FLETCHER BUILDING LIMITED - Investor Presentation 2012

FLETCHER BUILDING

2012 ANNUAL RESULTS PRESENTATION

22 August 2012

Jonathan Ling Chief Executive Officer

Bill Roest

Chief Financial Officer

Mark Adamson

Chief Executive – Laminates & Panels

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Hunua Quarry , Auckland

Annual Results | Fletcher Building | © August 2012

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Disclaimer

This annual results presentation dated 22 August 2012 provides additional comment on the media release of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions, earnings and activities given in that release.

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Annual Results | Fletcher Building | © August 2012

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Agenda

Results Overview

Divisional Performance

Financial Results

Strategy & Outlook

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Annual Results | Fletcher Building | © August 2012

Results Overview | Page 4

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Annual Results
RESULTS
OVERVIEW
ASB Wynyard Quarter , Auckland
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Annual Results | Fletcher Building | © August 2012

Results Overview | Page 5

Results overview

Revenues up 20% to $8,873 million Includes full year contribution from Crane (3 months in FY11)

Operating earnings $403 million, down 18%

Operating earnings before restructuring and impairment charges: $556 million, down 7%

Restructuring and impairment charges after tax of $132 million

Net earnings $185 million, down from $283 million in FY11

Net earnings before restructuring and impairment charges: $317 million, down 12%

Cashflow from operations $448 million, up 11%

Final dividend for the year 17.0 cents per share: Fully imputed for NZ tax purposes Dividend Reinvestment Plan will be operative for the dividend Total for the year 34.0 cents

Annual Results | Fletcher Building | © August 2012

Results Overview | Page 6

Residential consents in NZ improved whilst Australia continued to slow

	June 2012	June 2011	June 2010	12/11
Building Consents	12 months	12 months	12 months	%Mvmt
New Zealand
Residential Consents	15,414	13,539	16,167	+14
Non Res WPIP ($m)*	4,481	4,798	4,618	-7
Infrastructure WPIP ($m)*	6,823	6,599	5,919	+3
Australia			Source: Statistics NZ, Infometrics
Residential Consents	145,057	164,251	171,429	-12
Non Res WPIP (A$Bn)*	31.8	34.8	34.9	-9
Infrastructure WPIP (A$Bn)*	117.6	86.8	76.7	+35
US			Source: ABS, BIS Shrapnel
Residential (US$Bn)**	259.9	237.5	239.5	+9
Non Res (US$Bn)**	347.1	333.2	339.0	+4
Infrastructure (US$Bn)**	210.0	207.9	214.9	+1
			Source: IHS	Global Insight
Y12 data includes estimate for month of June 2012
Information presented for calendar years. 2012 represents forecast position

FY12 data includes estimate for month of June 2012

** Information presented for calendar years. 2012 represents forecast position

Annual Results | Fletcher Building | © August 2012

Results Overview | Page 7

NZ housing consents – record low levels in the first half of FY12, modest improvement in second half

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Residential Consents
12 month moving average
16,000
14,000
12,000
Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
Source: Statistics NZ
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Annual Results | Fletcher Building | © August 2012

Results Overview | Page 8

Weak NZ and Australian construction markets adversely impacted earnings

	June 2012	June 2011	June 2011
NZ$m	12 months	12	months	% Change
Sales	8,873		7,416	+20
EBITDA¹	786		801	-2
EBIT¹	556		596	-7
Net earnings1	317		359	-12
Restructuring and impairment charges
after tax	(132)		(76)
Net earnings	185		283	-35
EPS – cps1	46.5		57.1	-19
Dividend - cps	34.0		33.0	+3
_1. EBITDA, EBIT, Net Earnings and EPS all before_restructuring and impairment charges

Annual Results | Fletcher Building | © August 2012

Results Overview | Page 9

Geographic diversification has provided earnings stability despite cyclical downturn

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•
Revenue – FY12 EBIT¹– FY12
Rest of world:
$90m
12%
16%
New Zealand:
$207m
37%
41%
New Zealand
Australia
47% Rest of world
47%
Australia:
$259m
1. Earnings before interest and tax, excluding restructuring and impairment charges
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Annual Results | Fletcher Building | © August 2012

Results Overview | Page 10

Restructuring and impairment charges

Year to 30 June 2012	Restructuring and impairments charges	Restructuring and impairments charges	Restructuring and impairments charges
NZ$ Million	Before tax	Tax	After tax
Laminex restructuring – Australia and New Zealand	54	(16)	38
Formica – Bilbao plant closure	20	0	20
Insulation – adjustment to business asset carrying values	79	(5)	74
Total	153	(21)	132

Divisional Performance | Page 11

Annual Results | Fletcher Building | © August 2012

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Annual Results
DIVISIONAL
PERFORMANCE
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Horsham, Victoria

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Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 12

Strong full year contribution from Crane, earnings up in Concrete, other divisions down on lower volumes and/or margins

EBIT NZ$million[1 ]

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168
139
130
125
111
106
83
72
60
50 48
39
29 27
Building Products Concrete Construction Crane Distribution Laminates & Steel
Panels
12 months ended
Jun-12 Jun-11
1. Earnings before interest, tax, restructuring and impairment charges
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Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 13

Building Products result

NZ$m
	June 12 12 Mths June 11 12 Mths % ∆
Sales	670 692 -3
EBITDA¹	97 138 -30
EBIT¹	72 111 -35
Restructuring and impairment charges	(79) (80)
EBIT	(7) 31
Funds Employed	481 583
EBITDA1/sales %	14.5 19.9
EBIT1/sales %	10.7 16.0
ROFE1%	15.0 19.0

Plasterboard operating earnings down 10% due to lower volumes.

Insulation continued industry oversupply in Australia and NZ$ and A$ strength adversely impacted earnings. Roof Tiles volume growth in Africa and USA, flat volumes in Asia and down in NZ and Europe.

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1. Excluding restructuring and impairment charges

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 14

Building Products: decline in insulation and plasterboard volumes impacted earnings

Gross Sales	June 12	June 11
NZ$m	12 mths	12 mths	% ∆	Volume ∆	Price ∆	EBITDA ∆
New Zealand
Plasterboard	140	145	-3	↓	↑	↓
Insulation1	168	178	-6	↓	↓	↓
Australia
Insulation	205	205	-	↓	↓	↓
Roof Tiles2	179	175	+2	↑	↑	↓
1. Includes Forman & Tasman Access Floors
2. Includes NZ, Europe, Japan, Africa, USA

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 15

Concrete result

NZ$m	June 12 12 mths June 11 12 mths % ∆
Sales	958 912 +5
EBITDA Concrete NZ Concrete Aust.	101 91 102 85 -1 +7
Total EBITDA	192 187 +3
EBIT	130 125 +4
Funds Employed	1,071 1,016 +5
EBITDA/sales %	20.0 20.5
EBIT/sales %	13.6 13.7
ROFE %	12.1 12.3

NZ Concrete

Revenues 3% higher with most product volumes similar or slightly up on prior year;
Cement and masonry volumes lower, cement export margins also lower;
Market shares for all core products was stable.

Australia Concrete

Earnings contributions from Australian Construction Products and Atlantic Civil Products acquisitions;
Pipeline products: pricing initiatives and operational enhancements increased earnings;
Quarry earnings benefited from favourable sales mix and improved margins.

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 16

Concrete: operational efficiencies lifted earnings

Gross Sales	June 12	June 11
NZ$m	12 mths	12 mths	% ∆	Volume ∆	Price ∆	EBITDA ∆
New Zealand	645	639	+1
Concrete:
• Cement				↓	-	↓
• Readymix				-	↓	↑
• Aggregates				-	↓	↑
• Concrete Pipe				-	-	↑
Australia Concrete:	471	440	+7
• Concrete Products				-	↑	↑
• Quarry Products				↓	↑	↑

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 17

Construction result

NZ$m	June 12 12 mths June 11 12 mths % ∆
Sales	1,040 1,140 -9
EBITDA Total EBIT	61 50 70 60 -13 -17
Funds Employed	109 118 -8
EBITDA/sales %	5.9 6.1
EBIT/sales %	4.8 5.3
ROFE %	45.9 50.8

Tighter construction margins in subdued market

Construction backlog increased to $1,094m at end of June

In addition, preferred contractor on two projects worth $837m: would positively impact FY14 earnings if they proceed

Residential earnings up 35% due to increased house sales, particularly in Stonefields subdivision in Auckland

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 18

Canterbury update

Residential repairs for Earthquake Commission:

21 hubs established to carry out repairs

Over 20,000 home repairs completed to date

In addition, 45,000 emergency repairs and 16,400 winter heat installations completed

Target is to have last of the 100,00 repairs completed by end of 2015

Infrastructure repairs:

Fletcher Construction one of 5 contractors in the alliance to repair Christchurch infrastructure

Activity levels have been low due to planning work required, but momentum is now building

Rebuilding Christchurch City Centre:

Development plan for the new Christchurch central city area now finalised

70% to 80% of CBD buildings will be demolished

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 19

Crane – full year earnings overview

	FY12 Sales NZ$M FY11 Sales NZ$M¹	FY12 EBIT NZ$M FY11 EBIT² NZ$M¹ % ∆
Pipelines Tradelink Trade Distribution - NZ Industrial Products Intersegment/Unallocated Total	791 674 1,123 1,205 363 371 316 378 (200) (190)	59 46 +28 38 55 -31 (1) 3 8 7 +14 1 (17)
	2,393 2,437	106 92 +15

1. For comparative purposes only. Fletcher Building acquired Crane in March 2011, and its financial results for FY11 included 3 months trading contribution from Crane

2. Before restructuring and impairment charges

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 20

Strong contribution from Crane in first full year of ownership

Operating earnings $106 million, up 15% on 2011 result

Pipelines:

Operating earnings up 28% to $59 million

Gross revenues up 17%

Increased revenues from two coal seam gas contracts

Demand from resources, civil and rural sectors offset decline in building activity

Trade Distribution:

Operating earnings down 31% to $38 million

Gross revenues down 6% in Australia, flat in NZ

Performance impacted by decline in residential and commercial building

Industrial Products:

Operating earnings slightly higher at $8 million

Gross revenues down 16%

Austral Wright Metals and Mico Metals sold at year end, anticipated proceeds of NZ$70m

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 21

Distribution result

NZ$m	June 12 12 Mths June 11 12 Mths % ∆
Sales	813 856 -5
EBITDA	35 48 -27
EBIT	27 39 -31
Funds Employed	141 142 -1
EBITDA/sales %	4.3 5.6
EBIT/sales %	3.3 4.6
ROFE %	19.1 27.5

Revenues down 5%, impacted by continued low levels of residential house building

Increased competitor activity impacted margins in the second half Operating costs reduced by 2% and inventory levels down by 8%

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NZ Quarterly housing starts
4,500
4,000
3,500
3,000
2,500
Source: Statistics NZ
Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
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Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 22

Laminates & Panels result

NZ$m	June 12 12 mths June 11 12 mths % ∆
Sales	1,849 1,979 -7
EBITDA¹
Laminex¹	105 149 -30
Formica¹	100 83 +20
Total EBITDA¹	205 232 -12
EBIT¹	139 168 -17
Restructuring and impairment charges	(74) (9)
EBIT	65 159 -59
Funds Employed	1,799 1,745
EBITDA1/sales %	11.1 11.7
EBIT1/sales %	7.5 8.5
ROFE1%	7.7 9.6

Laminex

Australian revenues down 9% due to slowdown in residential and commercial markets
Cost increases not fully offset by compensating price changes
Staff levels reduced by 285

Formica

Operating earnings pre-restructuring and impairments charges up 27%
Result due to increased revenue in North America and Asia, and continued operational improvements
$4m EBIT contribution from Homapal acquisition

1. Excluding restructuring and impairment charges

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 23

Laminates & Panels: volume declines in Australia and NZ, but growth in Asia and North America

Gross Sales	June 12	June 11
NZ$m	12 mths	12 mths	% ∆	Volume ∆	Price ∆	EBITDA ∆
New Zealand
Laminex	133	143	-7	↓	↑	↓
Australia
Laminex1	901	979	-8	↓	-	↓
Formica
Asia	213	207	+3	↑	↑	↑
Europe	294	332	-11	↓	-	↓
Nth America	336	346	-3	↑	-	↑
1. Domestic volumes, excluding export volumes

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 24

Formica: strong growth in operating earnings before restructuring and impairment charges, driven by Asia and North America

EBIT NZ$m	FY12	FY11	% Change
Asia	38	34	+12
North America	34	28	+21
Europe¹	13	9	+33
Corporate	(14)	(15)	-7
EBIT beforerestructuring and	71	56	+27
impairments charges
Bilbao closure costs	(20)	0
EBIT	51	56	-9
1. Includes $4m contribution from Homapal in FY12 (nil in FY11)

Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 25

Steel result

• Lower rollforming volumes in Australia, margins impacted by increased competition

NZ$m	• • • June 12 12 Mths June 11 12 mths % ∆ 1,150 1,214 -5 73 106 -31 48 83 -42 540 577 -6 6.3 8.7 4.2 6.8 8.9 14.4
Sales
EBITDA
EBIT
Funds Employed
EBITDA/sales %
EBIT/sales %
ROFE %

Long steel margins impacted by strong NZ$ and A$; NZ volumes up 20%, but export returns lower

Low volumes and increased competition impacted Distribution margins

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Annual Results | Fletcher Building | © August 2012

Divisional Performance | Page 26

Steel: margin pressure across the division

Gross Sales NZ$m	June 12 12 mths June 11 12 mths % ∆ Volume ∆ Price ∆ EBITDA ∆ 269 247 +9 ↑ ↓ ↓ 166 176 -6 ↓ - ↓ 249 258 -3 ↓ - ↓ 608 662 -8 ↓ ↓ ↓
New Zealand Long Steel Coated Steel Distribution & Services Australia Coated Steel

Annual Results | Fletcher Building | © August 2012

Financial Results | Page 27

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Whangarei Golden Bay Cement , Portland

Financial Results | Page 28

Net earnings

NZ $m	June 2012 12 months June 2011 12 months % ∆ 556 596 -7 152 118 +29 79 111 -29 8 8 - 317 359 -12 (132) (76) 185 283 -35
EBIT1 Interest¹ Tax1 Minority Interests Net Earnings before restructuring and impairment charges Restructuring and impairment charges after tax Net Earnings _1. Before_restructuring and impairment charges

Financial Results | Page 29

Operating earnings before restructuring and impairment charges – 1[st] Half compared with 2[nd] Half

6 months June 2012 (2nd half)	6 months Dec 2011 (1st half)
NZ$M Revenue EBIT	Revenue EBIT
Building Products 315 29 Concrete 490 70 Construction 520 25 Crane 1,164 53 Distribution 411 12 Laminates & Panels 910 76 Steel 554 24 Corporate (10)	355 43 468 60 520 25 1,229 53 402 15 939 63 596 24 (6)
Total 4,364 279	4,509 277

Financial Results | Page 30

Cashflow from operations up 11%

	June 2012 12 months June 2011 12 months % Change 633 697 -9 (152) (122) +25 (123) (86) +43 122 89 +37 (23) (28) -18 15 (115) 71 20 (9) (42) (50) (52) (4) (148) -136 +130 -237 -600 448 402 +11
EBITDA
Funding costs
Cash tax paid
Non cash restructuring/impairment charges impact
Provisions movement/other
Working capital movements: - Debtors - Creditors - Stock - Other
Cashflow from operations

Financial Results | Page 31

Increase in net debt due to increased capex in FY12

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13
201 1,978
1,892
(16)
217
(27)
146
9
(457)
Opening Net Debt Cash from ops before working capital Working capital Growth Capex SIB Capex Divestments Dividends Min Distn FX on Debt Actual YTD Debt
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Financial Results | Page 32

Budgeted capital expenditure to reduce in FY 13

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Capital Expenditure
June 12 June 11
FY13
363 12 mths 12 mths [% ∆ ] Budget
307
Stay-in-business 207 200 +4 162
96 * Budget
56
264
Growth¹ 60 51 +18 102
246
230
60
51 205 Acquisitions² 96 56 +71 0
102
Total 363 307 +18 264
200 207 Depreciation 230 205 +12 246
162
2011 2012 2013
Acquisitions Stay in business Growth Depreciation
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1. Forecast includes investment in new Formica plant in China 2. Excludes Crane in 1H11

1. Excludes acquisition of shares in Crane Group Ltd

Financial Results | Page 33

Key ratios

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Total Shareholder Return (TSR)
Percentage
42
24
14 14
Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
-27
-43
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Debt/Debt Plus Equity Percentage

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40
34 35
31
27
22
Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
/ average funds
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Return on Average Funds
Percentage¹
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25
19
12 13 13
10
Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
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1. Earnings before interest, tax, restructuring and impairment charges / average funds

Financial Results | Page 34

Debt maturity profile

Funding and Maturity Profile June 2012

Undrawn credit lines of $782 million and cash on hand of $168 million.

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200
30
352 200
456
315
240 232
167 199 180 155
105 98
2013 2014 2015 2016 2017 2018 2020 2022 2024 2027
NZ$m
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Average maturity of debt is 5 years.

Average interest rate on debt is 6.7%.

67% of borrowings are at fixed rates.

Long term debt issuance during FY12:

US$300m private placement to US investors (10 and 12 year terms)
A$120 private placement to Japanese investors (15 year term)

June Years

Debt - Drawn Commited Undrawn Debt Facilities

Strategy & Outlook | Page 35

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Annual Results
STRATEGY &
OUTLOOK
Formica , Topshop London
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Strategy & Outlook | Page 36

Strategy

Improved earnings reliability through geographic and end-market diversification

Decentralised business model

Portfolio approach that creates value through application of proven operating model

Target attractive industry positions in Australia and NZ

Medium term aim is to grow earnings from existing portfolio of businesses irrespective of the economic cycle

Further opportunities to invest in Australia and NZ will be pursued, along with Formica growth in Asia

Strategy & Outlook | Page 37

Outlook FY2013

New Zealand:

Continued modest improvement in new house building
Assisted by low interest rates and increased activity in Canterbury
Commercial and infrastructure activity not expected to improve materially in FY13
FY14 should benefit from several large infrastructure projects

Australia:

Trend in residential activity unclear, risk of further decline
Commercial construction likely to remain subdued
Infrastructure expected to remain steady

Trading conditions in North America expected to remain flat to slightly positive

No recovery expected in Europe, but Germany and Scandinavia should remain relatively strong

China, SE Asia and Taiwan: continued growth expected

Strategy & Outlook | Page 38

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FLETCHER BUILDING LIMITED — Investor Presentation 2012

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