Sembcorp Industries Ltd. · SGX:U96
Sembcorp Industries — FY2001 Earnings Presentation
68 slides from Sembcorp Industries's earnings presentation, Feb 20, 2002
Slide 1: 2001 Performance Review
2001 Performance Review February 20, 2002 1
Slide 2: Disclaimer
DISCLAIMER This presentation is not an offer of securities for sale in the United States, securities may not be offered or sold in the United States absent registration or an exemption from registration, and any public offering of securities to be made in the United States will be made by means of a
Slide 3: Scope
SCOPE 2001 Results • Financial Performance • Key Business Review • Outlook and Management Target 3
Slide 4: 2001 Performance at a Glance
2001 PERFORMANCE AT A GLANCE PATMI $176m Earnings growth over FY00 51% Earnings growth over FY00 excl. EI 30% Key Business earnings growth over FY00 55% ROE 19% Group Orderbook excl. long-term contracts $3.7bn 4
Slide 5: Group Performance
GROUP PERFORMANCE PATMI excl. EI $m 200 Av. CAGR 23% 150 100 50 0 1998 1999 2000 2001 5
Slide 6: Group Performance
GROUP PERFORMANCE ROE excl. EI (%) 20 16 12 12 ROE target 12% 10 6 0 1998 1999 2000 2001 6
Slide 7: M&As in 2001
M&As IN 2001 Building the SembCorp Industries of tomorrow SBU M&A Activity The Result Utilities Phu My 3 Power Plant First mover advantage (Vietnam) in Vietnam Qianan SembCorp Entry into China’s Cogeneration Co. (China) power market Additional 20% stake in SembCogen now a SembCogen 70%-owned subsidi
Slide 8: M&As in 2001
M&As IN 2001 Building the SembCorp Industries of tomorrow SBU M&A Activity The Result Environmental Acquired 40% stake in Now have 100% of medical Engineering SembSITA waste market share and 28% of ICW market Invested in 60% stake of Future revenue stream from SembVISY Recycling post-processing plan
Slide 9: M&As in 2001
M&As IN 2001 Building the SembCorp Industries of tomorrow SBU M&A Activity The Result Marine PPL Shipyard Boosted rig building Engineering capabilities Mauà Jurong Tap into offshore and conversion markets in Gulf of Mexico and West Africa Dalian Cosco Marine Expansion into growing Engineering Co. Ch
Slide 10: Divestments in 2001
DIVESTMENTS IN 2001 Despite the poor economy, we made several divestments: $M Marine Services Business 205.6 Other Divestments 48.9 Permasteelisa Pacific Holdings 12.6 Singapore-Suzhou Industrial Holdings 9.8 Asia Internet Holding 8.4 Indo-Sembawang-Nippon Glass 8.1 APLS-Bok Seng Logistics 3.0 Wuxi
Slide 11: Our Management Philosophies Since 1998
OUR MANAGEMENT PHILOSOPHIES SINCE 1998 • Retain businesses with engineering and technology content • Regional leadership with global reach – No.1 or 2 in Asia (ex-Japan), or exit the business • Strong financial discipline: Net income, ROE > 12%, EVA enhancing – to give superior returns over industry
Slide 12: Three Years On
THREE YEARS ON • Focus achieved with 5 Key Businesses. Divestments unlocked $1.3bn in value • Logistics and Marine in global league. Utilities, E&C, EE strong in Asia (ex- Japan). M&A strategy bearing fruit • Consistent profit growth. ROE target exceeded. EVA down due to growth phase 12
Slide 13: Financial Review
FINANCIAL REVIEW 13
Slide 14: Profit & Loss
PROFIT & LOSS $M FY01 FY00 % Turnover 3,225.2 2,894.9 11 Profit attributable to shareholders 176.1 116.6 51 Profit attributable to shareholders 151.6 116.4 30 (excluding exceptional items) Profit before tax 340.3 250.0 36 EBIT 335.4 299.6 12 EBITDA 484.2 437.6 11 14
Slide 15: Contribution to Turnover by Businesses
CONTRIBUTION TO TURNOVER (%) – by businesses In Devt. & Corporate Marine In Devt. & Marine Engrg Corporate Engrg 19 26 24 26 4 Enviro 2 Enviro E&C 19 Engrg Engrg 22 15 15 17 E&C 11 Logistics Logistics Utilities Utilities FY01 FY00 15
Slide 16: Contribution to Turnover by Geographical Areas
CONTRIBUTION TO TURNOVER (%) – by geographical areas Rest of Asia Rest of Asia 18 18 Others Others 4 7 17 Europe 59 61 16 Europe Singapore Singapore FY01 FY00 16
Slide 17: Exceptional Items
EXCEPTIONAL ITEMS FY01 ($M) Gain / (loss) on disposals / dilution of interest in investments and business 111.7 Impairment of assets and investments (33.4) Others (35.5) Exceptional Items before tax and minority interest 42.8 Less: Tax and minority interest (18.3) Net Exceptional Items 24.5 17
Slide 18: Contribution to PATMI
CONTRIBUTION TO PATMI $M FY01 FY00 % Key Businesses Utilities 36.0 14.7 145 Engineering & Construction 5.6 2.2 155 Environmental Engineering 8.0 1.2 567 Logistics 55.9 34.2 63 Marine Engineering 50.4 48.0 5 155.9 100.3 55 In Development & Corporate 20.2 16.3 24 TOTAL 176.1 116.6 51 18
Slide 19: Contribution to PATMI (%)
CONTRIBUTION TO PATMI (%) In Devt. & Corporate In Devt. & Marine E&C Engrg Corporate 3 11 E&C 14 29 2 Marine 41 Utilities Engrg Utilities 20 13 5 Enviro 32 29 Engrg 1 Logistics Enviro Logistics Engrg FY01 FY00 19
Slide 20: Financial Indicators
FINANCIAL INDICATORS FY01 FY00 % ROE (%) 18.7 11.5 63 ROE excl. EI (%) 16.1 11.5 40 ROTA (%) 5.9 4.7 26 EPS (cts per share) 10.96 7.27 51 WACC (%) 8.2 9.0 (9) EVA ($m) (17.2) (10.9) (58) CAPEX ($m) 440 1,219 (64) 20
Slide 21: Financial Indicators
FINANCIAL INDICATORS Dec 31, 2001 Dec 31, 2000 % NTA per share ($) 0.59 0.52 13 Net Gearing (times) 1.3 1.1 18 Net Gearing (excluding PF*) 1.0 0.9 11 Interest Cover (times) 5.4 5.1 6 * PF - Project Financing 21
Slide 22: Balance Sheet
BALANCE SHEET $M Dec 31, 2001 Dec 31, 2000 % Non-current assets 3,602.0 2,808.2 28 Current assets 2,604.2 2,580.3 1 Less: Current liabilities (2,948.3) (2,986.9) (1) 3,257.9 2,401.6 36 Term loan (1,386.4) (858.5) 61 Non-current liabilities (168.3) (167.6) - 1,703.2 1,375.5 24 Share capital & reserve
Slide 23: Cash Flow Statement
CASH FLOW STATEMENT $M FY01 FY00 Cash flow from: Operating activities - before change in working capital 404 405 - change in working capital (538) (78) (134) 327 Investing activities (59) (878) Financing activities (63) 600 Net (decrease)/increase in cash & (256) 49 cash equivalents Cash & cash equi
Slide 24: CAPEX – FY01
CAPEX – FY01 Total CAPEX for 2001 = $440m $M Major investment items: 170 Simon-Carves 40 SembCorp Cogen 22 Phu My 3 BOT Company 30 Qianan cogeneration plant 11 PPL Shipyard 15 Mauà Jurong 22 S. Daniels 27 Others 3 Major fixed asset items: 270 Plant & Machinery 144 Capital WIP 84 Land & Buildings 18
Slide 25: Dividend
DIVIDEND • The Board recommends a 12% ordinary dividend (3.0 cents per share) for FY2001 • For FY2000, the dividend paid was 10% (2.5 cents per share) 25
Slide 26: Financial Review by Key Businesses
FINANCIAL REVIEW BY KEY BUSINESSES 26
Slide 27: Utilities
UTILITIES FY01 FY00 % Turnover ($m) 549.5 308.1 78 PATMI ($m) 36.0 14.7 145 ROE (%) 16.3 7.4 120 EVA ($m) 0.3 (3.1) NM Net Gearing (times) 2.8 0.7 300 Net Gearing (excluding PF*) 1.2 - NM * PF - Project Financing 27
Slide 28: Engineering & Construction
ENGINEERING & CONSTRUCTION FY01 FY00 % Turnover ($m) 646.1 662.7 (3) PATMI ($m) 5.6 2.2 155 PATMI excl. EI ($m) 5.6 23.2 (76) ROE (%) 7.6 4.7 62 ROE excl. EI (%) 7.6 53.0 (86) EVA ($m) (11.8) 14.3 NM Net Gearing (times) 0.2 1.2 (83) 28
Slide 29: Environmental Engineering
ENVIRONMENTAL ENGINEERING FY01 FY00 % Turnover ($m) 140.6 71.6 96 PATMI ($m) 8.0 1.2 567 ROE (%) 5.6 3.6 56 EVA ($m) (11.8) (6.6) (79) Net Gearing (times) - 3.0 NM 29
Slide 30: Logistics
LOGISTICS FY01 FY00 % Turnover ($m) 473.0 448.3 6 PATMI ($m) 89.8 46.9 91 PATMI excl. EI ($m) 62.9 46.6 35 ROE (%) 43.3 24.8 75 ROE excl. EI (%) 30.3 24.7 23 EVA ($m) (7.3) 9.7 NM Net Gearing (times) 0.4 1.9 (79) 30
Slide 31: Marine Engineering
MARINE ENGINEERING FY01 FY00 % Turnover ($m) 854.5 763.0 12 PATMI ($m) 82.7 79.8 4 ROE (%) 9.4 9.6 (2) EVA ($m) (2.3) (27.3) 92 Net Gearing (times) - - - 31
Slide 32: Sectoral Review
SECTORAL REVIEW 32
Slide 33: Utilities
UTILITIES 1998 - 2001 PATMI 16% $m 40 ROE target 12% 35 • Strong growth year-on-year 30 8% 7% • Gross power generation capacity 25 increased to 1669MW (China, 4% Vietnam, Australia, Singapore) 20 • Integrated utilities, gas and power 15 generation provide long-term baseload earnings 10 • SMOE order
Slide 34: Utilities: Key Developments in 2001
UTILITIES Key Developments in 2001 • SembCorp Cogen commenced commercial operations in September • SembCorp Power secured over 60 accounts and 300 MW - 20% share of contestable market • Acquired a 33.3% stake in Phu My 3 power plant in Vietnam • HGIW capacity of 30,000m³ per day sold out • SUT Sakra
Slide 35: Utilities: Operating Environment and Outlook
UTILITIES Operating Environment • Opportunities for integrated utilities in new chemical hubs in the Asia Pacific region eg. China, Australia • Opportunities from liberalisation of regional energy markets • Local energy market deregulation is expected to increase competition and put pressure on pool
Slide 36: Engineering & Construction
ENGINEERING & CONSTRUCTION 1998 - 2001 PATMI 61% $m 40 • Moved up value chain to process 30 engineering • Expertise in deep tunneling, 20 transportation and land ROE target 12% reclamation 8% 10 5% • Orderbook at $1.84bn (incl. fee- 0 based projects) 1998 1999 2000 2001 • Book to bill 2.78 -10 -20 -
Slide 37: E&C: Key Developments in 2001
ENGINEERING & CONSTRUCTION Key Developments in 2001 • Secured more than $1.7bn worth of new projects in FY01 • Acquired Simon-Carves for upstream engineering capabilities in oil & gas, petrochemical, chemical, pharmaceutical and nuclear sectors • Secured first land reclamation project using the “Bul
Slide 38: E&C: Operating Environment and Outlook
ENGINEERING & CONSTRUCTION Operating Environment • Total construction demand in Singapore contracted 40% last year • Regional construction market has been badly affected since 1997 due to lack of investments into the region Outlook • Construction industry will remain weak this year • Opportunities i
Slide 39: Environmental Engineering
ENVIRONMENTAL ENGINEERING 1998 - 2001 PATMI $m 8 ROE target 12% 6 6% • Streamline business 4 processes • Build two revenue streams: – 4% materials recovery and 2 incineration • Regional expansion in the 0 mid-term - focus on countries or cities with $10K per capita 1998 1999 2000 2001 GDP, start wit
Slide 40: Environmental Engineering: Key Developments in 2001
ENVIRONMENTAL ENGINEERING Key Developments in 2001 • Semac’s refuse collection contracts for five municipal sectors amount to >$400m revenue over 5 years • Re-engineering at Semac produced savings of $4m for 2001 – cut vehicle excess capacity from 40% to 10% – outsourced all fleet maintenance – cut
Slide 41: Environmental Engineering: Operating Environment and Outlook
ENVIRONMENTAL ENGINEERING Operating Environment • Decline in municipal waste tonnage due to economic downturn cuts disposal costs, gives improved margins • Industrial and commercial waste sector also affected by economic slowdown • Increasing emphasis on waste minimisation and recycling in Singapore
Slide 42: Logistics
LOGISTICS 1998 - 2001 PATMI 43% $m • Global platform 90 25% established with KNI and 70 USCO 50 • Pan-Asian network ROE expansion to fuel future target 12% growth 30 7% 10 • Now leading SCM service provider in Asia with 10m -10 sq ft of warehouse space 1998 1999 2000 2001 in 100 locations -30 -50 -1
Slide 43: Logistics: Key Developments in 2001
LOGISTICS Key Developments in 2001 • Divested marine business for $206m • KNI’s acquisition of US-based USCO completes our global SCM platform • Pan-Asian network expanded to Australia and Malaysia • Acquired 3% stake in Goodpack and reserves global exclusive use of patented-IBCs 43
Slide 44: Logistics: Operating Environment and Outlook
LOGISTICS Operating Environment • Global consolidation will result in 10 -15 major players • Outsourcing by companies still on uptrend • China’s GDP growth will fuel domestic consumption and logistics demand and its entry into WTO will spur export growth • China and India still showing strong growth
Slide 45: Marine Engineering
MARINE ENGINEERING 1998 - 2001 PATMI $m 90 80 • Steady reliable earnings 70 • Global hub strategy will ROE 60 target 12% strengthen future earnings 50 • Orderbook (excl. shiprepair) at 40 $1.4bn 10% 10% 9% 9% 30 20 10 0 1998 1999 2000 2001 45
Slide 46: Marine Engineering: Key Developments in 2001
MARINE ENGINEERING Key Developments in 2001 • Execution of Global Hub Strategy on track: – Mauà Jurong in Brazil and Dalian Cosco Marine in China • Acquired 50% stake in PPL to boost rig building capabilities • Disposed entire interest in Neptune Associated Lines, a ship owning and chartering compan
Slide 47: Marine Engineering: Operating Environment and Outlook
MARINE ENGINEERING Operating Environment • Shiprepair demand expected to be firm for the next 2 years • Continuing competitive pressure from emerging low cost centres such as China and Vietnam • Ship conversion market very active with strong demand for floating production units • Crude oil price to
Slide 48: Group Review and Outlook
GROUP REVIEW AND OUTLOOK 48
Slide 49: Group Strategy
GROUP STRATEGY Pursuing value- creating growth Shareholder Value Value Curve We’re here Forming Growth through Restructuring Strategic Strategic & Alliances and Alliances Divestments M&As Time 2000 Capital reallocated to: Leveraging on first – Utilities mover advantage – Logistics Move to high value
Slide 50: Priorities for 2002/2003
PRIORITIES FOR 2002/2003 Engineering & Environmental Marine Utilities Logistics Construction Engineering Engineering • Bid for PUB’s • Increase regional • Complete Asia’s • Expand network • Execute global 30mgd business in first automated into Japan, hub in China and desalination pharmaceutical MRF
Slide 51: Management Target - 2002
MANAGEMENT TARGET - 2002 This year:- • Utilities targets earnings growth of at least 50% • E&C expecting to at least double earnings • Environmental Engineering targets about 40% earnings growth • Logistics is targeting earnings growth (excluding EI and Goodwill) of 20% • Marine expecting earnings g
Slide 52: Management Target - 2002
MANAGEMENT TARGET - 2002 SembCorp Industries expects (barring unforeseen circumstances) to grow earnings by at least 20%. (These targets must be read and understood in conjunction with the the Disclaimer) 52
Slide 53: Appendix
APPENDIX 53
Slide 54: Contribution to Turnover (excludes inter-segment turnover)
CONTRIBUTION TO TURNOVER (excludes inter-segment turnover) $M FY01 FY00 % Key Businesses Utilities 548.3 302.8 81 Engineering & Construction 618.5 632.9 (2) Environmental Engineering 139.7 71.6 95 Logistics 469.2 444.7 6 Marine Engineering 850.0 757.7 12 2,625.7 2,209.7 19 In Development & Corporate
Slide 55: Contribution to Turnover by Geographical Areas
CONTRIBUTION TO TURNOVER - by geographical areas FY01 ($M) % FY00 ($M) % in % Singapore 1,915.2 59 1,766.9 61 (2) Rest of Asia 571.6 18 509.7 18 - Europe 528.2 16 485.9 17 (1) Others 210.2 7 132.4 4 3 TOTAL 3,225.2 100 2,894.9 100 55
Slide 56: Contribution to PBT (after associates)
CONTRIBUTION TO PBT (after associates) $M FY01 FY00 % Key Businesses Utilities 55.5 27.8 100 Engineering & Construction 7.0 15.7 (55) Environmental Engineering 9.3 2.6 258 Logistics 135.7 65.4 107 Marine Engineering 100.8 96.4 5 308.3 207.9 48 In Development & Corporate 32.0 42.1 (24) TOTAL 340.3 25
Slide 57: External Borrowings
EXTERNAL BORROWINGS Currencies Amount ($M) Total S$M As a % ST LT Equivalent of total S$ 897 1,326 2,223 85 US$ 241 98 339 13 Others (RM, A$, £) 13 33 46 2 Total 1,151 1,457 2,608 100 (Average interest rates for S$ and US$ were 4.47% and 5.72% p.a. respectively.) 57
Slide 58: Net Borrowings
NET BORROWINGS $M As at As at Dec 31, 2001 Jun 30, 2001 % Short-term 1,151 929 24 Long-term 1,457 1,456 - Gross 2,608 2,385 9 Less Cash (409) (399) 3 Net 2,199 1,986 11 58
Slide 59: Goodwill & Amortization
GOODWILL & AMORTIZATION $M Goodwill Amortization Charge Acquisition of:- Simon-Carves 36.8 1.1 SembCorp Cogen 7.2 0.3 S. Daniels 14.1 0.4 Additional Shares in JPL Industries 17.1 1.5 Others 0.3 - 75.5 3.3 59
Slide 60: Utilities
UTILITIES $M FY01 FY00 % Turnover Oil & Gas 201.0 164.9 22 Centralised Utilities 185.8 132.8 40 Chemical Feedstock 10.0 10.4 (4) Gas - - NM Power Generation 108.4 - NM Power Supply 64.1 - NM Head Office & others (19.8) - NM Total 549.5 308.1 78 PATMI Oil & Gas 16.3 10.2 60 Centralised Utilities 17.7
Slide 61: Engineering & Construction
ENGINEERING & CONSTRUCTION $M FY01 FY00 % Turnover mix Singapore 455.1 652.4 (30) Rest of Asia 75.9 10.3 637 Europe 115.1 - NM Total 646.1 662.7 (3) 61
Slide 62: Engineering & Construction: Order Book, Major Projects Singapore
ENGINEERING & CONSTRUCTION Order Book (incl. fee-based projects): $1.84bn Major Projects (Singapore) $m Client Kallang/ Paya Lebar 257 LTA Expressway (c422) Kallang/ Paya Lebar 235 LTA Expressway (c421) Tuas View Reclamation 198 JTC Anhydride Plant 128 Continental Plasticizer 62
Slide 63: Engineering & Construction: Major Projects Overseas
ENGINEERING & CONSTRUCTION Major Projects $m Client (Overseas) Simon-Carves’ Projects 95 Various Alkyd Resin/ Latex Plant 49 Continental Specialties (Guangzhou) GE Medical 44 GE (Beijing) Peciko 3rd Train Gas 34 TOTAL (Indonesia) Treatment Plant 63
Slide 64: Logistics
LOGISTICS $M FY01 FY00 % Turnover Supply Chain Mgt 380.5 313.9 21 Offshore Logistics 51.9 51.2 1 Marine Services 40.6 83.2 (51) Total 473.0 448.3 6 PATMI Supply Chain Mgt 53.9 28.4 90 Offshore Logistics 15.8 15.4 3 Corporate & Elimin (14.3) (14.5) 1 Subtotal 55.4 29.3 89 Marine Services & others 9.9
Slide 65: Marine Engineering
MARINE ENGINEERING $M FY01 FY00 % Turnover mix Shiprepair 486 382 27 Shipbuilding 104 84 24 Offshore 204 244 (16) Others 60 53 13 Total 854 763 12 65
Slide 66: In Development Contribution to PATMI
IN DEVELOPMENT CONTRIBUTION TO PATMI $M FY01 FY00 % Food Processing & Distribution 20.4 17.1 19 Minting 2.2 6.3 (65) Industrial Parks 7.7 9.5 (19) Internet Service Provider (1.8) (5.6) 68 IT Services 3.5 4.3 (19) Building Materials - (9.6) NM Travel & Retail 1.6 (10.0) NM Others * (3.9) 2.3 NM TOTAL
Slide 67: Disclaimer
DISCLAIMER This presentation contains certain statements that are not statements statements of historical fact, i.e. forward- forward-looking statements. Investors can identify some of these statements statements by forward- forward- looking terms such as ‘expect’ expect’, ‘believe’ believe’, ‘plan’
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