Land Systems - Singapore Technologies Engineering

ST Kinetics’ performance, in light of THE
difficult market conditions, is testimony to its
strong capabilities and demand for its products
and services.
The Commercial Articulated Vehicle and
the Bronco All Terrain Tracked Carrier.
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operating financial review
LAND SYSTEMS SOLUTIONS THAT EXCEED
THE COMPETITION
As ST Engineering’s land systems arm, ST Kinetics
provides an integrated suite of state-of-the-art
solutions for the defence, homeland security and
commercial markets. Serving customers in over
30 countries worldwide, ST Kinetics’ capabilities
cover the entire value chain, including the design,
development, production, operation and through-life
support of specialised land systems equipment and
specialty vehicles.
Despite market uncertainties, 2008 saw
improvements in ST Kinetics’ performance, largely
due to defence export sales. Its defence business
continued to perform well during the year, securing
several significant orders, most noteworthy of which
was the £150m order for Bronco All Terrain Tracked
Carriers by the UK Ministry of Defence (MoD).
Other key contracts announced were the supply of
40mm ammunition to the UK MoD and the export of
the 120mm Super Rapid Advanced Mortar System
(SRAMS) to a Gulf States customer.
LeeBoy 9000 Wheeled Paver was launched at CONEXPO 2008.
Faced with challenging market conditions in the
US, the company’s US specialty vehicles business
weathered the impact and grew in market share
in some product segments. In China, its specialty
vehicles companies managed to strengthen
operations and profitability.
ST Kinetics’ performance, in light of the difficult
market conditions, is testimony to its strong
capabilities and demand for its products and services.
Each of its specialty vehicles companies grew more
efficient, flexible and robust. Together with the solid
showing of its defence businesses, ST Kinetics has
reinforced its position as the premier land systems
company in Southeast Asia.
Land Systems & Solutions
The company participated in various exhibitions
during the year, showcasing both its capabilities
and products. In February, it participated in India’s
DefExpo 2008, where it showcased its automatic
assault rifle SAR21 and Ultimax100 light machine
gun. In the same month, the company participated
in the Singapore Airshow 2008, displaying its
range of capabilities for integrated defence
solutions, such as the wheeled 8x8 armoured
vehicle Terrex and Total 40mm Solutions, and
launching its 40mm Low Velocity Air Bursting
Munitions System (LV ABMS). The Commercial
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Articulated Vehicle (CAV) for disaster relief
and the Hybrid Electric Tow Tractor HETT20
were also exhibited. The HETT20 incorporates
the latest hybrid electric technologies and is
part of ST Kinetics’ offering of green products
designed to reduce the emission of greenhouse
gases and increase fuel efficiency.
Later in June, the company showcased its
Bronco Heavy Maintenance Vehicle, SRAMS
on Spider Light Strike Vehicle, Total 40mm
Solutions, including the 40mm LV ABMS, and
Compact Personal Weapon (CPW) at Eurosatory
2008 in Paris, France.
ST Kinetics’ specialty
vehicles companies
have placed greater
emphasis on the
development of
higher margin
products, and
export sales.
In September, ST Kinetics’ joint venture company,
Advanced Technology Research Centre, and
Nanyang Technological University (NTU), officially
opened Southeast Asia’s first research and
development centre in cold spray technology.
Through the combined strengths of ST Kinetics
and NTU, this collaboration aims to use the Cold
Spray Research Centre to spin off niche industrial
applications; specifically, advanced coatings for
enhanced wear resistance, as well as bioactive
and anti-bacterial coatings for biomedical
applications.
Toward the end of the year, ST Kinetics
showcased its solutions at two shows in the
US. It displayed its full range of 40mm
ammunition and the Bronco at Modern
Day Marines in Virginia, and at the
Association of United States Army
Annual Meeting & Exposition in
Washington DC, in September and
October respectively.
The Bronco Heavy Maintenance
Vehicle generated much interest at
Eurosatory 2008.
ST Kinetics launched its 40mm Low Velocity Air Bursting Munitions System at
Singapore Airshow 2008.
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operating financial review
In October, ST Kinetics and Singapore Polytechnic
signed an MOU for collaboration on a new Solar
Energy Test-bedding Application Centre (SETAC)
to facilitate research and development in solar
applications, and the production of Dye Sensitised
Solar Cell (DSSC). DSSCs are new generation
solar cells that are more efficient and up to 60%
cheaper than those currently available.
ST Kinetics expects greater demand for its
Total 40mm Solutions. It will also continue to
pursue opportunities in local and foreign defence
markets for its range of products, as well as new
development and upgrade programmes. Increasing
global environmental awareness and pressures
to reduce fuel consumption are also expected
The ST Kinetics-NTU Cold Spray Research Centre opened in September is
Southeast Asia’s first R&D centre for such technology.
to give rise to a higher demand for electric and
hybrid electric vehicles and more efficient hydromechanical
transmissions, all of which ST Kinetics
offers as subsystems or integrated end products
to its customers.
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Total Support & Services
Singapore Airport Terminal Services Limited
(SATS), the leading provider of integrated ground
handling and airline catering services at Singapore
Changi Airport, became the first customer to use the
Hybrid Electric Tow Tractor HETT20 in January.
In June, ST Kinetics launched “STAR BLACK”
– an independent premium service centre that
delivers personalised, comprehensive automotive
services for high-end German cars from
marques like BMW and Mercedes Benz. This
complements the current one-stop automotive
services of STAR Automotive Centre.
These EXPORT
contracts attest
to the growing
confidence and
global recognition
of ST Kinetics’
defence products.
ST Kinetics expects more opportunities to provide
services such as integrated training, logistics and
life cycle cost management. The global economic
downturn would also reduce new acquisitions and
lead to increased demand for MRO services and
life extension programmes for existing components
and equipment.
Specialty Vehicles & Services
In March, ST Kinetics generated strong interest
for three new LeeBoy products and GJK’s mini
excavator at CONEXPO 2008 held in Las Vegas.
VT LeeBoy launched its new 9000 wheeled
Asphalt Paver, 705 Motor Grader and the upgraded
Maximizer III Distributor.
Later in May, the company set up VT Specialized
Vehicles, S.A. de C.V. (VT SVM) – a wholly-owned
subsidiary in Mexico – to sell VT SVC’s specialty
vehicles in Mexico and Latin America. Sales of
VT SVC kits in Latin America have enjoyed steady
growth over the last few years, and the company’s
presence in Mexico will enhance customer service
and facilitate expansion in the Latin American market.
At Bauma China 2008, held in Shanghai in
November, both GJK and BZK showcased their
range of products for the construction and mining
industries. Also exhibited at the show were a new
high mobility telehandler called Chang Jing 6, a
hydraulic excavator, articulated dump truck
ADT-30, CAV, and hybrid electric vehicle
components and solutions.
Besides growing organic sales, ST Kinetics’
specialty vehicles companies have placed
greater emphasis on the development of higher
margin products, and export sales. It has
expanded its market reach through establishing
new dealers in Australia, Indonesia, India,
Malaysia, the Philippines, South Africa, the UAE
and Vietnam. These initiatives will not only help
the specialty vehicles companies to weather the
challenging periods of downturn, but also to
emerge stronger on the upswing.
PERFORMANCE OF THE LAND SYSTEMS
SECTOR
Half Yearly Performance
Turnover of the Land Systems sector in 2H2008 of
$618m was 6% or $38m lower than that achieved
in 1H2008. The lower turnover was mainly due to
lower turnover from the US operations and lower
project deliveries.
Compared to 1H2008, PBT in 2H2008 decreased
by 54% or from $31.3m to $26.7m. The lower
PBT was mainly attributable to lower turnover and
lower margins from product mix, as well as the
impairment in value of a quoted investment.
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operating financial review
Full Year Performance
Land Systems sector’s FY2008 turnover of $1,274m
was higher than that achieved in FY2007 by 8% or
$96m. The higher turnover was mainly contributed
by the Munitions & Weapon (M&W) business group’s
higher export sales, but this was partially offset by
lower turnover from the Automotive (Auto) business
group. The lower turnover in the Auto business
group was mainly due to lower sales from the US
operations, but this was partially offset by higher
project deliveries.
Compared to FY2007, Land Systems sector’s PBT
of $84.7m for FY2008 was higher by 6% or $4.7m.
The higher PBT was mainly contributed by the M&W
business group, but this was largely offset by lower
PBT in the Auto business group. The higher PBT
of the M&W business group was in line with the
higher turnover recorded, while the poorer results
of the Auto business group was mainly due to the
impairment in value of a quoted investment, lower
interest income, weakness in US operations and
lower margins from product mix.
Acquisitions
On 10 September, ST Kinetics acquired the remaining
13.76% stake in STAR Automotive Centre (Zhejiang) Co
Ltd (STAR (ZJ)), making it a wholly-owned subsidiary.
The acquisition was in line with ST Kinetics’ growth
plan in China’s expanding automotive repair market.
STAR (ZJ) has seen growing demand for quality aftersales
services in the provinces of Jiangsu and Zhejiang,
where it is the only workshop that provides quality
one-stop services for owners of premium cars such as
Mercedes Benz, BMW and Porsche. Using state-of-theart
equipment, STAR (ZJ) has one of the largest facilities
in the city, and is recognised by insurance companies in
the Jiangsu and Zhejiang provinces.
Major Projects
In August, ST Kinetics announced the $110m
redevelopment of its facilities at Jalan Boon Lay and
Chin Bee Road, where it will consolidate its facilities
and operations located at its Portsdown Road and Ayer
Rajah Crescent premises.
Visitors watching a demonstration of the 120mm SRAMS at Eurosatory 2008.
An export contract for the mortar system was announced in February.
During the year, ST Kinetics delivered the Bionix II,
Bronco, Pegasus, and other weapons and munitions.
It also saw the sales of specialised truck bodies,
trailers, off-road dump trucks, excavators, and road
construction and maintenance equipment to various
commercial customers.
In February, ST Kinetics was awarded a US$31.6m
contract for 120mm SRAMS by a Gulf States
customer. Under the export contract, ST Kinetics
will supply its unsurpassed low-recoil SRAMS, with
delivery to be completed by 2011. In the same month,
the company was awarded a contract worth about
$42.5m by the UK MoD for the supply of 40mm
ammunition.
2008 ended on a high note for ST Kinetics with the
announcements of two contracts from UK MoD -
a £150m order for over 100 Bronco All Terrain
Tracked Carriers and a £35m order for 40mm
ammunition. The Bronco order was a significant
export milestone as it is the first sale of a locally
designed and produced armoured vehicle and to
one of the world’s leading defence forces. UK MoD’s
repeat order for more 40mm ammunition was also
notable as it demonstrated the customer’s trust in
the product’s quality and performance. These export
contracts attest to the growing confidence and global
recognition of ST Kinetics’ defence products.
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