Boral Limited
ABN 13 008 421 761 Level 39, AMP Centre 26 June 2009 50 Bridge Street, Sydney GPO Box 910, Sydney NSW 2001 Telephone (02) 9220 6300 Facsimile (02) 9233 6605
www.boral.com.au
The Manager, Listings Australian Securities Exchange Company Announcements Office Level 4 Exchange Centre 20 Bridge Street SYDNEY NSW 2000
Dear Sir
We attach copies of presentations relating to the Australian Construction Materials (16 pages), Clay & Concrete (12 pages) and Timber (15 pages) Divisions, Construction Related Businesses (12 pages) and the Southern Employment Lands at the Greystanes Estate (7 pages) being made to analysts in Sydney today.
There are 2 slides to a page in each of the presentations.
Yours faithfully
Margaret Taylor Company Secretary
Boral Australian Construction Materials
John Douglas Sydney Site Tour 26 June 2009
Boral’s ACM division is an integrated supplier of construction materials and related services
External Revenues FY2008 AustralianAustralian ConstructionConstruction MaterialsMaterials QuarriesQuarries TransportTransport ConcreteConcrete
External Revenue ~$1,100m
External Asphalt Revenue ~$400m Asphalt Cement Cement External Revenue External Revenue ~$50m ~$650m BitumenBitumen QEUQEU LandfillLandfill EBIT ~$50m DevelopmentDevelopment
Sydney Site Tour 26 June 2009 2
1 Boral has strong positions across Australia in quarries, concrete and asphalt
Quarries: ~ 100 quarries & 4 mobile crushing plants Concrete: ~240 plants including 29 mobile plants Asphalt: ~50 plants including 5 mobile plants Extensive transport fleet
Sydney Site Tour 26 June 2009 3
We are organised regionally, with an overlay structure driving common systems and processes
QLD/NTQLD/NT NSW/ACTNSW/ACT VIC/TASVIC/TAS SASA WAWA MurrayMurray ReadRead TonyTony CharnockCharnock JohnJohn MalempreMalempre MichaelMichael NegriNegri RogerRoger JohnstonJohnston
MetroMetro QuarriesQuarries SEQSEQ QuarriesQuarries MetroMetro QuarriesQuarries QuarriesQuarries CountryCountry Country Country SASA QuarriesQuarries WAWA QuarriesQuarries Greg Price Country Country QuarriesQuarries Greg Price QuarriesQuarries QuarriesQuarries TASTAS QuarriesQuarries
Metro Concrete SEQSEQ ConcreteConcrete MetroMetro ConcreteConcrete Metro Concrete Ctry Concrete ConcreteConcrete CountryCountry CountryCountry Ctry Concrete Concrete Concrete SASA ConcreteConcrete WAWA ConcreteConcrete ShaneShane GrahamGraham Concrete Concrete TASTAS ConcreteConcrete Q Crete Concrite Q Crete Concrite AlsafeAlsafe
Transport Transport SEQSEQ TransportTransport NSWNSW TransportTransport VICVIC TransportTransport SASA TransportTransport WAWA TransportTransport AndrewAndrew RosengrenRosengren
QLDQLD AsphaltAsphalt AsphaltAsphalt NSWNSW AsphaltAsphalt VICVIC AsphaltAsphalt SASA AsphaltAsphalt WAWA AsphaltAsphalt AllensAllens AsphaltAsphalt DougDoug TuckerTucker
Sydney Site Tour 26 June 2009 4
2 Quarry End Use (QEU) is supported by an advisory committee with strategic, commercial and property expertise
AndrewAndrew JohnJohn DouglasDouglas TimTim GoddardGoddard WarburtonWarburton BarryBarry NeilNeil
PaulPaul DaltonDalton
SouthernSouthern EmploymentEmployment PropertyProperty PlanningPlanning && Boral Waste LandsLands (SEL)(SEL) Boral Waste DevelopmentDevelopment DevelopmentDevelopment SolutionsSolutions RemediationRemediation WorksWorks
Sydney Site Tour 26 June 2009 5
Commercial and engineering activity drove market growth but is now vulnerable
Australian Construction Work Done ($06/07 million)
140,000
120,000 Other Engineering 100,000 Construction
80,000 RHS&B
60,000 Commercial & Government
40,000 Alterations & Additions
20,000 New Residential 0 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
Source: ABS 8755.0 Construction Work Done, May 2009; RHS&B=Roads, Highways, Subdivisions & Bridges
Sydney Site Tour 26 June 2009 6
3 After 7 years of strong growth, the Australian concrete market has started to decline
Concrete Market Growth Concrete Market Growth CAGR FY01 to FY08 FYTD Apr-08 to FYTD Apr-09
6.4% AUS -8.0%
10.3% QLD/NT -10.1%
1.8% NSW/ACT -7.8%
6.2% VIC/TAS -9.3%
7.5% SA 0.5%
10.1% WA -2.2%
Source: ABS, May 2009
Sydney Site Tour 26 June 2009 7
BIS is forecasting road construction to remain strong
Road Construction Activity by Type Road Construction Value of Work Done ($06/07 billion)
Forecast Other
Subdivisions
Local Roads
Private Toll Roads
Highways & Arterials FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Source: BIS Shrapnel Road Construction Australia. Feb 09
Sydney Site Tour 26 June 2009 8
4 Commercial property trusts, QEU’s traditional customer base, are suffering
A-REIT Index July 00 – May 09
3,000
2,500
2,000
1,500
1,000
500 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Nov-00 Mar-01 Nov-01 Mar-02 Nov-02 Mar-03 Nov-03 Mar-04 Nov-04 Mar-05 Nov-05 Mar-06 Nov-06 Mar-07 Nov-07 Mar-08 Nov-08 Mar-09
Source: Real Estate Investment Trust
Sydney Site Tour 26 June 2009 9
The Government stimulus package is supporting spend in institutions and road works
Concrete Asphalt Quarries Schools Program Hospitals Public Housing Defence Housing Roads First Home Owners Boost
Sydney Site Tour 26 June 2009 10
5 1H09 EBITDA was down largely impacted by lower QEU earnings and weaker concrete markets
Concrete Quarries Asphalt QEU
EBITDA
Price
Volume
. Favourable . Favourable . High levels of . Weaker pricing +8% pricing +3% infrastructure property market activity in SEQ and SA . High 1H08 from . Weaker volumes . Weaker concrete in most regions aggregate sale of part of volumes Southern Employment Lands
Sydney Site Tour 26 June 2009 11
ACM workplace injury statistics are at historic lows
LTIFR1,2 - FY01 to FY09 YTD % Hours lost2 - FY01 to FY09 YTD
14 0.30
12 0.25 10 0.20 8 0.15 6 0.10 4 0.05 2
0 0.00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 YTD FY09 YTD YTD FY09 YTD 1. Lost Time Injury Frequency Rate per 1 million hours worked 2. FY09 YTD is for the period ending May 2009
Sydney Site Tour 26 June 2009 12
6 ACM NSW/ACT includes quarry, recycling, concrete, asphalt and transport businesses
Regional GM NSW/ACT Tony Charnock
NSW/ACTNSW/ACT MetroMetro MetroMetro NSWNSW /ACT/ACT CountryCountry NSW/ACTNSW/ACT QuarriesQuarries && ConcriteConcrite ConcreteConcrete TransportTransport ConcreteConcrete && AsphaltAsphalt RecyclingRecycling QuarriesQuarries
Quarries & Recycling: 23 quarries, 3 recycling Concrete: 103 plants Asphalt: 12 plants and 5 spray depots Extensive transport fleet
Sydney Site Tour 26 June 2009 13
NSW/ACT generates ~30% of ACM’s revenue in line with its share of Australian concrete volumes
ACM External Revenue by Region Australian Concrete Volume by Region Based on FY08, % Total FY08 = 26.6m m3
VIC & VIC & TAS TAS QLD & NT SA SA QLD & NT WA WA
NSW & ACT NSW & ACT
Source: ABS Concrete Monitor
Sydney Site Tour 26 June 2009 14
7 Declining dwelling activity has caused NSW concrete volumes to decrease for the past five years
Sydney Pre-mix Concrete Volumes NSW Country Pre-mix Concrete Volumes By sector, m3 By sector, m3
Engineering
Commercial & Government
Alterations & Additions
Other Dwelling Houses FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09F FY09F
Source: BIS Shrapnel Concrete Report, Dec 2008
Sydney Site Tour 26 June 2009 15
We have had a strong cost focus in NSW/ACT
. Operational improvement initiatives . Labour cost reduction including SG&A and labour hire . Strong focus on improving logistics, particularly service, payload and percentage loaded kilometres . Concrete mix design improvement using Six Sigma to reduce variability . Asphalt mix design improvement lifting percentage Recycled Asphalt Product (RAP) in mixes . Improved quarry yields and productivity . Increased marketing and lead generation . Structural initiatives . Portfolio rationalisation - exit small non-core operations . Organisational restructure of NSW Country . Boral Transport NSW depot rationalisation . Network optimisation . operating reduced shifts in quarries . mothballing low volume concrete plants
Sydney Site Tour 26 June 2009 16
8 Dwelling starts in NSW remain low, but leading finance approvals are improving
NSW Finance Approvals and Dwelling Starts Quarterly trend date, number
Finance Approvals Dwelling Starts 70,000 14,000
60,000 12,000
50,000 10,000
40,000 8,000
30,000 6,000
20,000 Qtrly Finance Approvals (LHS) 4,000 Qtrly Dwelling Starts (RHS) 10,000 2,000
0 0 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08
Source: ABS 8750.0, 5609.0
Sydney Site Tour 26 June 2009 17
We are investing in our key strategic positions in NSW/ACT
. Artarmon Concrete Plant Rebuild . Key plant for northern Sydney CBDs: North Sydney and Chatswood . Supports Brookvale and Thornleigh as a northern cluster . Ideally positioned for future Barangaroo development . DA approved, rebuild will be completed in FY10 . Increased capacity and storage, improved truck access
. Marulan Quarry . Future Sydney quarry after Penrith Lakes Development Corporation (PLDC) is exhausted (~ FY13-14) . 105m tonnes of proven reserves . Consent for 3.5m tpa production . Rail link to our existing Sydney terminals in St Peters and Enfield . Capital and operational opportunities with adjacent Blue Circle limestone quarry and cement plant
Sydney Site Tour 26 June 2009 18
9 We are rebuilding our Artarmon concrete plant in FY10 to service northern Sydney
Thornleigh Brookvale
Artarmon
Sydney Site Tour 26 June 2009 19
Our Marulan deposit and rail terminals give us a strong position in Sydney quarries post PLDC
Operating and new quarry options in the Operating rail terminals in Sydney Metro Sydney Region Seaham Talbragar
Newcastle Emu Plains PLDC
Peats Ridge Enfield (0.8Mt) St Peters Emu Plains – Widemere PLDC (1.3Mt) Sydney CBD Maldon 110kms (BCSC)
Wollongong Penrose (sand) Dunmore (2.25Mt) Dunmore Sand & Soil Penrose Wollongong Marulan South (3.5Mt consent) Dunmore BCSC (limestone) 170kms Dunmore Sand & Soil Marulan South BCSC Canberra
Operating quarry Operating terminal Major road New quarry option Other Major rail PLDC=Penrith Lakes Development Corporation
Sydney Site Tour 26 June 2009 20
10 Boral has a network of 12 asphalt plants and 5 spray depots in NSW supported by strong quarry positions
Population 2016
32,000 to 361,000 16,000 to 32,000 . Extensive fixed plant network is 4,000 to 16,000 able to service ongoing 0 to 4,000 maintenance work as well as road construction projects
. Dedicated high capacity mobile plants are also used to supply high volume major road projects
Quarry Asphalt Boral Hanson/PRS Cemex Works Other
Sydney Site Tour 26 June 2009 21
Our technical capability enables us to develop solutions to meet customer requirements
Sydney Site Tour 26 June 2009 22
11 We have secured a number of significant major projects in NSW/ACT
. Cadia Gold Mine, concrete . F3 upgrade, concrete and asphalt . Hume Highway upgrade projects, cement and transport . Port Botany expansion, concrete and quarry . Top Ryde shopping centre, concrete and recycling . Pacific Highway upgrade - Karuah to Bulladelah, quarry . Charlestown Square shopping centre, Newcastle, concrete . Darling Walk office building, Darling Harbour, concrete . Northern Distributor and Oak Flats Bypass, Wollongong, concrete and asphalt . Ballina Bypass, quarry and asphalt . Bligh St development, Concrite concrete
Sydney Site Tour 26 June 2009 23
Concrete supply into the Cadia gold mine in NSW requires dedicated plant and specialised trucks
. Supplying 105,000 m3 of concrete
. Mostly shotcrete to line tunnel walls . 22 km of tunnels need concrete for strength and stability . Specialised low slung agitators designed by Boral for safe operation underground . Winner of Newcrest Mine MD safety award
Sydney Site Tour 26 June 2009 24
12 Boral is supplying concrete and asphalt for the expansion of the F3
. Widening the F3 at Cowan, NSW
. Boral supplying concrete (23,000 m3) and asphalt
. Dedicated wet-mix batch plant on very small footprint site of 80m x 20m
Sydney Site Tour 26 June 2009 25
Blue Circle is supplying cement and flyash to three Hume Highway upgrade projects, delivered by ACM transport
To Berrima To Mt Piper . Three simultaneous and adjacent major
Abigroup – Coolac supply contracts for cement and flyash; Bypass 193,000 tonnes in total
Leightons - Northern . More than 6,600 loads Hume Alliance . Average lead distance of 360 km
Abigroup - Southern . Total distance travelled: 4.8 million km Hume Alliance . Around the world 120 times
. To the moon and back 6 times . February 2008 to July 2009
Sydney Site Tour 26 June 2009 26
13 Sydney Site Visit Overview
Port Botany Southern Employment Lands (SEL)
Sydney Site Tour 26 June 2009 27
Northern Employment Lands Nelsons Ridge (residential)
Southern Employment Lands
Eastern Western precinct precinct
Detention Basins
Boral Recycling (Widemere)
Sydney Site Tour 26 June 2009 28
14 Port Botany Expansion Project
The Port Botany Expansion project is spending $900m to create 5 new container ship berths
1.6km sea wall
5 new container ship berths
Sydney Site Tour 26 June 2009 30
15 A 1.6km sea wall is being constructed from 194 precast concrete wall units weighing 600t each
Precast vertical section under Precast wall unit schematic construction
Sydney Site Tour 26 June 2009 31
Concrete supply will run over two years from February 2009 to February 2011
. Onsite batching plant constructed to meet requirements
. Boral to supply 97,000m3 concrete . 140,000t aggregates . 35,000t cement . 15,000t fly ash
. 100 year design life
. Stringent chloride penetration criteria
Boral onsite concrete batching plant
Sydney Site Tour 26 June 2009 32
16 Boral Clay & Concrete Products
Nick Clark Sydney Site Tour 26 June 2009
C&C accounts for ~40% of Boral’s external revenues from Australian building products 1H2009 vs 1H2008 External Revenues Construction Materials, Building Products, Australia Australia USA Asia A$m 700
600 Clay & Concrete Products (C&C) A$275m 500 1H2009 400 1H2008 300 149 200 66 60
100
0 QEU Asia* Bricks Flyash Timber Asphalt Roofing Masonry Quarries Clay tiles Clay Windows Concrete Transport Cement** US Bricks US Construction Plasterboard Concrete tiles* Concrete * Includes revenues from MonierLifetile and Asian Plasterboard joint ventures which are equity accounted ** Cement division includes BCSC (external revenues), concrete placement & scaffolding
Sydney Site Tour 26 June 2009 2
1 C&C’s operating structure consists of four business units
Clay and Concrete Products
Bricks Roofing Masonry
Bricks and Roofing East Masonry East
Bricks East Roofing East Masonry East (NSW, Vic, QLD) (NSW, Vic, QLD) (NSW, Vic, QLD)
C&C Central
Roofing SA Masonry SA
Bricks West Midland Brick Masonry WA (WA)
Sydney Site Tour 26 June 2009 3
The majority of C&C’s revenues are from the residential market. NSW currently contributes ~20% of revenues
C&C External Revenues Based on 1H09 By End Market Exposure By State
Other NSW & ACT Non-Residential 4% ~20% 14%
A&A 19%
Other Dwellings Detached Dwellings 6% Other States 57% ~80%
Sydney Site Tour 26 June 2009 4
2 The number of detached dwelling commencements declined in most states in FY09, with NSW at particularly low levels of activity
Detached dwelling starts (’000)
40
35 Vic 30
25 Qld 20
15 WA NSW 10 SA 5
0 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09f
Source: ABS 8750.0 Dwelling Unit Commencements; BIS Shrapnel
Sydney Site Tour 26 June 2009 5
Australian affordability is improving (mortgage repayments down from 31% to 18% of household income), driven by falling interest rates
Repayment of mortgage as percentage of household income (March 2009)
40% Mortgage stress Interest rates are at 35% very low levels
30% Affordable1 House prices have 25% come off their peak; currently being 20% Brisbane (20%) supported by first home 15% Sydney (19%) buyer demand Australia (18%) 10% Melbourne (18%) Perth (18%) Rental vacancy rates 5% still at historical lows 0% Strong housing finance data highlights appetite Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 for future demand
Source: HIA data to Mar-09 Qtr 1. The HIA defines “affordable” as not more than 30% of household income to fund a mortgage.
Sydney Site Tour 26 June 2009 6
3 C&C will benefit from a number of Government stimulus initiatives
Bricks Roofing Masonry Timing
First Home FY10-FY11 Owners Boost 9 9 9
Social and FY10-FY12 Defence Housing 9 9 9
Schools Program 9 9 FY10-FY11
Sydney Site Tour 26 June 2009 7
Boral holds the #2 market position nationally in Bricks
~1,000 employees 16 kilns on 8 manufacturing sites
Darra
Kempsey
Midland Badgerys Ck Albury Bringelly Thomastown Scoresby
Brick manufacturing site
Sydney Site Tour 26 June 2009 8
4 Boral holds the #3 position in Bricks in NSW
Australian brick market is ~1.6 billion SBEs p.a.1 NSW is the 2nd largest state market, accounting for ~25% of national volume 3 major brick manufacturers in NSW – Boral, Brickworks and CSR Boral’s NSW Brick operation has ~150 employees
Product distribution channels: Direct to trade customers Via distributors Major costs: Labour, raw materials and energy
Cost base: High fixed / Low variable
Product development: Nuvo Aspire (high end face brick) introduced late 2008
1. Source: ABS manufacturing production statistics; SBE=Standard Brick Equivalent
Sydney Site Tour 26 June 2009 9
Boral holds the #2 market position nationally in Roofing
~250 employees (plus >600 contractors) 4 concrete plants 1 terracotta plant
Carole Park
Pooraka Wyee Emu Plains
Springvale
Concrete roof tile plant Terracotta roof tile plant Wyee Terracotta Plant
Sydney Site Tour 26 June 2009 10
5 Boral holds the #2 position in Roofing in NSW
Australian roof tile market is ~17 million m2 p.a.1; ~85% concrete tiles and ~15% terracotta tiles NSW is the 2nd largest state market, accounting for ~25% of national volume 2 major roof tile manufacturers in NSW – Boral, CSR Boral’s Roofing operation in NSW has ~120 employees Product distribution channels: Direct to large builders Via distributors Major costs: Labour, raw materials and product installation Cost base: Terracotta High fixed / Low variable Concrete Low fixed / High variable Product development: Contour (semi-flat tile) introduced in 2008
1. Source: ABS manufacturing production statistics
Sydney Site Tour 26 June 2009 11
Boral holds the #2 market position nationally in Masonry
~400 employees 11 manufacturing sites Cairns
Mackay
Wacol Labrador Byron Bay
Cannington Jandakot Pooraka Somersby Prospect Deer Park
Masonry plant
Sydney Site Tour 26 June 2009 12
6 Boral holds the #2 position in Masonry in NSW
Australian masonry market is ~ 2.6 million tonnes p.a.1 NSW is the 2nd largest state market, accounting for ~20% of national volume Masonry manufacturers in NSW include Boral, Adbri Masonry, Brick & Block Company and Baines Masonry Blocks Boral Masonry NSW has ~100 employees Product distribution channels: Direct to trade customers Retailers Distributors Major costs: Raw materials and labour Cost base: Low fixed / High variable Product development: Light weight grey block
1. Source: ABS manufacturing production statistics
Sydney Site Tour 26 June 2009 13
NSW Masonry’s range spans four product groups, each with distinct key market segments
Commercial Products Landscape Products
Blocks Bricks Retaining Walls Pavers
Key segments: Commercial brick and block Key segments: Resellers (e.g. Amber, Flower layers and builders (mainly medium density Power) and landscape contractors. Keystone residential) Retaining Walls suitable for engineering Designer blocks: Available in a range of applications (e.g. Southern City Freight Line) colours and finishes (split, shot, honed, Pavers: Full range suitable for applications from polished) heavy commercial to domestic pools
Sydney Site Tour 26 June 2009 14
7 C&C is focused on addressing its current priorities
Current challenges Initiatives
Demonstrating price leadership Recovering input cost increases and Achieving sustainable prices protecting/enhancing margins Capacity management
Formal operational improvement programs Merger of management of east coast Bricks and Managing cost Roofing businesses Investment in new plants Reduced capital expenditure Cashflow generation Slowing major capital project Capacity management BGC’s entry into the WA clay brick Managing pricing outcomes market Growing export volumes Growing clay paver market Industry body initiatives Category marketing Combating substitute building products Technical research Apprentice training schemes
OH&S programs Operating in a sustainable manner Energy efficiency initiatives Environmental programs
Sydney Site Tour 26 June 2009 15
C&C has had a disciplined approach to pricing, despite a weaker residential market Price and Volume Movements FY2007 vs FY2008 vs 1H2009 vs FY2006 FY2007 1H2008 Volume Bricks Price EBITDA Volume Roofing Price EBITDA Volume Masonry Price EBITDA
Sydney Site Tour 26 June 2009 16
8 Capacity planning forms an integral part of achieving sustainable pricing outcomes
FY09 Australian East Coast Brick Kiln Shutdown/slowdown plan JULY 08 JUNE 09 Darra Kiln 1
Darra Kiln 3.1 and 3.2
Kempsey
Badgerys Creek
Bringelly
Thomastown
Albury
Scoresby
Full Operation Slow Down Kiln Shut*
Note: Push rates may alter from time to time * Denotes temporary closure of part of site
Sydney Site Tour 26 June 2009 17
C&C will continue to drive down costs using formal operational improvement programs
Targeting 3-4% of compressible cost reduction in Performance Enhancement Programs (PEP) each year
Merger of management and administrative functions in the east coast Bricks and Roofing business in September 2008, will have annual savings of ~$4m from FY2010
Step change program commenced at Midland Brick with phased benefits of ~$10m-$15m from FY2010
Operational improvement programs / lean manufacturing
Sydney Site Tour 26 June 2009 18
9 C&C is working with industry bodies to promote product penetration and develop brick & block laying apprentices
Sydney Site Tour 26 June 2009 19
C&C continues to target improvements in safety and environmental performance
LTIFR1 - FY04 TO FY09 YTD Energy Efficiency Index2 -Clay
110% 6 100%
5 90%
4 80%
3 70%
2 60%
1 50%
0 40% FY04 FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 YTD FY09 1. Lost Time Injury Frequency Rate per 1 million hours worked. FY09 YTD is for the period ending May 2009. 2. Index =100% in FY05. Calculation based on total energy usage for clay products divided by tonne of clay product produced
Sydney Site Tour 26 June 2009 20
10 Overview of Prospect Masonry site
The Prospect site comprises a large board Hess plant (Plant 2) three smaller board Besser machines (Plant 1)
manual wet cast plant PlantPlant 11 polishing and honing Site produces a full range of masonry products Blocks - grey and coloured Bricks Pavers PlantPlant 22 Retaining walls
Sydney Site Tour 26 June 2009 21
There are five main steps in the masonry production process
Masonry Production Process
Material Storage 4 1. Dispense / combine raw materials according to the product mix design 2. Add water and mix to required 1 3 Batching blend and consistency 3. Place concrete in to mould, ‘Block’ Curing vibrate, compact and eject on Machine 2 to steel boards Mixing 4. Allow ‘green’ product to cure in temperature and humidity 5a controlled environment VAP 5a. Where required apply ‘Value Added Processes’ (VAP) to split, hone, polish or shot blast 5b the product Palletising Yard 5b. Place product on pallets and return steel boards to machine
Sydney Site Tour 26 June 2009 22
11 Boral has a significant pipeline of new masonry products
Illustrations of new Masonry East products recently launched or under trial
Wetcast Stylestone Hydrapave (II) Precinct Lightweight Brick (NSW)
Manhattan (Vic) Arena Wall Heathstone Regal Hadrian Wall
Sydney Site Tour 26 June 2009 23
Prospect Masonry Outdoor Factory Outlet
Boral Masonry’s first “Outdoor Factory Outlet”
Strong consumer acceptance
Profitable clearance of seconds, obsolete and end of line production
Sydney Site Tour 26 June 2009 24
12 Boral Timber
Bryan Tisher Sydney Site Tour 26 June 2009
Boral Timber accounts for ~20% of Boral’s external revenues from Australian building products 1H2009 vs 1H2008 External Revenues Construction Materials, Building Products, Australia Australia USA Asia A$m 700
600 Boral Timber A$141m 500 1H2009 400 1H2008 300
200
100
0 QEU Asia* Bricks Flyash Timber Asphalt Roofing Masonry Quarries Clay tiles Clay Windows Concrete Transport Cement** US Bricks US Construction Plasterboard Concrete tiles* Concrete * Includes revenues from MonierLifetile and Asian Plasterboard joint ventures which are equity accounted ** Cement division includes BCSC (external revenues), concrete placement & scaffolding
Sydney Site Tour 26 June 2009 2 Boral Timber’s operating structure consists of five business units Boral Timber
Softwood Hardwood
Integrated Softwood Plywood Residues Davis & Herbert Hardwoods
Highland Pine North Coast Joint Venture* Green & Dry Mills
Employees ~1,000 Hardwood flooring mill 3 Engineered Softwood sawmill 1* Structural mill 1 Flooring Plywood mill 1 Pole plant 1 Residue export facility 1 Engineered flooring plant 1 Hardwood sawmills 6 Warehouses 5 Warehouses * Boral Timber 50%: Carter Holt Harvey 50%
Sydney Site Tour 26 June 2009 3
~50% of Boral Timber revenues are from the dwellings segment; Hardwood contributes ~60% of revenues
Boral Timber External Revenues Based on 1H09 By End Market Exposure By Product
Non-Residential Plywood Flooring 10% Detached Dwellings 16% 26% 46% Residues 11% Other 26% Other Hardwood A&A Softwood Other Dwellings 12% Structural 15% 26% 3% Hardwood 9%
Sydney Site Tour 26 June 2009 4 Boral Timber will benefit from a number of Government stimulus initiatives
Structural Hardwood Plywood Timing Softwood Flooring First Home FY10-FY11 Owners Boost 9
Social and FY10-FY12 Defence Housing 99
Schools Program 99FY10-FY11
Sydney Site Tour 26 June 2009 5
Australian Major Softwood Timber Growing Regions
Key to Region Numbering 1. Western Australia 2. Tasmania 3. Green Triangle 4. Lofty Block 5. Central Victoria 6. Murray Valley 7. Central Gippsland Boral Plywood 8. East Gippsland/Bombala 9. Southern Tablelands Boral Softwood SE Queensland 10. Central Tablelands 11. Northern Tablelands 12. North Coast 13 13. South East Qld 14a. North Qld 14b. North Qld Central Tablelands 15. Northern Territory
10 ---- Region Boundary Major town / city * Port 6 Green Triangle 3 Significant plantation investment regions
Murray Valley
Sydney Site Tour 26 June 2009 6 Australian Hardwood Regional Forestry Agreements
Regions with completed Regional Forestry Agreements
Western Australia
West Victoria
North East Victoria
Central Highlands Victoria
Gippsland Victoria
East Gippsland Victoria
Tasmania
Southern Eastern NSW
Eden Eastern NSW Boral Hardwoods Engineered Flooring North East NSW Boral Residues
Sydney Site Tour 26 June 2009 7
Building a sustainable future
Boral Timber Products have full chain of custody certification aligned with the Australian Forestry Standard (AFS)
Chain of Custody certification (AS 4707 – 2006) confirms that Boral Timber products are sourced from certified and legal sources and the company can prove traceability of its wood materials from the forest through to the sale of its products to customers
Sydney Site Tour 26 June 2009 8 Hardwood is sourced from sustainably managed forests
Aerial Photo – Australian Group Selection (AGS) Regrowth of forest following AGS Harvesting
Harvested in 1999
Harvested in 2003
Harvested in 2008
Harvesting laws and guidelines prescribe three key silvicultural practices in NSW: Thinning - the removal of small trees to improve the health and growth of the remaining forest Single Tree Selection (STS) - involves the harvesting of individual or small clusters of trees Australian Group Selection (AGS) - harvesting a group of trees with an area of no greater than 0.25 ha leaving a gap in the canopy
Source : Forests NSW
Sydney Site Tour 26 June 2009 9
Boral Softwood products mainly supply frame and truss markets in Australia
Sydney Site Tour 26 June 2009 10 Highland Pine Products JV is part of the Oberon Timber Complex
Highland Pine Products Sites 1 & 2
CHH Structaflor Plant
CHH Mouldings Line
CHH MDF Plant
Woodchem Resins Plant
Jeldwen Doorskins Factory
Sydney Site Tour 26 June 2009 11
Highland Pine Products produces mainly structural softwood products
Resource SawmillOfftake Products Customers
Structural Frame & Truss 45% 50% Sawn Boral Merchants, Timber Treated Wholesalers 15% Volume Out Boral Forests Warehouses NSW Highland 50% Sawn Industrial Pallet & Timber 40% Pine Carter Holt Packaging Volume Out Products Harvey Manufacturers JV Export
Private Woodchips CHH MDF, Property Structaflor
Sydney Site Tour 26 June 2009 12 Highland Pine is a world scale modern sawmill with scanning and recovery optimisation technology
Softwood Sawmill Control Room Highland Pine Green Mill
Sydney Site Tour 26 June 2009 13
Highland Pine Products is automated to process 725,000m3 of sawlogs p.a.
Sydney Site Tour 26 June 2009 14 Boral Plywood produce a broad range of plywood products
Structural Cladding Premier wood
Flooring Formply Marine
Sydney Site Tour 26 June 2009 15
Hoop resource produces high face grade marine plywood
Red Dragon Marine
Sydney Site Tour 26 June 2009 16 Plywood’s New Modular BridgeWood System is a cost effective way to replace rural hardwood bridges
Removal of Kyogle Council’s old hardwood bridge at Iron Pot Creek
Replacement with Plywood’s new Modular Bridgewood Product
Sydney Site Tour 26 June 2009 17
Typical Hardwood Products
Green Decking Structural
Engineered Flooring Solid Flooring Decking
Sydney Site Tour 26 June 2009 18 Boral Hardwood has the largest range in Australian Hardwood Timber flooring
Sydney Blue Gum Messmate Spotted Gum
Blackbutt Australian Beech New England Oak
Sydney Site Tour 26 June 2009 19
Engineered Flooring adds value to the hardwood resource
Sydney Site Tour 26 June 2009 20 Engineered Flooring sells through a new range of retail channels
Harvey Norman Carpet Retail Timber Flooring Specialists
Sydney Site Tour 26 June 2009 21
Residues export facility at Newcastle
Softwood and Hardwood woodchip exports
Long term relationships with Japanese paper manufacturers
Opportunities for Bio-mass exports
Residue Export Facility at Kooragang Island, Newcastle
Sydney Site Tour 26 June 2009 22 Boral Timber Business Priorities
Safety performance
Capacity management and inventory
Cost reduction – process improvement
Cash management
Carbon Pollution Reduction Scheme (CPRS)
Sydney Site Tour 26 June 2009 23
Boral Timber’s safety performance compares well to the industry Timber Industry Safety Performance – LTIFR* Australian Hardwood Producers1 Australian Softwood Producers2 200 50
180 45
160 40
140 35
120 30
100 25 LTIFR
80 20
60 15
40 10
20 5 Boral Timber Boral Timber 0 0 2004 FY05 FY06 FY07 FY08 FY09 FY04 FY05 FY06 FY07 FY08 FY09 1. Major Hardwood Producers in NSW and Victoria 2. Major Softwood Producers on Australian East Coast * Lost Time Injury Frequency Rate per 1 million hours worked.
Sydney Site Tour 26 June 2009 24 Capacity planning forms an integral part of inventory management Boral Timber Mill Capacity Planning
1H08 2H08 1H09 2H09
JUL-07 JUN-09 Hardwood Green Mills Herons Creek Koolkhan Walcha Nowra Batemans Bay Narooma Hardwood Dry Mills Herons Creek Maxwells Creek Kyogle Grafton Parquetry Gloucester Murwillumbah Softwood Oberon HPP JV Ipswich Plywood
Full Operation Slow Down Mothballed
Sydney Site Tour 26 June 2009 25
Boral Timber will continue to drive down costs using formal operational improvement programs
Target 3-4% of compressible cost reduction in Performance Enhancement Programs (PEP) each year
Reduced labour costs
Step change program underway at Plywood
Operational Improvement Programs / lean manufacturing
Sydney Site Tour 26 June 2009 26 Boral Timber focused on cash management
Inventory reduction initiatives
Working Capital Management
Surplus Assets
Fast payback capital expenditure
Sydney Site Tour 26 June 2009 27
Timber products will benefit from CPRS if the carbon stored in wood products is counted
Paper products after 20 years in landfill Wood products after 46 years in landfill
Minimal carbon loss after 20 years Carbon loss of 0% to 9% after 46 years
Sydney Site Tour 26 June 2009 28 Sydney Site Tour 26 June 2009 29 Boral Construction Related Businesses
Warren Davison Sydney Site Tour 26 June 2009
Boral’s CRB division consists of four businesses
Boral Precast Formwork & Scaffolding (BFS)
De Martin & Gasparini Dowell Windows (DMG; concrete placing)
Sydney Site Tour 26 June 2009 2
1 CRB is a diverse portfolio characterised by a large workforce with a substantial proportion of contractors
Precast BFS DMG Dowell CRB
Total 224 463 322 871 1,880 Workforce1
Key Site panel Scaffold Concreter, Transport, Contractor erection erection and steel fixers services and Activities dismantle form workers site glazing
1.As at March 2009, includes ~1,340 employees and ~540 contractors
Sydney Site Tour 26 June 2009 3
We continue to improve CRB’s contractor and employee safety performance
Strengthening the safety culture through leadership and targeted behavioural change programs Subcontractor safety management programs Consistent application of Boral process and procedures Strengthening audit processes
1 25 LTIFR - FY03 TO FY09 YTD
20 Contractors
15
Employees Overall CRB 10
5
0 FY03 FY04 FY05 FY06 FY07 FY08 Mar 09 YTD
1. Lost Time Injury Frequency Rate per 1 million hours worked.Excludes Precast business.
Sydney Site Tour 26 June 2009 4
2 CRB operates across all market segments with national coverage….
Key CRB Sites
Precast
Formwork & Scaffolding
Windows
Concrete placing
Sydney Site Tour 26 June 2009 5
… pulling through revenue for other Boral businesses
Market Segment
CRB Boral Product Business pull-through Housing Multi-residential Commercial Engineering
Precast 3 3 3 Concrete
Formwork & 3 3 3 3 Plywood and Timber Scaffolding DMG 3 3 Concrete
Dowell 3
Sydney Site Tour 26 June 2009 6
3 CRB businesses have strong market positions
Estimated Key Variable Costs Fixed CRB Business National Market Material Costs Position Inputs Materials Other Concrete Precast 1 Low High Medium Steel
Formwork & Ply and 3 Low Low Medium Scaffolding Timber
DMG1 1 Concrete High High Low
Aluminium Dowell Windows 1 High Medium Low Glass
1. Sydney market only
Sydney Site Tour 26 June 2009 7
CRB is focused on improving efficiency and matching resources to demand
CRB Employees1 FY07 TO FY09 YTD
~15%
FY07 FY08 YTD FY09
CRB has a range of cost reduction plans to further improve its position
1. Excludes contractors; FY09 YTD is for the period ending March 2009
Sydney Site Tour 26 June 2009 8
4 Boral Precast consists of the Girotto (East Coast) and Gocrete (WA) businesses
~200 employees 5 manufacturing sites
Baseline Alexandria project
Gocrete Girotto Girotto Sydney Site
Sydney Site Tour 26 June 2009 9
Precast project evolution – Factory to Townhouse
Factory Unit Development Sydney
Magenta Shores Townhouse Development
Sydney Site Tour 26 June 2009 10
5 The Australian precast market has evolved from initial penetration in industrial buildings to more recent activity in single dwelling homes
Precast Market Evolution
Precast Mature Growth Activity Activity Activity Penetration continuing increasing increasing starting
Niche Single Industrial Multi-Units Multi-Units Single Dwelling Segment Tilt-up High rise Low rise Dwelling Project to Precast Homes
Sydney Site Tour 26 June 2009 11
Gocrete (WA) automated plant has been successfully commissioned
Gocrete Automated Plant - Steel and fitting placement
Gocrete Automated Plant – Concrete Gocrete Automated Plant - Finishing station
Sydney Site Tour 26 June 2009 12
6 Boral is the #3 player in Scaffolding nationally
Scaffolding is a hire business with on site labour, erecting and dismantling Formwork is a hire business with additional engineering design expertise required ~220 employees 18 branches: 14 Scaffolding & 4 Formwork
Scaffolding branch Formwork branch
Sydney Site Tour 26 June 2009 13
Significant unit cost reductions associated with consolidation of operating sites, focusing on dedicated formwork & scaffolding locations
2007 – Over 35 branches 2009 – 18 branches
Scaffolding branch Formwork/Scaffolding branch Formwork branch
Sydney Site Tour 26 June 2009 14
7 De Martin & Gasparini (DMG) is the leader in concrete placement projects in the Sydney Metro area
Proven capability and track record on major projects In operation over 50 years Industry leading safety performance
Sydney International Airport Multi-level Carpark Multiplex Lumiere Apartments Sydney
Sydney Site Tour 26 June 2009 15
Bligh Street development is an example of DMG pulling through Boral products
Grocon is building Sydney’s first high rise 6 star Green Star building (2011) Double skin facade with integrated energy control Natural air and light through central atrium Green star concrete (40,000 m3) over 29 floor plates
DMG is concrete supply and place Bligh Street Site works contractor Concrete from Concrite Reduced cement using flyash and slag Technically challenging project Clayton Utz main tenant
Artists impressions
Sydney Site Tour 26 June 2009 16
8 DMG has a proven track record in complex construction projects in Sydney
Other key construction projects in Sydney from DMG include: Bennelong Apartments (1998) Sydney Olympic Stadium (1999) Warringah Mall (2000) Westfield Bondi Junction (2004) Bankstown Square Shopping Centre (2005) Top Ryde Shopping Centre (2009) Bligh Street Office development (2009) Darling Walk (2009) DMG has a range of longstanding relationships with major Sydney constructors
Top Ryde Shopping Centre project for Bovis Lend Lease
Sydney Site Tour 26 June 2009 17
Dowell is the leading aluminium windows manufacturer and supplier to Australia’s new house market
~700 employees 14 manufacturing sites
Windows manufacturing sites Aluminium Timber/Aluminium Windows assembly plant Plastics
Sydney Site Tour 26 June 2009 18
9 Dowell’s key focus is on the new dwellings segment with limited exposure to the alterations and additions market
Focused on achieving a low cost position supplying major builders A strong management team in place Market share has been increasing to a clear leadership position in the new dwelling market
New Dwellings Alterations & Additions 5% 20% 21% 45% 50% 59% Boral
Other Majors
Local Players Source: Management Assessment
Sydney Site Tour 26 June 2009 19
Government regulatory standards for House Energy Ratings (HERs) will drive the uptake of energy efficient windows in new dwellings
Announced Policy changes
Upgraded to 5 star* energy standard in 2006 Only 10% of houses in Minimum ACT, Victoria & Tasmania to be 6 Australia have energy star in 2009 efficient glass Victorian builders offering 7 star design compared to 90% of houses in USA Building codes will be updated to require 6 star housing in all states from May 20111
1. COAG National Strategy on Energy Efficiency – May 2009
Sydney Site Tour 26 June 2009 20
10 An examination of US experience provides good insights into likely product developments in Australia
The climate zones in Australia match the key areas in the US
Brisbane Tampa Los Angeles
Sydney
San Francisco Melbourne
Cooling climate
Mixed climate Heating climate
Illustrative only
Sydney Site Tour 26 June 2009 21
Windows product demand is now showing the influence of changing energy regulations especially double glazing
Proportion of double glazed windows installed in residential construction % Double glazing 25 requirements are Victoria 20 strongest in Victoria and Southern NSW as State 15 Governments in heating climates are most actively 10 lifting standards Australia Dowell with its leading 5 market position is well positioned to benefit 0 FY05 FY06 FY07 FY08
Source: Management Assessment of BIS Shrapnel Building Materials and Fitting Studies
Sydney Site Tour 26 June 2009 22
11 Dowell is the #3 window supplier to the new house market in NSW
5 manufacturing sites in NSW Sydney, Newcastle, Nowra, Queanbeyan and Unanderra
~ 120 employees in NSW
Boral manufactures a complete range of aluminium windows and doors, designed to service the new home market
Major competitors in NSW are: Stegbar Bradnams Trend Windows Windows finished product
Sydney Site Tour 26 June 2009 23
Going forward, precast products expected to grow with increasing penetration whilst other businesses to benefit from market recovery and cost down programs Major focus areas
Consolidate automation Precast Cost reduction
Formwork and Optimise price and utilisation across network Scaffolding Further improve network cost position
DMG Maintain market position in Sydney
Dowell Further improve cost position Windows Position product offering to evolving energy regulatory environment
Sydney Site Tour 26 June 2009 24
12 Boral Australian Construction Materials Greystanes Estate – Southern Employment Lands
Paul Dalton Sydney Site Tour 26 June 2009
Greystanes Estate - Southern Employment Lands
Sydney Site Tour 26 June 2009 2
1 Greystanes is located at both the geographic and population centre of Sydney
You are here!
Sydney Site Tour 26 June 2009 3
The Southern Employment Lands (SEL) is part of the 330Ha Greystanes Estate, which has been continuously developed since 2001
. Greystanes Estate is located adjacent to M4 freeway & Great Western Highway . SEL is the former Prospect quarry comprising 65Ha of redeveloped industrial and commercial land . Part 3A (NSW Government) approval granted in July 2007 allows 97,000m2 of business park . Dexus contracts signed December 2007 for $157.7m for 47Ha (Eastern precinct) . Earthworks commenced in earnest in January 2008 to rehabilitate the site
Sydney Site Tour 26 June 2009 4
2 Northern Employment Lands Nelsons Ridge (residential)
Southern Employment Lands
Eastern Western precinct precinct
Detention Basins
Boral Recycling (Widemere)
Sydney Site Tour 26 June 2009 5
Greystanes Estate will provide dwellings for 4,000 people, employment for more than 7,000 people with potential built form investment in excess of $1.5b
Sydney Site Tour 26 June 2009 6
3 Greystanes Estate continues to be transformed from an operating quarry to residential and employment lands 1997 2004 2009
Sydney Site Tour 26 June 2009 7
Greystanes Estate - 1982
Sydney Site Tour 26 June 2009 8
4 Greystanes Estate - 2009
Sydney Site Tour 26 June 2009 9
Southern Employment Lands - December 2007
Sydney Site Tour 26 June 2009 10
5 Southern Employment Lands - February 2009
Sydney Site Tour 26 June 2009 11
Boral has designed a Groundwater and Stormwater system to harvest 150 Megalitres of water each year for the Cumberland Golf Club
. The Cumberland Golf Club will pump all groundwater and as much storm water as it wishes via the pipeline approved by Holroyd City Council
. The water will be pumped 3km from Greystanes to Cumberland
. As a result Cumberland Golf Club has been removed from Sydney Waters list of top 100 consumers of potable water
. The club achieved the Highest Percentage Reduction for 2008 at Sydney Water's Every Drop Counts Water Efficiency Awards held at the Powerhouse Museum recently
Sydney Site Tour 26 June 2009 12
6 Southern Employment Lands – Concept Plan
Sydney Site Tour 26 June 2009 13
Artists impression of completed development
Sydney Site Tour 26 June 2009 14
7