Sembcorp Industries Ltd. · SGX:U96
Sembcorp Industries — H1 2004 Earnings Presentation
56 slides from Sembcorp Industries's earnings presentation, Aug 11, 2004
Slide 1: SembCorp Industries First Half 2004 Results
SembCorp Industries First Half 2004 (1H2004) Results August 11, 2004
Slide 2: Scope of Presentation
Scope of Presentation CEO’s Report Financial Review Utilities Operations Review Operations Review Outlook & Prospects 2
Slide 3: CEO Report
CEO REPORT By Wong Kok Siew Dy Chairman & CEO, SembCorp Industries
Slide 4: Performance Highlights
Performance Highlights Delivered top and bottom-line growth Turnover of $2.9bn, up 39% from 1H2003 of $2.1bn PATMI of $102.0m, up 15% from 1H2003 PATMI before EI of $88.9m Growth in overseas contribution – turnover grew from 38% to 47% 4
Slide 5: Performance Highlights
Performance Highlights Sustainable growth Operating earnings underpinned by core businesses with stable earnings and growth upside Group orderbook (excl. long-term contracts in Utilities and Logistics) is $3.7bn M&As bearing fruit & achieving strategic objectives • Utilities – SembUtilities UK – Inc
Slide 6: Utilities Strategic M&As
Utilities Strategic M&As SembCorp Utilities UK SembUtilities UK a t W ilto n I n ter n a tio n a l Dec 1998 – P u r ch a s ed b y E n r o n E u r o p e fr o m I C I fo r £3 0 0 m A p r i l 2 0 0 3 – A cq u i r ed b y S em b C o r p f o r £10 6 M ( S $ 2 96 M ) Accretive acquisition - Earnings enhanc
Slide 7: Utilities Strategic M&As
Utilities Strategic M&As Positioned for Growth as Leading Niche Utilities Player Energy and Integrated Utilities 1H2004 PATMI 147% to $87m CHINA Establishing our presence in China’s major petrochemical parks UK Enhanced earnings – Now world’s leading SINGAPORE & largest centralised Consolidation of
Slide 8: Marine Engineering Strategic M&As
Marine Engineering Strategic M&As PPL & COSCO SINGAPORE CHINA July 2003: Upped stake in PPL July 2004: Acquisition of 30% stake Shipyard to 85% in COSCO Shipyard Group Better positioned to grow Establishing presence across China offshore business with 5 major shipyards Growth potential with propriet
Slide 9: Marine Engineering Strategic M&As
Marine Engineering Strategic M&As Global Hub Strategy China - Shiprepair Central America Middle East - Conversion & - Shiprepair Offshore -Offshore -Shiprepair - Conversion & Offshore Brazil Singapore - Offshore - Shiprepair - Shipbuilding - Conversion & Offshore Positioned for growth with a strong
Slide 10: Logistics Strategic M&As
Logistics Strategic M&As Footwork Express (Japan) J a p a n Shenyang H u ai r o u B ei j i ng Kor e a Nation-wide distribution U lu m u q i T i anj i n network and blue-chip C h i na Q i ngd ao Z henz ho u J i nan customer base in Japan X i ’an T ai c u ng N anj i ng Shanghai W u han Addition of maj
Slide 11: Growing Contribution from Overseas
Growing Contribution from Overseas Overseas Overseas 47% 38% Singapore 53% 62% Singapore 1H04 1H03 Total Turnover - $2.9bn Total Turnover - $2.1bn Expanding markets, growing opportunities. Contribution from overseas now at 47% 11
Slide 12: Financial Review
FINANCIAL REVIEW By Lim Joke Mui Group CFO, SembCorp Industries
Slide 13: Turnover and PATMI
Turnover and PATMI Turnover PATMI before EI $M $M 3,000.0 2,880 105 102 2,800.0 2,600.0 39% 100 2,400.0 15% 2,200.0 2,075 95 2,000.0 1,800.0 90 89 1,600.0 1,400.0 85 1,200.0 1,000.0 80 1H2003 1H2004 1H2003 1H2004 Good top-line and bottom-line growth 13
Slide 14: Contribution to Turnover
Contribution to Turnover $M 1H04 1H03 % Utilities 1,467 765 92 Marine Engineering 571 488 17 Logistics 224 228 (2) Environmental Engineering 100 90 11 Engineering & Construction 431 403 7 Others 87 101 (14) TOTAL 2,880 2,075 39 Turnover growth spurred by Utilities which grew by 92% 14
Slide 15: Contribution to Total Turnover by businesses
Contribution to Total Turnover (%) - by businesses Others Marine Eng. Utilities Others 3 20 5 Utilities Marine Eng. 51 24 37 Logistics 8 3 11 15 Env.Eng. Logistics 4 19 E&C E&C Env.Eng. 1H04 1H03 Total Turnover - $2.9bn Total Turnover - $2.1bn Utilities contributed 51% to Group turnover in 1H2004 15
Slide 16: Contribution to Total Turnover by geographical area
Contribution to Total Turnover (%) - by geographical area Rest of Asia 17% Rest of Others Asia 10% 15%Others Singapore 53% 9% Europe Singapore Europe 20% 62% 14% 1H04 1H03 Total Turnover - $2.9bn Total Turnover - $2.1bn Overseas turnover grew from 38% to 47% of Group turnover 16
Slide 17: Contribution to PATMI
Contribution to PATMI $M 1H04 1H03 % Utilities 48.4 37.3 30 Marine Engineering 29.1 25.1 16 Logistics 30.4 27.5 10 Environmental Engineering 7.8 6.0 30 Engineering & Construction 1.0 8.3 (88) Others (14.7) (15.3) 4 PATMI before EI 102.0 88.9 15 EI - 66.9 NM PATMI 102.0 155.8 (35) No additional provi
Slide 18: Capex
Capex $M Capex in 1H2004 127 Equity investments 54 Fixed assets 73 Major Equity Investment items: - Shanghai Caojing Cogen 25 COSCO Corp 14 Phu My 3 10 Major Fixed Asset items: - Capital WIP 47 Plant & Machinery 16 18
Slide 19: Cash Flow
$M Cash Flow 1H04 1H03 Cash flow from Operating activities - before changes in working capital 235 210 - changes in working capital (92) (284) - tax paid (19) (40) 124 (114) Cash flow from Investing activities - divestments proceeds & sale of fixed assets 51 92 - acquisitions (incl. investments) (20
Slide 20: Borrowings
Borrowings $M June 30, 2004 Dec 31, 2003 PF loans 785 814 Long-term 609 579 Short-term 774 660 Gross 2,168 2,053 Less Cash & FD (714) (679) Net Debt 1,454 1,374 Net Debt (excl. PF*) 846 762 Net Gearing Ratio • include PF* 0.6 0.6 • exclude PF* 0.4 0.3 * PF - Non-recourse project financing 20
Slide 21: Financial Indicators
Financial Indicators 1H04 1H03 Before EI EPS (cts) 5.6 4.9 Annualised EPS (cts) 11.2 9.8 Annualised ROE (%) 11.4 11.4 Annualised ROTA (%) 5.5 5.9 After EI EPS (cts) 5.6 8.6 Annualised EPS (cts) 11.2 13.4 Annualised ROE (%) 11.4 15.3 Annualised ROTA (%) 5.5 7.0 EVA ($m) 30 16 Maintaining healthy fina
Slide 22: Financial Indicators
Financial Indicators June 30, 2004 Dec 31, 2003 NAV per share (cts) 96 94 NTA per share (cts) 90 88 Net Gearing – excl. PF* (times) 0.4 0.3 Net Gearing – incl. PF* (times) 0.6 0.6 Interest Cover (times) 7 7 * PF - Non-recourse project financing Healthy balance sheet with room to gear up 22
Slide 23: Utilities Operations Review
UTILITIES OPERATIONS REVIEW By Tang Kin Fei President & CEO, SembCorp Utilities
Slide 24: Utilities
Utilities Turnover ($M) PATMI ($M) Annualised 1H2004 1H2004 ROE (%) 1,476.8 ( 91%) 48.4 ( 30%) 17.3% Energy and Integrated Utilities deliver robust performance Good top-line and bottom-line growth overall, notwithstanding unfavourable performance by Offshore Engineering 24
Slide 25: Utilities Revenue and PATMI
Utilities Revenue and PATMI REVENUE PATMI $M $M 48.4 30% 1,600.0 50 1,476.8 1,400.0 1,200.0 91% 40 37.3 1,000.0 30 774.1 800.0 600.0 20 400.0 10 200.0 0.0 0 1H2003 1H2004 1H2003 1H2004 Good top-line and bottom-line growth overall 25
Slide 26: Utilities Revenue and PATMI
Utilities Revenue and PATMI $M 1H04 1H03 % REVENUE: - Energy 789.1 369.5 113.5 - Integrated Utilities 440.8 239.1 84.3 - Offshore Engineering 246.9 165.5 49.2 Total Revenue 1,476.8 774.1 90.8 PATMI: - Energy 38.8 20.2 92.1 - Integrated Utilities 48.3 15.1 219.9 - Offshore Engineering (31.6) 8.6 NM -
Slide 27: Energy and Integrated Utilities Revenue
Energy and Integrated Utilities Revenue $M REVENUE GEOGRAPHICAL 1,400.0 1,229.9 Overseas 1,200.0 17% Singapore 102% 83% 1,000.0 800.0 1H2003 Overseas 608.6 24% 600.0 Singapore 400.0 76% 200.0 1H2004 0.0 1H2003 1H2004 Energy and Integrated Utilities, Energy 369.5 789.1 the key growth driver for Integ
Slide 28: Energy and Integrated Utilities PATMI
Energy and Integrated Utilities PATMI GEOGRAPHICAL $M PATMI 100.0 90.0 87.1 Overseas 9% 80.0 Singapore 91% 70.0 60.0 147% 1H2003 50.0 Overseas 40.0 35.3 28% 30.0 Singapore 72% 20.0 10.0 0.0 1H2004 1H2003 1H2004 Energy 20.2 38.8 Solid profit growth from Integrated Utilities 15.1 48.3 Singapore and UK
Slide 29: Utilities Key Developments
Utilities Key Developments Integration of Singapore operations to offer bundled utilities and services to clients Contributions from Phu My 3 power plant which achieved commercial operations on March 1, 2004 Obtained approval to set up a Wholly Foreign Owned Enterprise in China QianAn SembCorp Cogen
Slide 30: Utilities Outlook
Utilities Outlook 2004 PATMI expected to grow by 10-20% over 2003 Energy and Integrated Utilities operations will continue to do well Higher contribution from SembUtilities UK and consolidated Singapore operations High power prices in UK expected to remain strong over next 6-12 months Developments c
Slide 31: Operations Review
OPERATIONS REVIEW By Wong Kok Siew Dy Chairman & CEO, SembCorp Industries
Slide 32: Marine Engineering
Marine Engineering Turnover ($M) PATMI ($M) Annualised 1H2004 1H2004 ROE (%) 575.8 ( 18%) 46.0 ( 15%) 9.7% Global hub strategy bearing fruit Ship conversion/ offshore registered stronger growth followed by ship repair 32
Slide 33: Marine Engineering Key Developments
Marine Engineering Key Developments Secured the P54 FPSO conversion contract worth $1.1bn Good response to proprietary design Secured 2 Baker Pacific Class Jack-up rigs in 1H2004 with options for more units 4 units of 2,600 TEU container series with Wan Hai Lines Orderbook at $2.0bn (end of June 200
Slide 34: Marine Engineering Business Environment and Outlook
Marine Engineering Business Environment Overall improvement in ship repair market with strong freight rates 13% annual growth rate for Chinese ship repair market Strong fundamentals in offshore conversion, potential demand for newbuilding and upgrading for rigs Outlook Strengthened global hub, growi
Slide 35: Logistics
Logistics Turnover ($M) PATMI ($M) Annualised 1H2004 1H2004 ROE (%) 223.6 ( 2%) 50.3 ( 14%) 25.0% Delivering consistent double-digit growth 35
Slide 36: Logistics Key Developments
Logistics Key Developments Expanded supply chain management network to Vietnam – operations began in July Partnered Pacorini to offer specialised logistics services for metals and collateralised goods and commodities Expanded oil & gas logistics services to Middle East – offshore supply base on Iran
Slide 37: Logistics Business Environment and Outlook
Logistics Business Environment North Asia will continue to be main growth driver for supply chain management Economic outlook in most Asian countries are favourable for logistics. Outlook Maintain management target of 15 – 20% net earnings growth given current business conditions 37
Slide 38: Environmental Engineering
Environmental Engineering Turnover ($M) PATMI ($M) Annualised 1H2004 1H2004 ROE (%) 101.5 ( 13%) 7.8 ( 30%) 9.1% Good potential, consistent profit growth 38
Slide 39: Environmental Engineering Key Developments
Environmental Engineering Key Developments First Asian waste management company in India with 51/49 JV with Ramky Group to provide bio- medical waste management services Launch of 24/7 $5m automated medical waste incineration plant in Tuas, Singapore Sembiologics arm set up, 3 new ranges of bio- pro
Slide 40: Environmental Engineering Business Environment and Outlook
Environmental Engineering Business Environment Opportunities in Shanghai with the corporatisation and privatisation of state-owned enterprises in the municipal waste business Continued drive towards zero landfill and increased recycling participation rates in Singapore Outlook On track to achieve do
Slide 41: Engineering & Construction
Engineering & Construction Turnover ($M) PATMI ($M) Annualised 1H2004 1H2004 ROE (%) 432.7 ( 8%) 1.5 ( 82%) 3.7% Key Developments Orderbook at $1.1bn (end June 2004) Book-to-bill ratio at 1.33 Targeted projects and territories Process engineering projects comprise 57% of orderbook Penetration of Mid
Slide 42: Outlook & Prospects
OUTLOOK & PROSPECTS By Wong Kok Siew Dy Chairman & CEO, SembCorp Industries
Slide 43: Priorities 2004/5
Priorities 2004/5 Utilities Focus on Energy and Integrated Utilities operations and overseas expansion Turnaround Offshore Engineering Environmental Engineering Focus on providing total integrated environmental services in Chinese, Indian and Australian cities Engineering & Construction Continued fo
Slide 44: Priorities 2004/5
Priorities 2004/5 Marine Engineering Strengthening of China hub in partnership with COSCO Focus on growing offshore business through proprietary designs Logistics Execute North Asia strategy Further expansion of supply chain network to Vietnam, Indonesia and the Philippines 44
Slide 45: Outlook
Outlook The Group’s results and growth will be mainly contributed by Utilities, Marine Engineering and Logistics Barring unforeseen circumstances, overall operating performance for 2004 is expected to be better than that of 2003 excluding any impact of the outcome of the Solitaire arbitration 45
Slide 46: In Summary
In Summary Delivered top and bottom-line growth Sustainable growth Operating earnings underpinned by core businesses with stable earnings and growth upside M&As bearing fruit & achieving strategies objectives Maintaining 2004 management target of 12-16% growth in PATMI excl. EI 46
Slide 47: Read in conjunction with First Half 2004 Financial Statement
This presentation should be read in conjunction with SembCorp Industries’ First Half 2004 Financial Statement of June 30, 2004 lodged on Masnet Visit : www.sembcorp.com.sg for presentations and press releases 47
Slide 48: 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 plan intend estimat
Slide 49: Appendix
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Slide 50: Profit & Loss
Profit & Loss $M 1H04 1H03 % Turnover 2,880 2,075 39 EBITDA 263 294 (10) PBT 210 239 (12) PATMI before EI 102 89 15 PATMI 102 156 (35) EPS before EI (cts) 5.6 4.9 15 EPS (cts) 5.6 8.6 (35) PATMI before EI grew by 15% to $102m for 1H2004 50
Slide 51: Group Orderbook
Group Orderbook $M As at June 30, 2004 Utilities (SMOE) 263 Engineering & Construction 1,127 Environmental Engineering 377 Marine Engineering 1,980 TOTAL 3,747 Note: Excludes long-term contracts 51
Slide 52: Utilities Orderbook
Utilities Orderbook (end June 2004): $263m Major Projects $m Client Date of Completion Bongkot Field 175 PTT Exploration 1Q2005 Development and Production Phase 3C Public Company Dan FG Maersk Olie OG 1Q2005 Development Gas Project * Idd El Shargi 602 Occidental 1Q2005 North Dome Petroleum of Qatar
Slide 53: Engineering & Construction Orderbook
Engineering & Construction Orderbook (end June 2004): $1.1bn Major Projects $m Client Date of Completion Changi Water 167 Public Utilities Feb 2008 Reclamation Plant Board Contract C3B Betara Complex 138 PetroChina Apr 2005 Development in Sumatra, Jabung Indonesia International Changi Water 129 Publ
Slide 54: Engineering & Construction Orderbook Mix
Engineering & Construction Orderbook at $1.1bn:- Orderbook Mix 3% • $642m (57%) of Process Engineering projects 10% − petrochemical − utilities − pharmaceutical 87% − environmental − oil and gas • $361m (32%) of Civil Engineering projects Singapore Rest of Asia Europe & Others – transportation – def
Slide 55: Schedule for Solitaire Arbitration
Schedule for Solitaire Arbitration Ongoing arbitration between Sembawang Corporation and Allseas, owner of the vessel Solitaire. The arbitration is expected to conclude by 2005 2004 Ongoing hearings of the quantum of the Owner’s claim The Tribunal ruled in favour of the Owner (Allseas) in the interi
Slide 56: ES NS
23 33 ES NS 56