Sia Engineering Co. Ltd. · SGX:S59
Sia Engineering — FY2022/23 Earnings Presentation
34 slides from Sia Engineering's earnings presentation, May 9, 2023
Slide 1: FY2022/23 Review
SIA ENGINEERING COMPANY FY2022/23 REVIEW 9 MAY 2023 GROWING SUSTAINABLY
Slide 2: Operational Review
SIA ENGINEERING COMPANY OPERATIONAL REVIEW GROWING SUSTAINABLY
Slide 3: Core Business
Core Business Line Maintenance Base Maintenance Component Services Engine Services • 30 airports in 7 countries • 6 hangars in Singapore • 109 aircraft from 10 • CFM LEAP Quick Turn • 3 hangars in Philippines airlines under Inventory (QT) Facility Technical Management 3
Slide 4: Line Maintenance
Line Maintenance • Number of flights handled in FY22/23 more than doubled year-on-year • Flight recovery at end of FY22/23 was at 78.7%, an improvement of 40.6 percentage points from a year ago • Transformation initiatives delivered improved productivity, and new third-party customers secured • Cont
Slide 5: Base Maintenance
Base Maintenance Maintenance Checks at Singapore Base • Demand remains strong as there are capacity challenges FY21/22 FY22/23 within the industry Light Checks* 348 568 • Increase in number of checks with heavier work content Heavy Checks 93 94 • Additional capacity to meet increased demand achieved
Slide 6: Component Services
Component Services • Increase in work volume at component shops as flight activities continue to ramp up • Oct 2022: Signed 10-year contract with MYAirline to provide component pooling and repair support programme for its A320 fleet • Additional MRO capability being added to facilities through new a
Slide 7: Engine Services
Engine Services • Additional Rolls Royce Trent On-Wing Services engine repair capabilities to include o Boroblending and Fan Blade Reprofiling • Continued ramp up at Aircraft Engine Services facility o Delivered first LEAP-1A and LEAP-1B quick turn o Working with partners to expand and increase capa
Slide 8: FY22/23 Key Customer Contracts – Growth in Third-party Customers
FY22/23 Key Customer Contracts – Growth in Third-party Customers Line Maintenance Line Maintenance International Component Services New New New + Fleet Management New Base Maintenance New Renewed Renewed 8
Slide 9: Strategic Partnerships – JV Portfolio
Strategic Partnerships – JV Portfolio 22 JVs across 8 Countries with Total Revenue of S$6B in FY22/23 • May 2022: Completed the acquisition of 75% stake in SR Technics Engine and Component Malaysia Sdn Bhd Singapore Aero Engine Eagle Services Asia Component Aerospace Services (SAESL) (ESA) Singapore
Slide 10: Transformation Phase
Transformation Phase 2 – FY20/21 to FY22/23 Strengthen ecosystem & Boost com petitiveness Create value for key stakeholders im prove culture For Customers Increased aircraft availability for airlines Enhanced Lean and digital Time saved for customer through digital competencies 20% improvement in ai
Slide 11: Financial Review
GROWING SUSTAINABLY SIA ENGINEERING COMPANY FINANCIAL REVIEW 11
Slide 12: Key Highlights
Key Highlights • Group recorded a net profit of $66.4 million for FY22/23, a slight decrease from net profit of $67.6 million for FY21/22 despite the reduction in wage support. • Operating losses tapering as business activities progressively increases; flights handled during the year represented abo
Slide 13: Summary of Group Results FY22/23
Group Revenue Summary of Group Results 796.0 FY22/23 FY21/22 FY22/23 900.0 700.0 S$’M 500.0 300.0 566.1 100.0 Group Operating Share of profits of JV Group Profit (100.0) Group Revenue Loss & Assoc after tax +229.9 40.6% y-o-y -26.3 90.0 77.8 66.4 0.0 80.0 Group Expenditure (10.0) 70.0 65.0 (21.8)
Slide 14: Analysis of Group Profit – FY22/23
Analysis of Group Profit – FY22/23 +102.6 excluding wage support & prior year tax writeback $’M +42.7 +4.3 -103.8 50.0 +55.6 67.6 66.4 * 1.2M (+14.7M excluding impact of ex-gratia) Operating Share of Non-operating Impact of lower FY22/23 FY21/22 Performance wage support Profits items, taxation & NCI
Slide 15: Group Operating Performance Trend
Group Operating Performance Trend 5.0 Excluding wage support 0.0 (5.0) (3.0) (10.0) (9.3) (15.0) (12.6) (12.5) (16.9) (20.0) (25.0) (22.8) (24.5) (30.0) (28.9) (35.0) 1Q21/22 2Q21/22 3Q21/22 4Q21/22 1Q22/23 2Q22/23 3Q22/23 4Q22/23 15
Slide 16: Analysis of Group Revenue FY22/23
Analysis of Group Revenue FY22/23 $151.1M Group Revenue $M 1200 +$229.9M $796.0M 1000 994.1 796.0 40.6% 800 566.1 600 443.0 $644.9M 400 200 0 FY19/20 FY20/21 FY21/22 FY22/23 Airframe overhaul and line maintenance Engine and component 38.4% 644.9 50.6% 465.8 151.1 $’M 100.3 FY21/22 FY22/23 FY21
Slide 17: Analysis of Group Expenditure FY22/23
Analysis of Group Expenditure FY22/23 $64.0M $93.0M $120.1M Group Expenditure $M $118.8M +$234.4M $822.3M 1000 926.4 822.3 39.9% 800 587.9 600 468.0 400 $426.4M 200 0 Staff costs net of FY19/20 FY20/21 FY21/22 FY22/23 Material costs Subcontract costs Depreciation & Others wage support Amortisation
Slide 18: Share of Profits after tax FY22/23
Share of Profits after tax FY22/23 Joint Venture and Associated Companies $’M Airframe & Engine Centers Component Centers Line Maintenance -10.9 -2.7 +12.3 19.1% y-o-y 8.3% y-o-y 115.0% y-o-y 57.1 1.6 46.2 32.7 30.0 (10.7) FY21/22 FY22/23 FY21/22 FY22/23 FY21/22 FY22/23 Excluding wage support
Slide 19: Group Revenue FY22/23
Group Revenue FY22/23 (SIAEC, Subsidiaries, JV and Associated Companies) 6,730.6 6,342.3 685.9 987.8 5,506.9 537.1 4,287.4 450.6 • +22.2% YoY • 106% of FY19/20 6,044.7 5,354.5 4,969.8 3,836.8 FY1920 FY2021 FY2122 FY2223 Engine and component Airframe and line maintenance * Revenue of associated and j
Slide 20: Group Balance Sheet and Financial Statistics
Group Balance Sheet and Financial Statistics Mar-23 Mar-22 Variance $M $M $M % Total equity 1,676.7 1,621.3 + 55.4 + 3.4 Non-current liabilities 91.1 39.0 + 52.1 + 133.6 Current liabilities 215.4 177.9 + 37.5 + 21.1 Non-current assets 1,031.1 925.5 + 105.6 + 11.4 Cash 633.0 625.5 + 7.5 + 1.2 Other c
Slide 21: Final Dividend FY22/23
Final Dividend FY22/23 FY22/23 FY21/22 Variance % Proposed Final Dividend (per share) 5.5 cents - n.m. Dividend payout ratio 93% - n.m. Dividend yield 2.4% - n.m. based on the closing share price of $2.25 on 31 March 2023 • In recommending the final dividend, the Board takes into consideration the p
Slide 22: Outlook
SIA ENGINEERING COMPANY OUTLOOK GROWING SUSTAINABLY
Slide 23: Strong Recovery
Strong Recovery FY21/22 FY22/23 Variance Revenue ($M) 566.1 796 229.9 41% Excluding wage support and tax-writeback GPAT ($M) -47.4 55.2 102.6 Profit Margin -8.4% 6.9% 15.3 ppts Return on Equity -3.0% 3.4% 6.4 ppts 23
Slide 24: Approaching Full Recovery
Approaching Full Recovery Past 3 Years through the Pandemic Group Revenue (S$ M) Flights Handled by SIAEC LM 994 (% of pre-Covid levels) 79% 75% 75% 75% 73% 796 65% 65% 63% 59% 60% 55% 50% 566 45% 443 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 FY19/20 FY20/21
Slide 25: Transformation Dividends
Transformation Dividends Boost Competitiveness Create value for Customer & Strengthen Organisational Staff Capabilities • Improvement in aircraft check • Increased aircraft availability • Enhanced Lean & Digital turnaround time for airlines operating system • Productivity improvement • Broadened MRO
Slide 26: Outlook
Outlook Challenges remain Pace of recovery remains uncertain - Reopening of China’s borders is a positive development for a faster and full sector recovery - But risks remain due to macroeconomic factors - Constraints faced by airlines in returning to pre-pandemic flight levels Macroeconomic factors
Slide 27: Priorities
Priorities Remaining vigilant and prudent in Stepping up from Transformation to managing increase in costs Continuous Improvement Seeking investment opportunities for growth development 27
Slide 28: Emerging Stronger
Emerging Stronger Strategies that have strengthened SIAEC Engine Services & Component Services Growing new Growing capabilities Overseas Transformation & Capacity Restructuring Creation of JV Portfolio Centralised Sales & Commercial Unit
Slide 29: Transitioning to Continuous Improvement
Transitioning to Continuous Improvement Moving forward We have reaped dividends from the 3-year Transformation Program. With the enhanced operating system and organisational capabilities, we are well positioned to grow and make improvement continuously. Going forward: • Continue to deepen Lean & Dig
Slide 30: Restructuring of JV Portfolio
Restructuring of JV Portfolio Closed JVs New Investments Asia Pacific Aircraft HMSS APACS Component Services (APACS) BAPAS Subang Hangars [Ongoing Negotiation] Aviation (POS) Pos Aviation Engineering AST Services [Subject to approval from MAVCOM]
Slide 31: Growth Opportunities
Growth Opportunities Increase 3rd Party Customers Seize business opportunities • Grow 3rd party customers and fleet type • Diverse customer portfolio strengthens revenue Invest in New Capabilities Invest in new-generation aircraft capabilities • Engine Services Division to invest in new capabilities
Slide 32: Sustainability
Sustainability Expanding use of renewable energy Investing in energy-efficient equipment and cleaner vehicles • Installation of additional solar panels • Progressive upgrade of air compressors in will fulfil 20% of SIAEC’s electricity hangars needs (from 18% in FY22/23) • Scale up adoption of electr
Slide 33: FY22/23 and Beyond
FY22/23 and Beyond Strong Recovery Transformation Emerging Stronger Dividends Growth achieved in all Enabled us to generate Enhanced capabilities and segments additional capacity to JVs poised for growth along capture demand with recovery 33
Slide 34: Thank you
GROWING SUSTAINABLY SIA ENGINEERING COMPANY Thank you 34
SIA Engineering Company — FY2022/23 Earnings Presentation on 6ix