Exhibit 99.1
ColorPlus Supply Chain Ryan Sullivan
DISCLAIMER
This SEC, Management on Forms 20-F Presentation and 6-K, in contains its annual forward-looking reports to shareholders, statements. James in offering Hardie circulars, may from invitation time to memoranda time make forward-looking and prospectuses, statements in media in releases its periodic and reports other written filed with materials or furnished and in to oral the statements are not historical made facts by the are company’s forward-looking officers, statements directors or and employees such forward-looking to analysts, institutional statements investors, are statements existing made and potential pursuant lenders, to the Safe representatives Harbor Provisions of the media of the and Private others. Securities Statements Litigation that Reform Act of 1995. Examples of forward-looking statements include: statements about the company’s future performance; projections of the company’s results of operations or financial condition; statements regarding the company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or our products; expectations concerning the costs associated with the suspension or closure of operations at any of the company’s plants and future plans with respect to any such plants; expectations that the company’s credit facilities will be extended or renewed; expectations concerning dividend payments and share buy-back; statements concerning the company’s corporate and tax domiciles and potential changes to them, including potential tax charges; statements regarding tax liabilities and related audits, reviews and proceedings; statements Commission as (ASIC); to the possible consequences of proceedings brought against the company and certain of its former directors and officers by the Australian Securities and Investments asbestos-related expectations about personal the timing injury and and amount death claims; of contributions to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian expectations concerning indemnification obligations; statements about product or environmental liabilities; and availability statements of about mortgages economic and conditions, other financing, such mortgage as economic and or other housing interest recovery, rates, the housing levels affordability of new home and construction, supply, the levels unemployment of foreclosures levels, and changes home resales, or stability currency in housing exchange values, rates the and consumer confidence.
Words are intended such as to identify “believe,” forward-looking “anticipate,” “plan,” statements “expect,” but are “intend,” not the “target,” exclusive “estimate,” means of “project,” identifying “predict,” such statements. “forecast,” “guideline,” Readers are “aim,” cautioned “will,” not “should,” to place “likely,” undue “continue” reliance on and these similar forward-looking expressions statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. conditions, Forward-looking they, by statements their very are nature, based involve on the inherent company’s risks current and uncertainties, expectations, many estimates of which and assumptions are unforeseeable and because and beyond forward-looking the company’s statements control. address Such known future and results, unknown events risks, and uncertainties projected or implied and other by these factors forward-looking may cause actual statements. results, These performance factors, or some other of achievements which are discussed to differ under materially “Risk Factors” from the in anticipated Section 3 results, of the Form performance 20-F filed or with achievements the US Securities expressed, and Exchange James Hardie Commission subsidiaries; on 29 required June 2011 contributions include, but to are the not AICF, limited any to: shortfall all matters in the relating AICF to and or the arising effect out of of currency the prior exchange manufacture rate of movements products that on contained the amount asbestos recorded by current in the and company’s former which financial the statements company operates; as an asbestos the consequences liability; governmental of product loan failures facility or to defects; the AICF; exposure compliance to environmental, with and changes asbestos in tax or laws other and legal treatments; proceedings; competition general economic and product and pricing market in conditions; the markets the in supply customer’s and inability cost of to raw pay; materials; compliance possible with and increases changes in in competition environmental and and the potential health and that safety competitors laws; risks could of conducting copy the company’s business internationally; products; reliance compliance on a small with and number changes of customers; in laws and a governance regulations; and the potential effect of tax the benefits; transfer currency of the company’s exchange corporate risks; dependence domicile on from customer The Netherlands preference to and Ireland the concentration to become an of the Irish company’s SE including customer employee base on relations, large format changes retail in customers, corporate distributors facilities on terms and dealers; favorable dependence to the company, on residential or at all; and acquisition commercial or sale construction of businesses markets; and business the effect segments; of adverse changes changes in the in company’s climate or weather key management patterns; personnel; possible inability inherent to limitations renew credit on internal company controls; cautions use you of that accounting the foregoing estimates; list and of factors all other is risks not exhaustive identified in and the that company’s other risks reports and filed uncertainties with Australian, may cause Irish and actual US securities results to agencies differ materially and exchanges from those (as in appropriate) forward-looking . The statements. Forward-looking statements speak only as of the date they are made and are statements of the company’s current expectations concerning future results, events and 2 conditions.
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AGENDA
Why Supply Chain is critical to James Hardie
Past to current day Supply Chain
Supply Chain Strategy and Systems
Execution Update
Go Forward
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Why Supply Chain is critical to James Hardie
SUPPLY CHAIN BARRIERS – NEW PRODUCT GROWTH
Barriers limit pace of new James Hardie products adoption
Catch-22: channel won’t get behind new products without builder demand; builders reluctant without strong channel support
Higher channel margins—partly to cover inventory costs, partly because new products are considered a specialty item
Transition from old product generations to new generation causes disruption in the channel
SKU range growth in prime and color create channel inefficiency
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SUPPLY CHAIN BARRIERS – COLORPLUS GROWTH
Supply Chain Barriers limit growth of ColorPlus
Job site waste due to standard supply chain minimum order amounts: can’t return excess or use it on next job as with primed product
Very long lead times for non-stocked orders due to order requirements
Limited access: only readily available in a small minority of dealers in some key markets with scale (direct trucks)
Order requirements limit ability for many channel partners to participate cost effectively (full truck)
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SUPPLY CHAIN BARRIERS – MARKET STRATEGY
??James Hardie market strategies are requiring advanced Supply Chains to deliver on customer value proposition and gain access
??Cemplank Strategy??Short lead-time
??Less than Truck Load (LTL)
??Multifamily Strategy??Direct to job site ??Short lead-time
??Less than Truck Load (LTL)
??Commercial – Direct to job site bundle
??Increased service requirements of key accounts 7
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SUPPLY CHAIN BARRIERS – OPPORTUNITY
Overcoming these Supply Chain Barriers enables
Market share growth
Category share growth
Increased trim and accessory attachment
Increased ColorPlus adoption
Faster new product adoption
More aligned channel partners
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Past to Current Day Supply Chain
JAMES HARDIE SUPPLY CHAIN NETWORK – 1990s
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JAMES HARDIE SUPPLY CHAIN NETWORK – 2000s
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JAMES HARDIE SUPPLY CHAIN NETWORK – 2010s
12
FUTURE STATE SUPPLY CHAIN
The future Supply Chain of James Hardie will be:
Multiple Supply Chains (programs) configured for specific customer
and product segments – all aligned around core principles
Full market access
Low-cost value chain
Value added services
James Hardie affordability to the market
Internally linked from quote through delivery
Integrated with key customer accounts
Physical – VMI (Vendor Managed Inventory)
Information – IT
Services – Division of responsibility within value chain
13
JAMES HARDIE SUPPLY CHAIN NETWORK—FUTURE
JH Plant
ColorPlus Freight Reloads VMIs
C+ Reloads Retail VMIs
14
Supply Chain Strategy and Systems
CHANNEL STRATEGY OBJECTIVES
Channel Objectives That Support Share Growth
Share Growth
Full Market Access
• Enable Hardie to sell its full range (including trim & soffit, ColorPlus, Artisan, etc.)
– Local stocking
– Reasonable margins on “specialty” items
– Job packs
Lowest Cost Value Chain
• Bring savings to Hardie, the channel and the customer by optimizing our value chain
– Deliver product via the lowest cost possible on every delivery
Value-Added Services
• Enable ColorPlus (and
Hardie more generally)
by providing good
service
– Short & consistent
lead times
– Accurate order
fulfillment
– Job Site Delivery
– Post-sales service
JH Affordability to the Market
• Make Hardie
competitive vs. other
claddings (e.g., vinyl)
by getting it to the end
customer as cheaply as
possible
– Channel should make
a fair return on the
services it provides,
but not overcharge
KEY SUPPLY CHAIN PROGRAMS
To execute our strategy there are a few key Supply Chain Programs:
ColorPlus Job Packs
Vendor Managed Inventory (VMI)
Less than Truck Load orders (LTL)
Channel Interface Systems
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WHAT ARE JOB PACKS?
Job packs are to-the-piece orders of ColorPlus, ordered for one house or
project, that are assembled by James Hardie and sold and delivered direct
to channel partners
Job Packs Defined
Ordered to the piece—not ordered in full/mid/mini quantities
May include any combination of siding, trim, soffit, fascia
Should include touch-up, caulk and other accessories
Any channel partner can place an order— no sales rep required
Job pack is cross-docked through the channel to the jobsite
LTL orders enabled – customer does not need to fill an entire truck 18
WHY JOB PACKS?
Job Packs are an initiative in support of our on-going strategy of product
differentiation
Since its introduction, ColorPlus has been a critical aspect of our
differentiation strategy
Market adoption of ColorPlus is slowed by supply chain issues
The channel has lacked fast, affordable, full access to ColorPlus
Attachment rate on accessory products has been lower than expected
Further, we are evolving from selling individual products to selling an
attractive, low maintenance full wrap exterior
Job packs solve many supply chain roadblocks for ColorPlus
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JOB PACK IMPACT ON SUPPLY CHAIN
Substantially reduce the amount of ColorPlus product that must be
stocked by the channel
Provide easy access to the full color and product range
Eliminate jobsite waste on non-stocked SKU’s
Increase efficiency through the supply chain
Reach a broader set of channel partners thereby increasing access for
contractors
20
REDUCED LEAD TIMES
Our end state ColorPlus Job Pack lead time will be 5-8 business days from order to receipt by dealer
Today contractor experienced lead time ranges from three to six weeks
ColorPlus Timeline: From Order to Delivery
Today vs. with Job Packs
DAYS
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Today (average) Transportation Arrive at Dealer
Dealer Order
Distribution Order
Order Entry, Scheduling
Manufacture
Transfer at Distribution
With House Packs
Lead time compressed by removing channel holdups and by automating scheduling & production planning
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JOB SITE WASTE REDUCTION
Job packs cut waste by allowing the builder to order exactly what they need as opposed to fixed pallet quantities
Amount Saved by Enabling Order to the Piece
Number of Times Savings Observed (in Sample of 48 Jobs)
$ Saved on the Job Pack
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FAR BROADER ACCESS TO PRODUCTS
Job packs dramatically increase access to non-stocked SKU’s
Chicago ColorPlus SKU’s
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day lead time (stocked by Dealer) |
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day lead time (stocked by Distribution) |
Formerly 3 week lead times (not stocked)
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JOB PACK SCOPE
Goal: Shift majority of our ColorPlus Single Family R&R and New
Construction volume to Job Packs
MF volume through standard process
Remaining flows through traditional channel in full pallet / full truck
Short lead time service – walk in business
Fill-ins – advance service offering by channel
Inventory for key customers of channel partner
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SUPPLY CHAIN FLOW
Customer Delivery
Interface Order Fulfillment Products
Distribution /
VMI
Take Offs Planning and
Scheduling
Pricing / Quote Transportation
Manufacturing
Order Invoicing
Processing Warehouse
Management
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STREAMLINE COMMUNICATION – CUSTOMER PORTAL
James Hardie central customer communication and service hub
Channel Partner
JH PORTAL
Online Order Entry
JH Contact Information
Directed Marketing
Events (Aggregation…etc.)
JH University
Order Status, Pricing
Programs/Dashboards
Technical Documents (MSDS, Best Practices, Etc.)
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FUTURE STATE VALUE CHAIN – ONLINE ORDER ENTRY AND TRACKING
Target Customer
Builder Contractor Serious DIY
Product Order
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ONLINE ORDER ENTRY – PROJECT VALUES
In order to be successful our designed solution must:
Be easy to use
Deliver validation & guided selling
Eliminate biggest causes of errors/holds and minimize others Be flexible to accommodate business changes quickly Provide options to minimize channel effort redundancy Be scalable Be secure
Planned for launch in Q4 FY12
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Execution/Results Update
CURRENT JOB PACK MARKETS
Standard Markets
Current Job Pack Markets
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JOB PACK ADOPTION
Job Pack Volume
Job Packs
Total C+ Vol -US only
% ColorPlus via Job Packs
Job Packs have seen rapid adoption in all markets launched to date
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JOB PACKS – MARKET ACCESS
Florida Market
Chicago Market
Job Packs continue to gain wider market access
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JOB PACKS – ACCESSORY ATTACHMENT INCREASES
ColorPlus Trim Attachment Chicago
ColorPlus Trim Attachment PNW
Job Packs help to increase accessory attachment in low penetration markets
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Go Forward
GO FORWARD
In the next 12 months we will deliver on a number of key elements:
Channel Interface launch – Q4
ColorPlus Manufacturing capability enhancements – Q1
Additional Job Pack markets – on going
VMI network expansion – key markets
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CURRENT JOB PACK MARKETS
Standard Markets Current Job Pack Markets Upcoming Job Pack Markets
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Summary
SUMMARY
The James Hardie Supply Chain is developing from a base
manufacture model to an advanced value chain to support and drive
market initiatives
Job Packs continue to expand and grow while driving expected
value in the market
Continued development and investment will be required for the next
few years to advance supply chain capabilities and efficiency
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Questions and Answers
Channel Strategy & Management Robb Rugg
DISCLAIMER
SEC, This Management on Forms 20-F Presentation and 6-K, in contains its annual forward-looking reports to shareholders, statements. James in offering Hardie circulars, may from invitation time to memoranda time make forward-looking and prospectuses, statements in media in releases its periodic and reports other written filed with materials or furnished and in to oral the
are statements not historical made facts by the are company’s forward-looking officers, statements directors or and employees such forward-looking to analysts, institutional statements investors, are statements existing made and potential pursuant lenders, to the Safe representatives Harbor Provisions of the media of the and Private others. Securities Statements Litigation that
Reform Act of 1995. Examples of forward-looking statements include:
statements about the company’s future performance;
projections of the company’s results of operations or financial condition;
statements regarding the company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or our products;
expectations concerning the costs associated with the suspension or closure of operations at any of the company’s plants and future plans with respect to any such plants;
expectations that the company’s credit facilities will be extended or renewed;
expectations concerning dividend payments and share buy-back;
statements concerning the company’s corporate and tax domiciles and potential changes to them, including potential tax charges;
statements regarding tax liabilities and related audits, reviews and proceedings;
statements Commission as (ASIC); to the possible consequences of proceedings brought against the company and certain of its former directors and officers by the Australian Securities and Investments
asbestos-related expectations about personal the timing injury and and amount death claims; of contributions to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian
expectations concerning indemnification obligations;
statements about product or environmental liabilities; and
availability statements of about mortgages economic and conditions, other financing, such mortgage as economic and or other housing interest recovery, rates, the housing levels affordability of new home and construction, supply, the levels unemployment of foreclosures levels, and changes home resales, or stability currency in housing exchange values, rates the
and consumer confidence.
Words are intended such as to identify “believe,” forward-looking “anticipate,” “plan,” statements “expect,” but are “intend,” not the “target,” exclusive “estimate,” means of “project,” identifying “predict,” such statements. “forecast,” “guideline,” Readers are “aim,” cautioned “will,” not “should,” to place “likely,” undue “continue” reliance on and these similar forward-looking expressions
statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements.
conditions, Forward-looking they, by statements their very are nature, based involve on the inherent company’s risks current and uncertainties, expectations, many estimates of which and assumptions are unforeseeable and because and beyond forward-looking the company’s statements control. address Such known future and results, unknown events risks, and
uncertainties projected or implied and other by these factors forward-looking may cause actual statements. results, These performance factors, or some other of achievements which are discussed to differ under materially “Risk Factors” from the in anticipated Section 3 results, of the Form performance 20-F filed or with achievements the US Securities expressed, and
Exchange James Hardie Commission subsidiaries; on 29 required June 2011 contributions include, but to are the not AICF, limited any to: shortfall all matters in the relating AICF to and or the arising effect out of of currency the prior manufacture exchange rate of movements products that on contained the amount asbestos recorded by current in the and company’s former
financial which the statements company operates; as an asbestos the consequences liability; governmental of product loan failures facility or to defects; the AICF; exposure compliance to environmental, with and changes asbestos in tax or laws other and legal treatments; proceedings; competition general economic and product and pricing market in conditions; the markets the in
supply customer’s and inability cost of to raw pay; materials; compliance possible with and increases changes in in competition environmental and and the potential health and that safety competitors laws; risks could of conducting copy the company’s business internationally; products; reliance compliance on a small with and number changes of customers; in laws and a
governance regulations; and the potential effect of tax the benefits; transfer currency of the company’s exchange corporate risks; dependence domicile on from customer The Netherlands preference to and Ireland the concentration to become an of the Irish company’s SE including customer employee base on relations, large format changes retail in customers, corporate
distributors facilities on terms and dealers; favorable dependence to the company, on residential or at all; and acquisition commercial or sale construction of businesses markets; and business the effect segments; of adverse changes changes in the in company’s climate or weather key management patterns; personnel; possible inability inherent to limitations renew credit on
internal company controls; cautions use you of that accounting the foregoing estimates; list and of factors all other is risks not exhaustive identified in and the that company’s other risks reports and filed uncertainties with Australian, may cause Irish and actual US securities results to agencies differ materially and exchanges from those (as in appropriate) forward-looking . The
statements. Forward-looking statements speak only as of the date they are made and are statements of the company’s current expectations concerning future results, events and conditions.
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AGENDA
Channel Strategy Review
Channel Objectives
Distribution Review & Approach
Dealer Approach
CHANNEL STRATEGY REVIEW
We are reviewing and adjusting (where necessary) our channel strategy.
Goal: greater alignment with our four channel objectives and greater consistency
Why is Hardie Revisiting its Channel Strategy?
Ensure our channel approach fully enables JH and our channel partners to
provide full market access, lowest delivered cost, value added services and affordability.
Improve consistency of approach toward channel partners in North America
What Are the Main Components of Our Channel Strategy Review?
Refine our distributor strategy
Best available partners by region
Programs & incentives that support the plan
Refine our dealer strategy
Further alignment with segment & product leadership strategies
Increased communication, planning, training and coordination
Improved implementation efficiencies
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CHANNEL STRATEGY OBJECTIVES
Four core goals: access, low delivered cost, value-add services and affordability.
These four objectives are how the channel partners help JH to achieve market share growth
Channel Objectives That Support Market Share Growth
Market Share Growth
Full Market
Access
Enable Hardie to
sell its full range
(including trim &
soffit, ColorPlus,
Artisan, etc.)
Local stocking
Reasonable
margins on
“specialty” items
Job packs
Lowest Cost Value Chain
Bring savings to
Hardie, the channel and customer by optimizing our value chain
Deliver product via the lowest cost possible on every delivery
Value-Added
Services
Enable ColorPlus
(and Hardie more
generally) by
providing market
valued services
Short & consistent
lead times
Accurate order
fulfillment
Job Site Delivery
Post-sales service
JH
Affordability
to the Market
Make Hardie
competitive vs. other
claddings (e.g., vinyl)
by getting it to the
end customer as cost
effectively as possible
Channel should
make a fair return
on the services it
provides
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CHANNEL STRATEGY – DISTRIBUTION
Driving toward a consistent distribution strategy
Each strategy component shaped by the four core objectives
Distribution Strategy
Primary sales responsibility with James Hardie coordinated with Distribution Partners Dual distribution in all markets
Pick best of breed in each region
Pay for specific function and/or performance
Hold James Hardie & Distribution Partners accountable for joint planning, coordination & performance Inventory management Value based pricing Systems integration
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STARTS DENSITY
POPULATION DENSITY
SUMMARY
Mapped out U.S. based on starts and population
Pure Non-Metro or Metro exception vs. the rule
Base case Distribution Model is mature Metro with
supplemental Non-Metro component for added
function(s)
Increasing James Hardie sales involvement with dealers
coordinated and complimentary with Distribution efforts
Dealer Approach
DEALER APPROACH
Continue to drive primary demand with builder,
contractor and owners
Educate, train and go to market with dealer partners in
a planned, complimentary and coordinated manner
Cost effectively deliver differentiated product, systems
and services to the marketplace
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FUTURE STATE VALUE CHAIN – JAMES HARDIE INFRASTRUCTURE
Target Customer
Builder Contractor Serious DIY BIY
Order Product
12
STATEGY EXECUTION ROADMAP – NEXT FIVE YEARS
Timeline 0 – 3 Years 3 – 5 Years
Easy to do Business with – Build the Infrastructure –Objective “Simplify” “Connect”
Deliverables
• Customer Service improvement
• Online Order Entry platform
• Channel Management team
• Job Pack capability
• Guided Selling (Boxes)
• Estimation Tool
• Visualizer 2.0
• Partner Training (portal)
• R&R Contractor integration
• Builder integration
• Dealer/Distributor integration
• Coordinated marketing (social
media, channel support,
traditional, etc)
• Variable pricing
13
SUMMARY
Channel, both Distribution & Dealers, being viewed and treated
as important strategic partners
Strategically important to market share growth; provides full
market access, low-cost, value-add services and affordability as
core objectives
Increasing sales resources and infrastructure to support the
channel strategy
ORGANIZATION – CHANNEL FOCUS
Building a channel focused sales organization
Organization will work with channel partners to develop and
implement strategic growth plans
Hardie, channel partners and marketplace will get market
access, low-cost value chain, value-add services and
affordability
Questions and Answers
Product North Strategy Sean Gadd
DISCLAIMER
SEC, This Management on Forms 20-F Presentation and 6-K, in contains its annual forward-looking reports to shareholders, statements. James in offering Hardie circulars, may from invitation time to memoranda time make forward-looking and prospectuses, statements in media in releases its periodic and reports other written filed with materials or furnished and in to oral the
are statements not historical made facts by the are company’s forward-looking officers, statements directors or and employees such forward-looking to analysts, institutional statements investors, are statements existing made and potential pursuant lenders, to the Safe representatives Harbor Provisions of the media of the and Private others. Securities Statements Litigation that
Reform Act of 1995. Examples of forward-looking statements include:
statements about the company’s future performance;
projections of the company’s results of operations or financial condition;
statements regarding the company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or our products;
expectations concerning the costs associated with the suspension or closure of operations at any of the company’s plants and future plans with respect to any such plants;
expectations that the company’s credit facilities will be extended or renewed;
expectations concerning dividend payments and share buy-back;
statements concerning the company’s corporate and tax domiciles and potential changes to them, including potential tax charges;
statements regarding tax liabilities and related audits, reviews and proceedings;
statements Commission as (ASIC); to the possible consequences of proceedings brought against the company and certain of its former directors and officers by the Australian Securities and Investments
asbestos-related expectations about personal the timing injury and and amount death claims; of contributions to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian
expectations concerning indemnification obligations;
statements about product or environmental liabilities; and
availability statements of about mortgages economic and conditions, other financing, such mortgage as economic and or other housing interest recovery, rates, the housing levels affordability of new home and construction, supply, the levels unemployment of foreclosures levels, and changes home resales, or stability currency in housing exchange values, rates the
and consumer confidence.
Words are intended such as to identify “believe,” forward-looking “anticipate,” “plan,” statements “expect,” but are “intend,” not the “target,” exclusive “estimate,” means of “project,” identifying “predict,” such statements. “forecast,” “guideline,” Readers are “aim,” cautioned “will,” not “should,” to place “likely,” undue “continue” reliance on and these similar forward-looking expressions
statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements.
conditions, Forward-looking they, statements by their very are nature, based involve on the inherent company’s risks current and uncertainties, expectations, many estimates of which and assumptions are unforeseeable and because and beyond forward-looking the company’s statements control. address Such known future and results, unknown events risks, and
uncertainties projected or implied and other by these factors forward-looking may cause actual statements. results, These performance factors, or some other of achievements which are discussed to differ under materially “Risk Factors” from the in anticipated Section 3 results, of the Form performance 20-F filed or with achievements the US Securities expressed, and
James Exchange Hardie Commission subsidiaries; on 29 required June 2011 contributions include, but to are the not AICF, limited any to: shortfall all matters in the relating AICF to and or the arising effect out of of currency the prior manufacture exchange rate of movements products that on contained the amount asbestos recorded by current in the and company’s former
financial which the statements company operates; as an asbestos the consequences liability; governmental of product loan failures facility or to defects; the AICF; exposure compliance to environmental, with and changes asbestos in tax or laws other and legal treatments; proceedings; competition general economic and product and pricing market in conditions; the markets the in
supply customer’s and inability cost of to raw pay; materials; compliance possible with and increases changes in in competition environmental and and the potential health and that safety competitors laws; risks could of conducting copy the company’s business internationally; products; reliance compliance on a small with and number changes of customers; in laws and a
governance regulations; and the potential effect of tax the benefits; transfer currency of the company’s exchange corporate risks; dependence domicile on from customer The Netherlands preference to and Ireland the concentration to become an of the Irish company’s SE including customer employee base on relations, large format changes retail in customers, corporate
facilities distributors on terms and dealers; favorable dependence to the company, on residential or at all; and acquisition commercial or sale construction of businesses markets; and business the effect segments; of adverse changes changes in the in company’s climate or weather key management patterns; personnel; possible inability inherent to limitations renew credit on
company internal controls; cautions use you of that accounting the foregoing estimates; list and of factors all other is risks not exhaustive identified in and the that company’s other risks reports and filed uncertainties with Australian, may cause Irish and actual US securities results to agencies differ materially and exchanges from those (as in appropriate) forward-looking . The
statements. Forward-looking statements speak only as of the date they are made and are statements of the company’s current expectations concerning future results, events and conditions.
AGENDA
What is the 3-product strategy
Why the 3-product strategy is important
Market opportunity
Market approach
Results
Go forward
WHAT IS THE 3 PRODUCT STRATEGY
As the leader in Fiber Cement, with our product leadership position and
advances in technology, we position James Hardie as the superior exterior
solution for cladding to builders, contractor and developers
HZ5 markets in the North and Canada
Delivering on our brand promise
Durability
Low maintenance
Design
Through the benefits of a Complete James Hardie ColorPlus Exterior to
the marketplace
HZ5 HardiePlank™
HardieTrim™ NT3
New HardieShingle™
All with the superior ColorPlus paint finish
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PRODUCTS – HARDIEPLANK HZ5 LAP SIDING WITH IMPROVED DRIP EDGE |
Superior moisture shedding
Clean lines
More durable edge
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PRODUCTS – HARDIETRIM NT3 BOARDS |
Concealed fasteners
virtually eliminates touchup
speeds up installation
12’ Lengths (5/4” and 4/4”)
reduces seams
reduces waste
Back groove
reduces weight
increases strength
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PRODUCTS – NEW HARDIESHINGLE® SIDING |
Authentic wood shingle appearance New tab dimensions 5 different widths
Reduces waste
Improved pattern variation 2 different panel types
New texture
More authentic look
Available ColorPlus individual shingles
COMPLETE JAMES HARDIE COLORPLUS EXTERIOR
Complete range of products with ColorPlus® Technology. Low maintenance Same maintenance cycle Single source limited warranty protection
WHY THE 3 PRODUCT STRATEGY IS IMPORTANT
Delivers on James Hardie’s brand promise, creating more value
along the value chain
Fortifies the ColorPlus™ value proposition – removes the need
for the painter at the site and delivers a superior finish
Re-invigorates our HZ5 messaging to the entire supply chain
Builds competitive advantage – complete exterior versus siding
Increases average selling price
Increases revenue and margin dollars per home
NORTHERN MARKET OPPORTUNITY
Large opportunity
300 million sqft between shingle and trim
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billion sqft of siding |
Trim and shingle penetration sold through the value of color and full wrap in all segments
COMPETITION IN THE NORTH
STRATEGY – MARKET APPROACH
Approach, dependent on market dynamics
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Ps |
Product
ColorPlus Complete Exterior:
Place
Delivering positioning through channel
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step process: |
1. Dealer stocking / accepting of supply chain
2. Developing dealer relationships
3. Educating contractors with the dealer
4. Converting contractors with dealers to full wrap ColorPlus exterior
Promotion
• HZ5 messaging
• Product knowledge and education
• Dealer setups
• Dealer rep ride-alongs
• Contractor aggregation events
• Installation trainings
Price
• Value pricing
EXECUTION AND RESULTS TO DATE
Northern HZ5 Markets and Canada
Primary focus on large metro markets
DC/Baltimore
Philadelphia
New England
Minneapolis
Kansas City
Began coordinated launch in FY12
NORTHERN MARKETS – RESULTS
GO FORWARD
Continue our product development strategy
Deliver our brand promise to all segments of the market and all
price bands
Continue to further develop our range of products
Creating value all along the value chain
Questions and Answers
Repair & Remodel Segment David Donofrio
DISCLAIMER
SEC, This Management on Forms 20-F Presentation and 6-K, in contains its annual forward-looking reports to shareholders, statements. James in offering Hardie circulars, may from invitation time to memoranda time make forward-looking and prospectuses, statements in media in releases its periodic and reports other written filed with materials or furnished and in to oral the
are statements not historical made facts by the are company’s forward-looking officers, statements directors or and employees such forward-looking to analysts, institutional statements investors, are statements existing made and potential pursuant lenders, to the Safe representatives Harbor Provisions of the media of the and Private others. Securities Statements Litigation that
Reform Act of 1995. Examples of forward-looking statements include:
statements about the company’s future performance;
projections of the company’s results of operations or financial condition;
statements regarding the company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or our products;
expectations concerning the costs associated with the suspension or closure of operations at any of the company’s plants and future plans with respect to any such plants;
expectations that the company’s credit facilities will be extended or renewed;
expectations concerning dividend payments and share buy-back;
statements concerning the company’s corporate and tax domiciles and potential changes to them, including potential tax charges;
statements regarding tax liabilities and related audits, reviews and proceedings;
statements Commission as (ASIC); to the possible consequences of proceedings brought against the company and certain of its former directors and officers by the Australian Securities and Investments
asbestos-related expectations about personal the timing injury and and amount death claims; of contributions to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian
expectations concerning indemnification obligations;
statements about product or environmental liabilities; and
availability statements of about mortgages economic and conditions, other financing, such mortgage as economic and or other housing interest recovery, rates, the housing levels affordability of new home and construction, supply, the levels unemployment of foreclosures levels, and changes home resales, or stability currency in housing exchange values, rates the
and consumer confidence.
Words are intended such as to identify “believe,” forward-looking “anticipate,” “plan,” statements “expect,” but are “intend,” not the “target,” exclusive “estimate,” means of “project,” identifying “predict,” such statements. “forecast,” “guideline,” Readers are “aim,” cautioned “will,” not “should,” to place “likely,” undue “continue” reliance on and these similar forward-looking expressions
statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements.
conditions, Forward-looking they, statements by their very are nature, based involve on the inherent company’s risks current and uncertainties, expectations, many estimates of which and assumptions are unforeseeable and because and beyond forward-looking the company’s statements control. address Such known future and results, unknown events risks, and
uncertainties projected or implied and other by these factors forward-looking may cause actual statements. results, These performance factors, or some other of achievements which are discussed to differ under materially “Risk Factors” from the in anticipated Section 3 results, of the Form performance 20-F filed or with achievements the US Securities expressed, and
James Exchange Hardie Commission subsidiaries; on 29 required June 2011 contributions include, but to are the not AICF, limited any to: shortfall all matters in the relating AICF to and or the arising effect out of of currency the prior manufacture exchange rate of movements products that on contained the amount asbestos recorded by current in the and company’s former
financial which the statements company operates; as an asbestos the consequences liability; governmental of product loan failures facility or to defects; the AICF; exposure compliance to environmental, with and changes asbestos in tax or laws other and legal treatments; proceedings; competition general economic and product and pricing market in conditions; the markets the in
supply customer’s and inability cost of to raw pay; materials; compliance possible with and increases changes in in competition environmental and and the potential health and that safety competitors laws; risks could of conducting copy the company’s business internationally; products; reliance compliance on a small with and number changes of customers; in laws and a
governance regulations; and the potential effect of tax the benefits; transfer currency of the company’s exchange corporate risks; dependence domicile on from customer The Netherlands preference to and Ireland the concentration to become an of the Irish company’s SE including customer employee base on relations, large format changes retail in customers, corporate
facilities distributors on terms and dealers; favorable dependence to the company, on residential or at all; and acquisition commercial or sale construction of businesses markets; and business the effect segments; of adverse changes changes in the in company’s climate or weather key management patterns; personnel; possible inability inherent to limitations renew credit on
company internal controls; cautions use you of that accounting the foregoing estimates; list and of factors all other is risks not exhaustive identified in and the that company’s other risks reports and filed uncertainties with Australian, may cause Irish and actual US securities results to agencies differ materially and exchanges from those (as in appropriate) forward-looking . The
statements. Forward-looking statements speak only as of the date they are made and are statements of the company’s current expectations concerning future results, events and conditions.
OVERVIEW
Market/Strategy Review
James Hardie R&R Execution Update
Summary and Go Forward
Questions and Answers
Repair & Remodel Market Overview
R&R OPPORTUNITY CONTINUES TO GROW VS NEW CONSTRUCTION
R&R SEGMENT STRATEGY
Business Strategy – Switch the preference from vinyl to fiber cement by directly communicating the benefits and affordability of James Hardie to the consumer
2/3 of Americans can afford James Hardie when presented with an affordable option
Most Americans will choose fiber cement over vinyl when presented with an affordable choice
James Hardie presented as the affordable option in all segments
R&R STRATEGIC OBJECTIVES
Objectives
Get into home via education, contractor or both
PDG ( Market Share ~ 35%)
Category Share-90%
Shift to Full Wrap- ColorPlus, Trim
Outcomes/Challenges
James Hardie can impact seller and buyer behavior
ColorPlus and trim attachment rates lead business
Category Share is approx. 90%+
Market fragmentation
Early focus on scale contractors
R&R SEGMENT STRATEGY, OBJECTIVES AND INITIATIVES
Homeowner
Contractor
James Hardie influences the decision in the home on both the Buyer (homeowner) side and the Seller (contractor) side
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CONTRACTOR LANDSCAPE
Breakdown by Sales Revenue $ 10 mm + $ 2.0 – $9.9 mm $ 1.0 – $1.9 mm $750K– $999K $500K– $749K
$250K– $499K
> $250K
Top 24% of contractors:
• James Hardie primarily targets the Specialty Contractor while expanding to include influential Full Line Contractors
• James Hardie reaching out to top 15%+ of Specialty Contractors via Website Contractor Program
• Full Line Contractors influence markets with tear down and rebuilds
Bottom 76% of contractors:
• Fragmentation will be on-going challenge
• James Hardie will reach balance of the market with Aggregation Events and the Associate Contractor Program
Mean Contractor Rev: $1.04 mm Median Contractor Rev: $450K
James Hardie internal
JAMES HARDIE R&R PRODUCT TARGETS
Market Share with JH direct intervention
Top 3rd
rd
Middle 3
Bottom 3rd
Wood/Stone
Vinyl
Distinct Product Targets in the Expanded Middle
Artisan
ColorPlus Full Wrap
James Hardie Value
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Repair & Remodel Progress Update
R&R PROGRESS UPDATE
James Hardie Organization Creating the Standard Contractor Partnerships
James Hardie Siding Center Update
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R&R PROGRESS – JAMES HARDIE ORGANISATION
Continue to build an R&R competency inside our organization –
Segment Managers and a dedicated James Hardie Repair and Remodel sales force focusing on the top US market opportunities
Field sales focus continues to shift – additional James Hardie rep sale force with significant R&R responsibility throughout the business
Creation of R&R standard operating procedure to provide continuous training to drive internal competency around neighborhood targeting, contractor acquisition & contractor program adoption
All reps measured on % design, conversion targets, deliverable footage plans, contractor program adoption targets
CREATING THE STANDARD – NEIGHBOURHOOD TARGETING
Original Hot Mapping evolved into a more refined view of the markets
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DRIVING THE STANDARD Vinyl Hardie
Well Established
Battleground
Vinyl Neighborhood
DOWN TO THE STREET
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STREET LEVEL TARGETING
Yard Signage
Canvassing (before & after)
Direct mail in targeted neighborhoods
Door Hangers
Letter & pictures to HOA (before, during, and after on progress)
Neighborhood “Open House” event
Referrals
Testimonial letter to HOA from homeowners
HOA = Home Owners Association
STREET LEVEL TARGETING – CONTINUED
Neighborhood Events
Community Events
Open Houses
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JAMES HARDIE CONTRACTOR PARTNERSHIP PROGRAMS
Our Objective is to develop a productive and mutually beneficial partnership with Contractors and Remodelers who want to build a better business and are looking to create a competitive advantage in the marketplace selling James Hardie® Siding.
Provide access to the latest job-site safety and installation best practice training, support in-home sales, as well as marketing and lead generation efforts, and help our partners track and measure their success along the way.
WINWITHHARDIE.COM
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WINWITHHARDIE.COM
Website Demo
WHY JAMES HARDIE?
• Endorsement on James Hardie’s website
• Preferred Remodeler logo & certificate
• Direct consumer leads via Request a Quote page
• Customized sales, marketing, & lead generation support
• Guild Quality customer satisfaction surveying (3rd Party)
• Personalized account on salesforce.com lead management website
• Regular training opportunities on installation best practices, job-site safety, lead generation, and in-home sales.
• Access to sales, marketing, and lead generating tools to give your business a competitive edge.
• Measurement tools to track your progress along the way.
• Membership in the HardieRewards™ Program*
• Samples & literature support
• Installation training via events
*Participation in the HardieRewards™ Program is limited to Associate Contractors only
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WHY JAMES HARDIE? BUSINESS GROWTH WEBINAR SERIES
R&R PROGRESS – JAMES HARDIE SIDING CENTER
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years into our learning experience in Denver |
Learn and understand the repair and remodel segment, how to generate leads, target specific areas and price points as well as understand the buying behaviors of our customers
Build credibility with Professional Contractors across US as a reside expert
Learning how to sell up and sell down
Closed & transitioned business to Hardie Preferred Contractors September 2011
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R&R PROGRESS ISSUES AND CHALLENGES
Continue to build organizational competency
Emphasis on target acquisition and neighborhood segmentation Grow Preferred Remodeler geographic presence Preferred Remodelers as an extension of JH in the home
Create a bench of Preferred contractors thru Associate Contractor Program (ACP’s)
R&R PROGRESS ISSUES AND CHALLENGES – CONTINUED
Grow & Leverage “Associate” Program
Ensure “benefits and affordability” message is carried into the home by Preferreds (boat) and Associates (wake)
Leverage successful James Hardie positions with Neighborhood Events
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Repair & Remodel Summary and Go Forward
JAMES HARDIE R&R SEGMENT SUMMARY AND GO FORWARD
Original assumptions are valid – JH can and is having an impact in R&R; both the homeowner and contractor are positively impacted when JH is presented as an affordable option
Organizational Shift – Dedicated R&R presence in top US opportunity markets – additional rep force with significant R&R responsibility throughout the organization
Full Program and Package – Preferred Remodeler Program has robust offering; continue to focus and grow “Associate Contractor” program and drive contractor engagement and involvement
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JAMES HARDIE R&R SEGMENT SUMMARY AND GO FORWARD
Continue to convert the large middle market with Colorplus Full Wrap offering
Drive into the upper and lower markets – proper product targeting and early, direct Hardie sales involvement
Benefits and affordability message in the home continue to be key
Scale and speed continue to challenge
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Questions and Answers
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Non-Metro Segment David Donofrio
DISCLAIMER
SEC, This Management on Forms 20-F Presentation and 6-K, in contains its annual forward-looking reports to shareholders, statements. James in offering Hardie circulars, may from invitation time to memoranda time make forward-looking and prospectuses, statements in media in releases its periodic and reports other written filed with materials or furnished and in to oral the are statements not historical made facts by the are company’s forward-looking officers, statements directors or and employees such forward-looking to analysts, institutional statements investors, are statements existing made and potential pursuant lenders, to the Safe representatives Harbor Provisions of the media of the and Private others. Securities Statements Litigation that Reform Act of 1995. Examples of forward-looking statements include:
statements about the company’s future performance;
projections of the company’s results of operations or financial condition;
statements regarding the company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or our products;
expectations concerning the costs associated with the suspension or closure of operations at any of the company’s plants and future plans with respect to any such plants;
expectations that the company’s credit facilities will be extended or renewed;
expectations concerning dividend payments and share buy-back;
statements concerning the company’s corporate and tax domiciles and potential changes to them, including potential tax charges;
statements regarding tax liabilities and related audits, reviews and proceedings;
statements Commission as (ASIC); to the possible consequences of proceedings brought against the company and certain of its former directors and officers by the Australian Securities and Investments asbestos-related expectations about personal the timing injury and and amount death claims; of contributions to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian
expectations concerning indemnification obligations;
statements about product or environmental liabilities; and availability
statements of about mortgages economic and conditions, other financing, such mortgage as economic and or other housing interest recovery, rates, the housing levels affordability of new home and construction, supply, the levels unemployment of foreclosures levels, and changes home resales, or stability currency in housing exchange values, rates the and consumer confidence.
Words are intended such as to identify “believe,” forward-looking “anticipate,” “plan,” statements “expect,” but are “intend,” not the “target,” exclusive “estimate,” means of “project,” identifying “predict,” such statements. “forecast,” “guideline,” Readers are “aim,” cautioned “will,” not “should,” to place “likely,” undue “continue” reliance on and these similar forward-looking expressions statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements.
Forward-looking conditions, they, statements by their very are nature, based involve on the inherent company’s risks current and uncertainties, expectations, many estimates of which and assumptions are unforeseeable and because and beyond forward-looking the company’s statements control. address Such known future and results, unknown events risks, and uncertainties projected or implied and other by these factors forward-looking may cause actual statements. results, These performance factors, or some other of achievements which are discussed to differ under materially “Risk Factors” from the in anticipated Section 3 results, of the Form performance 20-F filed or with achievements the US Securities expressed, and Exchange James Hardie Commission subsidiaries; on 29 required June 2011 contributions include, but to are the not AICF, limited any to: shortfall all matters in the relating AICF to and or the arising effect out of of currency the prior manufacture exchange rate of movements products that on contained the amount asbestos recorded by current in the and company’s former financial which the statements company operates; as an asbestos the consequences liability; governmental of product loan failures facility or to defects; the AICF; exposure compliance to environmental, with and changes asbestos in tax or laws other and legal treatments; proceedings; competition general economic and product and pricing market in conditions; the markets the in supply customer’s and inability cost of to raw pay; materials; compliance possible with and increases changes in in competition environmental and and the potential health and that safety competitors laws; risks could of conducting copy the company’s business internationally; products; reliance compliance on a small with and number changes of customers; in laws and a governance regulations; and the potential effect of tax the benefits; transfer currency of the company’s exchange corporate risks; dependence domicile on from customer The Netherlands preference to and Ireland the concentration to become an of the Irish company’s SE including customer employee base on relations, large format changes retail in customers, corporate distributors facilities on terms and dealers; favorable dependence to the company, on residential or at all; and acquisition commercial or sale construction of businesses markets; and business the effect segments; of adverse changes changes in the in company’s climate or weather key management patterns; personnel; possible inability inherent to limitations renew credit on internal company controls; cautions use you of that accounting the foregoing estimates; list and of factors all other is risks not exhaustive identified in and the that company’s other risks reports and filed uncertainties with Australian, may cause Irish and actual US securities results to agencies differ materially and exchanges from those (as in appropriate) forward-looking . The statements. Forward-looking statements speak only as of the date they are made and are statements of the company’s current expectations concerning future results, events and conditions.
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AGENDA
Why Non-Metro Segment Focus Market Execution Mid-South Summary/Go Forward Q&A
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NON-METRO VS METRO MAP – ORIGINAL ASSUMPTIONS
Metro
Priority Non-Metro (45)
Secondary Non-Metro (low opportunity)
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STARTS DENSITY Source: Dodge 8/11 & NAHB Builder and Consumer Practice Reports ‘09 (8/10)
SF CONSTRUCTION PROMINENT IN NON-METRO
Type SF (%) MF (%) Mobile Average % of home (%) Home Size Housing (sf) cost as a % of income Metro 59% 37% 4% 2,443 22% Non-Metro 78% 7% 15% 2,091 18%
Source: US Census Bureau, 2008 & 2010 Characteristics of New Homes Survey
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JAMES HARDIE IS UNDERPENETRATED IN NON-METRO
Vinyl & Wood 75% Non-Metro Primary Wall Exterior
Other Fiber Cement Vinyl Stucco Wood Brick
Source: US Census Bureau, 2010 Characteristics of New Homes Survey
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STATEGIC OBJECTIVE AND GAME PLAN
Strategic Objective
Grow what it fiber is in cement their reference penetration metro in market. non-metro markets to be equal to
Game Plan
construction Build product and awareness R&R segments with home through owners channel for single partners family new Align development distributors activities and dealers in non-metro to support market maximize Use James product Hardie’s availability scale advantage and affordability in manufacturing to non-metro and logistics to consumers
Increase James Hardie Sales rep coverage in non-metro markets
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NON-METRO STRATEGIC OBJECTIVE
Objectives
Provide the consumer 100% market access to full JH product offering
Align channel to support and drive market development activities
PDG growth to match reference metro market
Category share 90%
Outcomes/Challenges
Fundamentally changed distribution and logistics in non-metro markets
Full line product availability
Identified & targeted non-metro dealer universe
Competitive pressure in non-metros
Transition from dealer alignment to market development slow 9
Non-Metro Market Execution Mid-South
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NON-METRO EXECUTION
Pilot Program – 2 Regions
Mid-South
Heavy primed Hardie markets (HZ10) Fragmented dealer base Fragmented builder base Competitive pressure (competitive fiber cement) Small dealer alignment gap Large geography with lots of smaller cities rather than large metros James Hardie differentiated products come with a price premium and service delays Difficult for James Hardie value proposition to get to consumer
Mid-West
Color / Primed Split Markets (HZ5) Fragmented dealer base Fragmented builder base Competitive pressure (wood & competitive fiber cement) Small dealer alignment gap Large geography with lots of smaller cities rather than large metros James Hardie differentiated products come with a price premium and service delays Difficult for James Hardie value proposition to get to consumer
MID-SOUTH EXECUTION
Strategic Initiatives
Grow share through dealer & builder conversions
Fundamentally change our distribution model and realign our distribution network to enable JH growth initiatives in fragmented builder and dealer markets
100% access of full James Hardie product line delivered in an acceptable timeframe, in job pack quantities at an affordable price
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MID-SOUTH NON-METRO PRODUCT/SEGMENT STRATEGY
Full Line access to James Hardie family of products ColorPlus available in job pack quantities Cemplank available for the cost conscious builder Prevail available for the multifamily segment
Single Family Single Family
New Repair & Retail Multi Family Construction Remodel
MID-SOUTH EXECUTION—PLACE
Fundamentally Redesign our Supply Channel
Regional Distribution Model
Dedicated distribution for specific geographic region Distributor advantaged to service dedicated geography VMI / Color job pack model (full line availability)
Dealer Servicing and Training Agreement
Dealers identified and ranked in all regions (Loyal / Dual / Competitive) Agreed service area and frequency Training & aggregation event schedules
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Way Communication Structure |
Market planning sessions – agreed servicing Growth targets by customer / attachment / color Quarterly plan reviews and status updates Joint call planning and market activities
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MID-SOUTH EXECUTION – DISTRIBUTION ZONES
MID-SOUTH PROMOTION AND PRICE
We have expanded James Hardies direct sales presence as well as James Hardie installation support in the Mid-South
James Hardie will take direct sales responsibilities to dealers of scale and activities to drive market development with those partners
James Hardie and our regional distribution partner will service the fragmented “tail” of dealers throughout the Non-Metro market
100% product availability to dealers with who primarily promote James Hardie products
Job packs serviced market wide at a negotiated service rate, Cemplank to match and follow commodity fiber cement
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MID-SOUTH EXECUTION SUMMARY
Hardie Sales Model Executed
Increased Sales and Install presence as well as Sales Manager
Currently dealer focused for alignment / transition to market development Standard operating procedure being developed for rep effectiveness
Distribution Model Executed
Partners in place / VMI and color pack capability in place
Dealer Universe has been identified
Identified / ranked and targeted dealer opportunities throughout the Mid-South – began to convert dealers to “Full Line”
Multi-Family Model Executed
Full product line including Prevail
Non-Metro Segment Summary and Go Forward
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SUMMARY – GO FORWARDS
The non-metro markets remain a growth opportunity for James Hardie
Better executed Mid-South pilot, continue dealer game plan and transition to market development
Re-focus on Mid-West restructure, resourcing ramp, new management in place
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Questions and Answers
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Brand Positioning Rob Gilfert
DISCLAIMER
SEC, This Management on Forms 20-F Presentation and 6-K, in contains its annual forward-looking reports to shareholders, statements. in James offering Hardie circulars, may invitation from time memoranda to time make and forward-looking prospectuses, statements in media releases in its periodic and other reports written filed materials with or furnished and in oral to the are statements not historical made facts by the are company’s forward-looking officers, statements directors or and employees such forward-looking to analysts, statements institutional are investors, statements existing made and pursuant potential to lenders, the Safe representatives Harbor Provisions of the of media the Private and others. Securities Statements Litigation that Reform Act of 1995. Examples of forward-looking statements include:
statements about the company’s future performance;
projections of the company’s results of operations or financial condition;
statements regarding the company’s plans, objectives or goals, including those relating to strategies, initiatives, competition, acquisitions, dispositions and/or our products; expectations concerning the costs associated with the suspension or closure of operations at any of the company’s plants and future plans with respect to any such plants; expectations that the company’s credit facilities will be extended or renewed; expectations concerning dividend payments and share buy-back; statements concerning the company’s corporate and tax domiciles and potential changes to them, including potential tax charges; statements regarding tax liabilities and related audits, reviews and proceedings;
Commission statements as (ASIC); to the possible consequences of proceedings brought against the company and certain of its former directors and officers by the Australian Securities and Investments asbestos-related expectations about personal the timing injury and and amount death of claims; contributions to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian expectations concerning indemnification obligations; statements about product or environmental liabilities; and availability statements of about mortgages economic and conditions, other financing, such as mortgage economic and or other housing interest recovery, rates, the housing levels affordability of new home and construction, supply, the unemployment levels of foreclosures levels, and changes home or resales, stability currency in housing exchange values, rates the and consumer confidence.
statements are intended and to identify all such forward-looking forward-looking statements statements but are are qualified not the in exclusive their entirety means by reference of identifying to the such following statements. cautionary Readers statements. are cautioned not to place undue reliance on these forward-looking conditions, Forward-looking they, by statements their very are nature, based involve on the inherent company’s risks current and uncertainties, expectations, many estimates of which and are assumptions unforeseeable and and because beyond forward-looking the company’s statements control. Such address known future and results, unknown events risks, and projected uncertainties or implied and other by these factors forward-looking may cause actual statements. results, performance These factors, or some other achievements of which are discussed to differ materially under “Risk from Factors” the anticipated in Section results, 3 of the performance Form 20-F filed or achievements with the US Securities expressed, and Exchange James Hardie Commission subsidiaries; on 29 required June 2011 contributions include, but to the are AICF, not limited any shortfall to: all matters in the AICF relating and to the or arising effect of out currency of the prior exchange manufacture rate movements of products on that the contained amount recorded asbestos in by the current company’s and former financial which the statements company operates; as an asbestos the consequences liability; governmental of product loan failures facility or defects; to the AICF; exposure compliance to environmental, with and changes asbestos in tax or other laws and legal treatments; proceedings; competition general economic and product and pricing market in conditions; the markets the in customer’s supply and inability cost of raw to pay; materials; compliance possible with increases and changes in competition in environmental and the and potential health that and competitors safety laws; could risks copy of conducting the company’s business products; internationally; reliance on compliance a small number with and of changes customers; in laws a and regulations; governance the and effect potential of the tax transfer benefits; of currency the company’s exchange corporate risks; dependence domicile from on The customer Netherlands preference to Ireland and to the become concentration an Irish of SE the including company’s employee customer relations, base on changes large format in corporate retail customers, facilities distributors on and terms dealers; favorable dependence to the company, on residential or at all; and acquisition commercial or sale construction of businesses markets; and the business effect segments; of adverse changes changes in in the climate company’s or weather key patterns; management possible personnel; inability inherent to renew limitations credit on internal company controls; cautions use you of that accounting the foregoing estimates; list of and factors all other is not risks exhaustive identified and in that the company’s other risks and reports uncertainties filed with Australian, may cause Irish actual and results US securities to differ materially agencies and from exchanges those in forward-looking (as appropriate) . The statements. Forward-looking statements speak only as of the date they are made and are statements of the company’s current expectations concerning future results, events and conditions.
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PRODUCT/SEGMENT STRATEGY
Achieving market growth requires us to continue to develop our product strategy to meet the needs of different customer segments
Single Family Single Family
Manufactured New Repair & Retail Multi Family Housing Construction Remodel
AGENDA
Win & defend category share with the price-
Cemplank conscious builder
HardiePlank Defend & grow our premium brand share Innovation with new differentiated products
Pilot program to communicate the value of
Made For Living a full-wrap James Hardie home
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Cemplank
CEMPLANK STRATEGY RESET
Objective: Win back and defend our category share with the price-conscious bottom ~ 1/3 of the market.
Core Strategy: Price Cemplank to the dealer at parity to commodity fiber cements and position as a component of a full line, single-vendor product solution.
Manage the risk of brand cannibalization by:
Selling only in select geographies
Pricing & distribution strategies
Product positioning
Continued innovation of our premium brand(s)
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CHOOSING CEMPLANK MARKETS
Where we sell and do not sell Cemplank is a function of several variables We are more likely to introduce Cemplank to markets that are/have:
More mature (high S-Curve)
Lower category share Dual-stocking channel
Consolidated channel
Lower product differentiation
CEMPLANK PRODUCT POSITIONING AND PROMOTION
We have re-positioned Cemplank as a “Builder Grade” product line designed for new construction starter homes.
Cemplank Product Attributes
Limited SKU range
Siding only, no accessories
Generic wood pattern
Limited warranty (relative to James Hardie)
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CEMPLANK PRICING AND DISTRIBUTION STRATEGIES
We have multiple pricing and distribution ‘design experiments’ in place, all aligned around achieving the following objectives:
Sell Cemplank to dealers who primarily sell James Hardie product
Match & follow ‘everyday’ commodity fiber cement pricing
Ensure James Hardie has visibility to who is buying Cemplank, how much (in relation to James Hardie brand), and at what price
CEMPLANK STRATEGY RESULTS
We measure the success of our Cemplank strategy by tracking dealer conversions & buying behaviors, and measuring the volume of siding sold into the channel.
Market A Market B
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HardiePlank Innovation
JAMES HARDIE INNOVATION PATH
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CUSTOM COLONIAL – TEXAS
In the fall of 2010 we launched a plank differentiation strategy, via a pilot project in Texas
Introduced ‘Custom Colonial’ – an upgrade of our existing Colonial product Nail line / branding Improved product shaping Improved pattern alignment
Eliminated the Cemplank Colonial product
Focus on product positioning Cemplank – Starter homes
Custom Colonial – Move-up homes & Repair/Remodel segment
HARDIEPLANK DESIGN COLLECTION
In October 2011 we will launch 4 differentiated plank profiles as a HardiePlank Design Collection into select low-differentiation markets where we are running our Cemplank strategy.
Our objective is to defend our premium brand share by continuing to move the market preference to differentiated design / superior technology products.
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NEXT GENERATION PLANK INNOVATION
In 2012 we will introduce step-change innovation across our entire HZ10 plank platform. Our objective is to provide clear differentiation in terms of both aesthetics and performance
We are currently evaluating innovation concepts around:
Product Design/Shaping Texture & Smoothness Installation Aids
Made For Living (Model Home Marketing)
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MADE FOR LIVING
“Made For Living” is a pilot program designed to educate the market on the value of a full-wrap James Hardie home by partnering with influential new home builders
Model Home Experience Real Estate Network Consumer Marketing
Home Buyer
MODEL HOME EXPERIENCE
In our Houston pilot, we have partnered with 3 key move-up home builders whose homes are 100% full-wrap premium JH brand products
Our brand message is now being communicated to homebuyers through a network of over 100 model homes:
Model home merchandising QR code/video technology Educated builder sales staff
Soffit Frieze Siding
Trim
Shingle
Fascia
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MODEL HOME EXPERIENCE
REAL ESTATE COMMUNITY
By educating and influencing the real estate community, we reach a broader audience with our message and drive traffic back to our partner builders.
Since inception we have communicated directly with over 2,000 Houston realtors through:
Direct sales/dedicated rep Online James Hardie education courses Email contact strategy Aggregation events
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SUMMARY
Achieving market growth requires us to continue to develop our product strategy to meet the needs of different customer segments.
Cemplank ‘Builder Grade’ for the price-conscious bottom 1/3 of the market
Continued innovation of our HardiePlank products to defend and grow our premium brand share
Made For Living – ‘full-wrap’ marketing to grow our share of the house
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