Presentation Slides - Singapore Technologies Engineering

ST Engineering
1Q2008
Results Briefing

1Q2008 Results
Steady Performance

Scope of Briefing
• Financial Highlights
• Business Review
– Sector Operations
– Singapore Airshow 2008
• Outlook
3

Financial Highlights
for the first quarter ended 31 March 2008
Turnover
EBIT
PBT
PATMI
8%
6%
6%
13%
Growth from all sectors,
except Marine
Steady operating
performance
Higher PBT in Aerospace &
Land Systems; lower PBT
in Electronics & Marine
Growth from all sectors,
except Marine
4

Financial Highlights
for the first quarter ended 31 March 2008
1Q2008 1Q2007 Change
Earnings Per Share 4.11¢ 3.69¢
Return on Sales 9.6% 9.2%
Return on Equity 7.1% 6.4%
5

Financial Highlights
for the first quarter ended 31 March 2008
• Commercial sales at 63% (FY2007 : 67%) or $826m
of turnover
• $9.19b order book; about $2.89b to be delivered in
next three quarters (end 2007 : $9.49b)
• $1.6b of cash and cash equivalents and amounts
under fund management (FY2007 : $1.5b)
6

Financial Highlights
for the first quarter ended 31 March 2008
$ m
1Q2008 1Q2007 Change
Turnover 1,315 1,220 8%
Investment, interest
and other income 19.5 15.6 25%
EBIT 139.8 131.7 6%
PBT 156.4 147.2 6%
PATMI 122.5 108.8 13%
7

Aerospace
Comparable First Quarter
8

Aerospace – Turnover
$456m
3%
$469m
• Turnover increased by 3%
or $13m to $469m
‣ More project milestone
completions and higher
material sales
1Q2007
1Q2008
9

Aerospace – PBT
4%
$82.6m
$79.3m
• PBT higher by 4% or $3.3m
to $82.6m
‣ Higher investment income
Partially offset by:
‣ Unfavourable sales mix (EMS)
‣ Higher interest expense and
lower contribution from
associated companies
1Q2007
1Q2008
10

Electronics
Steady Performance
in 1Q
Solutions at Singapore Airshow 2008
11

Electronics – Turnover
6%
$245m
$231m
• Turnover increased by 6% or
$14m to $245m
‣ Sales of new telematics systems
(CSG)
‣ Milestone completions of LTA’s
Circle Line project (LSG)
1Q2007
1Q2008
12

Electronics – PBT
$22.2m
(9%)
$20.1m
• PBT lower by 9% or $2.1m to
$20.1m
‣ Lower operating profit from
satellite communication product
sales (CSG)
‣ Lower income from associated
companies (SSG)
Partially offset by:
‣ Higher profits from higher turnover
and better margins in project
milestones completed (LSG)
1Q2007
1Q2008
13

Land Systems
Better performance
for 1Q2008

Land Systems – Turnover
22%
$364m
$299m
• Turnover increased by 22%
or $65m to $364m
‣ Higher Bionix II & other
project deliveries (Auto)
‣ Higher weapon and munitions
sales (M&W)
Partially offset by:
‣ Lower Bronco and specialty
vehicles sales (Auto)
1Q2007
1Q2008
15

Land Systems – PBT
34%
$32.9m
$24.5m
• PBT higher by 34% or $8.4m
to $32.9m
‣ Higher profits from higher
turnover and better product
mix (M&W)
Partially offset by:
‣ Poorer product mix and higher
operating expenses (Auto)
1Q2007
1Q2008
16

Marine
Shiprepair performance continues to be good
Launched 1 st RoRo “City of Hamburg”
Pipe Laying Vessel, “Castoro Otto”
Keel laid 2nd RoRo
17

Marine – Turnover
$197m
-%
$198m
• Turnover comparable at
$198m
‣ Increased Shiprepair activities
Offset by:
‣ Lower Shipbuilding activities in
the US operation
1Q2007
1Q2008
18

Marine – PBT
$19.3m
(10%)
$17.4m
• PBT lower by 10% or $1.9m
to $17.4m
‣ Lower other income
‣ Higher operating expenses
Partially offset by:
‣ Higher gross profit
1Q2007
1Q2008
19

ST Engineering
Steady Performance
20

Group Turnover by sector
$1,220m
8%
$95m
$1,315m
Higher
Higher
turnover
turnover
from
from
all
all
sectors
sectors
except
except
Marine
Marine
sector
sector
37
39
197
Marine -%
198
299
Land
Systems 22%
364
231
Elect 6%
245
456
Aero 3%
469
1Q2007
1Q2008
21

Profit Before Tax by sector
1Q2007
1Q2008
Land
Systems
(17%)
$24.5m
Marine
(13%)
$22.2m
$19.3m
Others
(1%)
$1.9m
Aero
(54%)
$79.3m
Land
Systems
(21%)
10%
34% 4%
$32.9m
Marine
(11%)
$17.4m
$20.1m
Others
(2%)
$3.4m
Aero
(53%)
$82.6m
Elect
(15%)
Elect
(13%)
9%
$147.2m
6%
$9.2m
$156.4m
Growth in Aerospace and Land Systems sectors, partially offset by
lower PBT in Electronics and Marine sectors
22

EBITDA / EBIT - Group
$ m 1Q2008 1Q2007 %
EBITDA 177.5 163.7 8
Depreciation & amortisation (37.7) (32.0) (18)
EBIT 139.8 131.7 6
Investment, interest and
other income 19.5 15.6 25
Financial expenses (11.4) (12.6) 10
Operating profit 147.9 134.7 10
Associated companies 8.5 12.5 (32)
Profit before tax 156.4 147.2 6
Steady
Steady
operating
operating
performance
performance
Income
Income
from
from
fund
fund
maturity
maturity
(Aero),
(Aero),
with
with
lower
lower
interest
interest
income
income
and
and
higher
higher
exchange
exchange
loss
loss
Lower
Lower
US$
US$
interest
interest
rate
rate
Lower
Lower
contribution
contribution
from
from
TOS
TOS
and
and
absence
absence
of
of
ECS
ECS
(divested
(divested
in
in
4Q07)
4Q07)
23

Investment Income
Maturity of a fund
Maturity of a fund
$ m
under
1Q2008 1Q2007 Change
under management
management
Aerospace 11.5 100% 0.1 23% NM
Land Systems - - 0.1 20% 100%
Marine - - 0.3 57% 100%
Group 11.5 100% 0.5 100% NM
24

Interest and Other Income
$ m 1Q2008 1Q2007 Change
Aerospace (0.3) (4%) 4.9 33% 106%
Electronics 0.9 11% 1.2 8% 27%
Land Systems 2.0 25% 1.7 11% 15%
Marine 3.5 44% 3.8 25% 8%
Others 1.9 24% 3.5 23% 46%
Higher
Higher
exchange
exchange
loss
loss
& absence
absence
of
of
a
a
gain
gain
on
on
disposal
disposal
of
of
PPE
PPE
Lower
Lower
interest
interest
income
income
Group 8.0 100% 15.1 100% 48%
Higher exchange loss and lower interest income
25

Income from Associated Co / JV
$ m 1Q2008 1Q2007 Change
Aerospace 7.8 91% 9.0 72% 14%
Electronics 0.1 2% 2.4 19% 93%
Land Systems 0.6 7% 1.1 9% 44%
Group 8.5 100% 12.5 100% 32%
Absence
Absence
of
of
contribution
contribution
from
from
ECS
ECS
(divested
(divested
in
in
4Q2007)
4Q2007)
26

PBT Margin by sector
1Q2008 1Q2007
% %
Lower
Aerospace 18
Lower
contribution
contribution
from associated 17
from associated
companies
companies
Electronics 8 10
Land Systems 9 8
Marine 9 10
Group 12 12
27

Profit After Tax & Minority Interests
$ m 1Q2008 1Q2007 Change
Aerospace 63.1 52% 60.9 56% 4%
Electronics 16.5 13% 15.9 15% 3%
Land Systems 27.7 23% 18.0 16% 54%
Marine 14.2 12% 14.1 13% -
Others 1.0 - (0.1) - NM
Group 122.5 100% 108.8 100% 13%
Growth from all sectors except Marine sector
28

Balance Sheet
$ m 31 Mar 2008 31 Dec 2007
Property, plant and equipment 1,027 1,015
Associated companies & joint ventures 245 268
Investments 35 41
Intangible assets 608 630
Investment properties 18 18
Long-term receivables 2 4
Finance lease receivables 1 1
Derivative financial instruments 1 3
Deferred tax assets 114 112
Non-current assets 2,051 2,092
Current assets 4,077 3,951
Total assets 6,128 6,043
Current liabilities 3,649 3,751
Non-current liabilities 597 513
Total liabilities 4,246 4,264
Share capital and reserves 1,730 1,632
Minority interests 152 147
Total equity and liabilities 6,128 6,043
Net Current Assets (1Q08 - $428m
Net Current Assets (1Q08 - $428m
vs FY07- $200m)
vs FY07- $200m)
‣ Increase in CCE
‣ Increase in CCE
‣ Decrease in creditors and
‣ Decrease in creditors and
accruals
accruals
Partially offset by:
Partially offset by:
‣ Increase in progress billings in
‣ Increase in progress billings in
excess of WIP
excess of WIP
Higher advance payments from
Higher advance payments from
customers
customers
29

Cash Flow Statement
$ m 1Q2008 1Q2007
Cash flow from/(used in) :
Operating activities 261 494
Investing activities (79) (54)
Financing activities (2) 18
Net increase in CCE 180 458
CCE at beginning of the year 1,283 1,141
Exchange difference (13) (3)
Good
Good
operating
operating
cashflow
cashflow
Cash
Cash
outflow
outflow
for
for
acquisition
acquisition
of
of
Telematics,
Telematics,
partially
partially
offset
offset
by
by
proceeds
proceeds
from
from
fund
fund
maturity
maturity
and
and
dividends
dividends
from
from
associated
associated
companies
companies
Lower
Lower
proceeds
proceeds
from
from
issue
issue
of
of
shares
shares
CCE at end of period 1,450 1,596
*CCE - Cash & Cash Equivalents
30

Scope of Briefing
• Financial Highlights
• Business Review
– Sector Operations
– Singapore Airshow 2008
• Outlook
31

Business Review – Aerospace Operations
• AMM
• SASCO completed 767BCF prototype,
aircraft redelivered to Boeing for flight test
• STA Engineering inducted first C-130
aircraft for upgrade
• Skybus Airlines announced bankruptcy in
April 2008
• PAE achieved Brazil and Mexico
certifications
767BCF
Aerial View: PAE
32

Business Review – Aerospace Operations
• CERO
• EMS
• Signed an eight-year MBH TM contract (US$60m) for 20 CFM56-3
engines with Comair Limited
• Signed a 10-year MSP with Flybe for up to 65 aircraft (US$160m)
• Awarded a 737NG Landing Gear contract from Middle East airline
• Awarded FAA Supplemental Type Certificate for FedEx 757 PTF
33

Business Review – Electronics Operations
• LSG
• Secured a 15-year maintenance contract worth
$52m from CAAS to provide maintenance of
Long Range Radar and Display System III
(LORADS III) Air Traffic Control System
• CSG
• Secured an Ethernet network project in
Middle East
• Launched DiskCrypt Mobile DCM200, the
World’s first USB 2.0 external drive enclosure
with smartcard protection at International CES
2008
• iDirect received 2008 Teleport Technology of
the Year Award from World Teleport
Association
LORADS III
iDirect’s Hub & Router
34

Business Review – Electronics Operations
• SSG
• Acquired 60% of Antycip Simulation Ltd,
a European industry leader in the
distribution and support of simulation
COTS tools
• Developed a Smart Scenario Generator to allow different
simulators and Artificial Intelligence engines to interact in a
common virtual environment
35

Business Review – Land Systems Operations
• Auto
• Delivered Bionix II, specialised truck bodies and trailers, road
construction and maintenance equipment, off-road dump trucks
and excavators
• M&W
• Delivered Pegasus, air defence guns and various munitions
products
• Announced the following:
‣ Supply of 120mm Super Rapid Advanced Mortar System
(SRAMS) to Middle Eastern customer
‣ 40mm munitions contract with UK MOD
120mm SRAMS
40mm Munitions
36

Business Review – Marine Operations
• Shipbuilding
Local
• Launched 1 st Roll-on and Roll-off (RoRo)
vessel
• Keel laid 2 nd RoRo vessel
US
• Secured a contract to build two platform
supply vessels
• Delivered 4 th of 10 Articulated Tug Barge
(ATB) units
Launched 1 st RoRo “City of Hamburg”
Keel laid 2nd RoRo
37

Business Review – Marine Operations
• Shiprepair
Local
• Secured contract for outfitting works for 2 seismic vessels
• Completed steelwork renewal for 2 dredgers and 2 tankers
Dredger, “Jan Steen”
38

Business Review – S’pore Airshow 2008
• New show, new approach
• Defensphere
‣ Showcases the Group’s integrated
defence capabilities
‣ A holistic concept which represents
all elements of an operational unit
• Total Aviation Support
‣ Features the Group’s wide range of
airframe, engine and component
maintenance, repair and overhaul
capabilities
‣ Offers the convenience of one stop
solutions, and flexibility of
customised programmes
39
39

Business Review – S’pore Airshow 2008
• Almost half a billion dollars worth of contracts announced
• Maintenance contract for air traffic system from CAAS
• Aircraft engine MBH TM contract with Comair
• Contract for outfitting seismic research vessel from Waveship AS
• 40mm contract from UK Ministry of Defence
• Middle Eastern SRAMS contract for mobile mortar system
• Component maintenance and management contract from Flybe
• Events during the show included:
• Signing of JV agreement with IBERIA
Maintenance
• Opening of new hangar in Seletar and a
new test cell facility in Paya Lebar
40
40

Scope of Briefing
• Financial Highlights
• Business Review
– Sector Operations
– Singapore Airshow 2008
• Outlook
41

Group Outlook for 1H2008
Barring unforeseen circumstances, the Group expects to
achieve a modestly higher turnover and PBT in 1H2008
compared to that of 1H2007.
• For Aerospace and Land Systems sectors, 1H2008
turnover and PBT are expected to be higher than that
of 1H2007
• For Electronics sector, 1H2008 turnover and PBT are
expected to be comparable to that of 1H2007
• For Marine sector, 1H2008 turnover and PBT are
expected to be lower than that of 1H2007
42

Outlook for 1H2008
Aerospace
• MAE to redeliver first FedEx 757 PTF
• SASCO to redeliver first 767BCF to ANA
• STATA to start second and third CPL courses and place current
students
Electronics
• Sales recognition from LTA’s Circle Line project
• Sales recognition from supply of telematics systems, sales of
satellite communication products and electro-optics equipment
• Sales recognition from the completion of milestones in a managed
services project and simulator projects
43

Outlook for 1H2008
Land Systems
• Continue contractual deliveries of Bionix II, Bronco, Pegasus,
munitions & weapon products and specialty vehicles
• Continue to pursue defence programmes and more specialty
vehicles sales
Marine
• Delivered 3 rd feeder container vessel “OEL Dubai” in April 2008
• Expect to launch the 5 th of 10 ATB units
• Expect to complete the conversion of a Floating Storage Off-loader
(FSO) to Floating Production Storage Off-loader (FPSO)
44

Group Outlook for FY2008
Barring unforeseen circumstances, the
Group expects to achieve a modestly higher
turnover and PBT in FY2008 compared to
that of FY2007.
45

President & CEO’s Message
“The Group reported 8% and 6% increase in turnover and profit before tax (PBT)
respectively in 1Q2008 compared to 1Q2007 on the back of improved PBT for the
Aerospace and Land Systems sectors, and lower PBT for the Electronics and
Marine sectors. Profit after tax and minority interests grew 13% for the quarter.
In February 2008, the Group participated in the Singapore Airshow 2008 and
announced a series of contracts worth a total of about $500m.
Despite the loss of the Airbus contract following Skybus' filing of Chapter 11
protection, the Group's order book remains healthy at $9.19b as at end of 1Q2008.
With the expected slowdown in the global economy and the challenges ahead, we
will continue to stay vigilant of events unfolding around us. Our priorities are to
strengthen our market and competitive positions and seize business opportunities
that emerge amidst the uncertain business environment.”
~ Tan Pheng Hock
46