A Leading Cement and Lime Producer Leveraged to Resources

Adelaide Brighton is a very reliable performer. It is a leading Australian integrated construction materials and lime producing company with high exposure to the engineering, infrastructure and resource sectors.

Recent News Highlights

As at 17/09/2014 : see details at www.adbri.com.au   (new window? Shift+Click)

28/08/2014       Half Yearly Report and Accounts (PDF)

28/08/2014       Media statement covering June 2014 half year report (PDF)

28/08/2014       Presentation covering June 2014 half year report (PDF)

06/06/2014      Reinstatement of lime supply to major customer in the NT

21/05/2014      AGM Addresses & Presentation & 2014 Outlook

14/03/2014      Potential changes to South Aust cement supply arrangements

20/02/2014      Adelaide Brighton NPAT $151.1m on record revenue of $1,228m

Recent News Highlights

As at 31/12/2012 : see details at www.adbri.com.au   (new window? Shift+Click)

07/12/2012   ABC re-enters S&P/ASX 100 Index on quarterly rebalancing, effective 22 December

06/12/2012   Completes acquisition of 30% stake in Aalborg Portland Malaysia

03/12/2012   Acquires 30% stake in Aalborg Portland Malaysia (APM), an integrated white clinker & white cement producer in Ipoh, for ~A$28.5m. APM will consider a white clinker capacity expansion by 150,000 tonnes pa for 2015 at a cost of US$18.6m. APM will supply white clinker to ABC for 10 years from 2015, adding flexibility and a strategic regional stake for ABC. ABC has also executed final agreements for the next two years with a major cement customer in WA and SA.

27/92/2012   Analyst/Investor Tour

16/08/2012   1H12 Results - Revenue up 8.3%, EBIT 6.6%, NPAT 9.8%, dividend of 7.5¢ maintained

14/06/2012   Presentation to Morgan Stanley Emerging Companies Conference

17/05/2012   Annual General Meeting

17/04/2012   Annual Report for year ended 31 December 2011

05/04/2012   Chairman to retire after AGM, to be succeeded by Les Hosking

02/03/2012   ABC to enter S&P/ASX 100 Index on quarterly rebalancing, effective 17 March

16/02/2012   FY11 Results - met guidance, satisfactorily positioned despite market weakness continues

22/12/2011   Secures additional financing facilities

07/12/2011   Investor meetings - Presentation by MD Mark Chellew

Half-year Performance & Estimates - ABC

Year-end December	1H11A	FY11A	1H12A	FY12A	1H13A	FY13E	FY14E
Sales, $m	507.9	1100	548.9	1,173	578.2	1,217	1,259
EBITDA, $m	129.3	281.2	98.6	290.9	124.0	285.0	302.5
EBIT, $m	92.5	223.4	98.6	225.7	89.7	219.0	234.3
Report NPAT, $m	61.5	148.4	67.6	154.2	61.0
Adj. NPAT, $m					61.0	148.0	159.0
Reported EPS, ¢	10.00	18.00	11.00	24.00	10.00
Adjusted EPS, ¢					10.00	23.30	25.05
EPS %FY/Growth	56%		46%	33%	-9%	-3%	8%
Dividend, ¢	7.5	16.5	7.5	16.5	7.5	17.00	18.75
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	25%	25%	18%	25%	21%	23.4%	24.0%
NPAT Margin	13%	13%	12%	13%	11%	12.2%	12.6%
ROE, %	15%	15%	7%	15%	6%
EBIT/Interest	11.7	8.2	10.6	13.8	14.0
Net Debt / Equity	0.24	0.34	0.30	0.31	0.31
CashFlow/Sh, ¢	7.9	24.4	12.6	29.3	14.0	31.8	35.6
Y/E Shares, m	636.3	636.9	637.4	637.4	637.4

Notes

EPS Growth compared with the pcp is shown in most columns, except 1H10A and 1H11A which show the first half % of full year EPS.

Half-yearly Performance & Estimates - ABC

Year-end December	FY10A	1H11A	FY11A	1H12A	FY12A	FY13E	FY14E
Sales, $m	1073	507.9	1100	548.9	1,173	1,237	1,287
EBITDA, $m	269.1	129.3	281.2	98.6	290.9	303.5	320.4
EBIT, $m	216.3	92.5	223.4	98.6	225.7	236.7	253.8
Report NPAT, $m	151.5	61.5	148.4	67.6	154.2
Adj. NPAT, $m					154.2	161.0	176.1
Reported EPS, ¢	24.00	10.00	18.00	11.00	24.00
Adjusted EPS, ¢					24.00	25.25	27.45
EPS %FY/Growth		56%	-25%	46%	33%	5%	9%
Dividend, ¢	21.5	7.5	16.5	7.5	16.5	18.00	19.75
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	25%	25%	25%	18%	25%	24.5%	24.9%
NPAT Margin	14%	13%	13%	12%	13%	13.0%	13.7%
ROE, %	16%	15%	15%	7	15%
EBIT/Interest	15.4	11.7	8.2	10.59	13.76
Net Debt / Equity	0.16	0.24	0.34	0.30	0.31
CashFlow/Sh, ¢	29.7	7.9	24.4	12.6	29.3	32.7	38.5
Y/E Shares, m	635.2	636.3	636.9	637.4	637.4

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns, except 1H11A and 1H12A which show the first half % of full year EPS. In a handful of cases, unadjusted share splits may give strange changes in ratios.

Half-year Performance & Estimates - ABC

Year-end June	1H10A	FY10A	1H11A	FY11A	1H12A	FY12E	FY13E
Sales, $m	519.4	1073	507.9	1100	548.9	1,162	1,232
EBITDA, $m	125.4	269.1	129.3	281.2	98.6	287.4	306.9
EBIT, $m	98.8	216.3	92.5	223.4	98.6	224.7	241.6
Report NPAT, $m	68.9	151.5	61.5	148.4	67.6
Adj. NPAT, $m					67.6	152.7	163.4
Reported EPS, ¢	11.00	24.00	10.00	18.00	11.00
Adjusted EPS, ¢					11.00	24.00	25.50
EPS %FY/Growth	46%		56%	-25%	10%	33%	6%
Dividend, ¢	7.5	21.5	7.5	16.5	7.5	17.00	18.00
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	25%	25%	25%	25%	18%	24.7%	24.9%
NPAT Margin	13%	14%	13%	13%	12%	13.1%	13.3%
ROE, %	15%	16%	15%	15%	7%
EBIT/Interest	14.9	15.4	11.7	8.2	10.59
Net Debt / Equity	0.20	0.16	0.24	0.34	0.30
CashFlow/Sh, ¢	11.0	29.7	7.9	24.4	12.6	33.2	35.0
Y/E Shares, m	635.2	635.2	636.3	636.9	637.4

Notes

EPS Growth compared with the pcp is shown in most columns, except 1H10A and 1H11A which show the first half % of full year EPS.

In FY11, ended 31 December 2011, ABC achieved EPS of 23.3 cents, down 2.2%, tax driven, on FY10. The FY11 total dividend was maintained at 16.5 cents, franked, a 70% payout ratio. Revenue rose 2.6% to $1,100m, EBIT 3.3% to $223.4m and pre-tax profit was up 2.1% to $206.4m. NPAT slid 2.2% to $148.4m. Net debt at year-end was $248.4m, with current debt facilities of $500m and gearing of 26%.

In FY11, 70% of revenues were from cement and lime, with exposure to engineering and mining sectors supporting demand and WA and SA the key geographic markets. The balance of revenues were from concrete and aggregates and concrete products. Four downstream acquisitions were completed, costing $48m at an average 7.3 times FY11 EBITDA. Investment of $60m was made to expand milling capacity in SA and $34m for environmental and capacity improvements to lime production in WA.

On his presentation on 14 June, MD Mark Chellew noted that in 2012, cementitious volumes are expected to be marginally higher than in 2011. Demand remains robust in SA due to infrastructure and non residential projects, and in WA as a result of mining and resource projects, with a further weakening in residential and non-residential sectors. The scope for price increases may be limited.

Mr Chellew said that, in 2012, lime sales volumes are expected to be marginally higher than in 2011, with the benefit of improved lime pricing to a major alumina customer in WA, effective from 1 July 2011. The threat of small scale cement and lime imports in WA and the NT remains.

Mr Chellew observed that the Australian concrete market plateaued last year, but concrete and aggregates pricing is expected to improve with increases notified effective 1 April 2012. Weakness in the concrete masonry market is expected to continue in 2012. ABC has a significant land bank in WA, SA and Victoria which could realise some $100m over 2-10 years. ABC will continue its long term growth strategy of investment in cement, lime and downstream operations, with an ongoing focus on cost management. The carbon tax impact on FY12 NPAT is expected to be around $2.7m before mitigation.

On 7 December 2011, Mark Chellew had pointed out that the concrete market had peaked in mid 2008 after seven years of growth. After a downturn of about 15% over some 18 months, the recovery now appears to be plateauing with the outlook uncertain. The national concrete market is expected to remain flat in 2012 with some risk to the downside.

Mr Chellew said that Adelaide Brighton is committed to lowering its carbon emissions and has significantly reduced its carbon footprint in Australia by - using fly ash and slag; using alternative fuels and raw materials; implementing changes to cement standards; closing less efficient clinker facilities; and developing its capability to import cementitious materials.

As a result of investment in import supply chain over the last 20 years, Adelaide Brighton is now the largest importer of cement and clinker into Australia. Mr Chellew says this places it in a strong position relative to domestic competitors to deal with the potentially rising local production cost given the carbon tax proposed.

For the 2011 year, now ended, Mr Chellew expected cement demand to be similar to 2010, with ABC's 2H11 volumes boosted by projects in SA and weakness in the WA residential sector partially offset by mining and resource projects. Excluding the temporary shutdown of a major NT customer in 1H11, the year's lime sales volumes were expected to be similar to 2010.

The strong A$ increases risk of import competition and pricing challenges in the cement and non-alumina (mostly spot) lime business. But is also supports import margins – ABC hedged its 2H11 imports.

Lime price increases to a major alumina customer in WA from 1 July 2011 were expected to improve 2H11 EBIT by $6m over 2H10. For FY12, EBIT will be $8-$12m better than 2010 subject to volume and import competition.

Company Overview

• Adelaide Brighton has operations in all states and territories; 1,600 employees

• It is well positioned to supply cement to all mainland states from its domestic manufacturing base, coastal supply and import facilities

• Market leader in lime in Australia, and 9th largest producer on a world scale

• The second largest supplier of cement and clinker in Australia

• Market leader in concrete masonry products with an emerging position in aggregates and ready mixed concrete

• ABC is highly cash generative with low gearing and balance sheet capacity for organic and acquisitive growth

• Consistent strategy over the last decade has supported long term shareholder returns through a focus on Cost Reduction and Operational Improvement; Lime development; and focused and relevant Vertical Integration

• For Cement – A $60m investment to expand milling capacity at Birkenhead, SA, subject to planning approvals and finalisation of supply agreements, should provide annualised benefits of $10-$12m from mid 2013

• For Lime – The investment of $34m for two projects should bring environmental improvements and an additional 100,000 tonnes per annum capacity at Munster, WA

• Downstream acquisitions have continued - four acquisitions were made in 2011 totalling $47m at an effective cost of 7.3 times 2011 EBITDA.