America

• Moderation in pace of new housing construction

• Commercial activity up-turn remains elusive

• Europe

• Modest improvement driven by stronger UK market

• Asia

• Further growth in South Eastern Asian markets

• China and Taiwan likely to be flat

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Financial Outlook

Earnings before interest, tax and significant items expected to be in the range of $650 million to $690 million

First half earnings likely to be broadly flat on the prior corresponding period

Second half earnings expected to be significantly ahead of the prior corresponding period

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Ralph Waters Chairman

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General Business

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2014 Annual Shareholders’ Meeting

21 October 2014

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Fletcher Building Annual Shareholders’ Meeting | © October 2014