Singapore Technologies Engineering Ltd · SGX:S63
Singapore Technologies Engineering — Q3 2016 Earnings Presentation
36 slides from Singapore Technologies Engineering's earnings presentation, Nov 10, 2016
Slide 1: Financial Results Briefing Third Quarter 2016 Results
Financial Results Briefing Third Quarter 2016 Results 10 November 2016 Engineering Our Future
Slide 2: 3Q2016 Results: Lower Profits
3Q2016 Results Lower Profits ST Engineering Page 2
Slide 3: Agenda
Agenda ► Financial Highlights ► 3Q2016 vs 3Q2015 ► 9M2016 vs 9M2015 ► Business Review ► Outlook ST Engineering Page 3
Slide 4: Financial Highlights for the third quarter ended September 2016
Financial Highlights for the third quarter ended 30 September 2016 3Q2016 3Q2016 3Q2016 3Q2015 $'m Change Total JHK * w/o JHK Total [A] [B] [C] = [A] - [B] [D] [E] = [C] - [D] Revenue 1,613 - 1,613 1,500 ▲ 113 8% Earnings before interest & tax (EBIT) 82.0 (65.1) 147.1 120.5 ▲ 26.6 22% Other income,
Slide 5: Financial Highlights
Financial Highlights for the third quarter ended 30 September 2016 $'m 3Q2016 3Q2015 Change Revenue 1,613 1,500 ▲ 113 8% Earnings before interest & tax (EBIT) 82.0 120.5 ▼ 38.5 32% Other income, net 10.7 6.8 ▲ 3.9 58% Finance income, net 0.6 12.0 ▼ 11.4 95% Profit before tax (PBT) 106.6 154.7 ▼ 48.1
Slide 6: Financial Highlights
Financial Highlights for the third quarter ended 30 September 2016 ► Commercial sales at 63% (3Q2015: 66%; FY2015: 64%) or $1.0b of 3Q2016 revenue ► $11.4b order book; about $1.4b to be delivered in 4Q2016 (end-2Q2016: $11.6b) ► CCE including funds under management of $1.3b (end-2Q2016: $1.3b) ► EBI
Slide 7: Group Revenue by sector
Group Revenue by sector Higher Revenue by $113m or 8% $'m 3Q2016 % 3Q2015 % Change Aerospace 563 35 506 34 ▲ 57 11% Electronics 466 29 429 28 ▲ 37 9% Land Systems 334 21 319 21 ▲ 15 5% Marine 211 13 205 14 ▲ 6 3% Others 39 2 41 3 ▼ 2 5% Group 1,613 100 1,500 100 ▲ 113 8% ST Engineering Page 7
Slide 8: Group Revenue by geography
Group Revenue Breakdown by location of customers (by geography) 6% 8% 7% 5% Locality 3Q2015 3Q2016 $m % $m % 23% Asia 970 65 987 61 USA 352 23 398 25 25% Europe 71 5 133 8 65% 61% Others 107 7 95 6 Total 1,500 100 1,613 100 ST Engineering Page 8
Slide 9: EBIT by sector
EBIT by sector Lower EBIT by $38.5m or 32% $'m 3Q2016 3Q2015 Change Aerospace 51.6 50.4 ▲ 1.2 2% Electronics 49.4 47.3 ▲ 2.1 4% Land Systems 17.4 15.0 ▲ 2.4 16% Marine 36.2 10.7 ▲ 25.5 238% Others (7.5) (2.9) ▼ 4.6 159% Group (excluding JHK's impact) 147.1 120.5 ▲ 26.6 22% JHK (65.1) - ▼ 65.1 100% G
Slide 10: Group PBT by sector
Group PBT by sector Lower PBT by $48.1m or 31% $'m 3Q2016 % 3Q2015 % Change Aerospace 65.2 61 63.3 41 ▲ 1.9 3% Electronics 52.8 50 49.3 32 ▲ 3.5 7% Land Systems 23.7 22 19.8 13 ▲ 3.9 20% Marine 38.7 36 15.9 10 ▲ 22.8 143% Others (8.7) (8) 6.4 4 ▼ 15.1 235% Group (excluding JHK's impact) 171.7 161 15
Slide 11: PBT Margin by sector
PBT Margin by sector 3Q2016 3Q2016 3Q2015 w/o JHK * Aerospace 12% 12% 12% Electronics 11% 11% 11% Land Systems (12%) 7% 6% Marine 18% 18% 8% Group 7% 11% 10% * JHK’s one-off assets impairment and closure costs ST Engineering Page 11
Slide 12: Aerospace: Comparable Profits
Aerospace Comparable Profits 3Q2016 vs 3Q2015 • Higher revenue from AMM and EMS Revenue $563m ▲ $57m or 11% partially offset by lower revenue from engines output • Higher gross profit from AMM and EMS ▲ $1.2m or 2% Partially offset by EBIT $51.6m • Higher amortisation of EFW intangibles • Higher rot
Slide 13: Electronics: Higher Revenue and Profits in 3Q2016
Electronics Higher Revenue and Profits in 3Q2016 3Q2016 vs 3Q2015 • Higher revenue from LSG and CSG Revenue $466m ▲ $37m or 9% whilst SSG reported comparable revenue • Higher gross profit from higher revenue EBIT $49.4m ▲ $2.1m or 4% Partially offset by • Higher research & development expenses • Hig
Slide 14: Land Systems: Profits impacted by JHK impairment and closure costs
Land Systems Profits impacted by JHK impairment and closure costs 3Q2016 vs 3Q2015 • Higher project deliveries from Auto and M&W Revenue $334m ▲ $15m or 5% Partially offset by • Divestment of a subsidiary, Guizhou Jonyang Kinetics ("GJK") • Lower EBIT due mainly to EBIT ($47.7m) ▼ $62.7m or 418% imp
Slide 15: Marine: Higher PBT
Marine Higher PBT 3Q2016 vs 3Q2015 • Higher revenue from Shiprepair ▲ Partially offset by Revenue $211m $6m or 3% • Lower revenue from Shipbuilding and Engineering business groups ▲ $25.5m or 238% • Better performance from all three EBIT $36.2m business groups PBT $38.7m ▲ $22.8m or 143% • In line w
Slide 16: Statement of Cash Flows
Statement of Cash Flows $m 3Q2016 3Q2015 Net cash from/(used in): Operating activities 169 117 Investing activities (76) (125) Financing activities (108) (182) Net decrease in CCE * (15) (190) CCE at beginning of the period 800 1,092 Exchange difference 4 18 CCE at end of the period 789 920 * CCE –
Slide 17: Agenda
Agenda ► Financial Highlights ► 3Q2016 vs 3Q2015 ► 9M2016 vs 9M2015 ► Business Review ► Outlook ST Engineering Page 17
Slide 18: Financial Highlights for the nine months ended September 2016
Financial Highlights for the nine months ended 30 September 2016 9M2016 9M2016 9M2016 $'m China w/o China 9M2015 Change SVC* SVC [A] [B] [C] = [A] - [B] [D] [E] = [C] - [D] Revenue 4,863 - 4,863 4,556 ▲ 307 7% Earnings before interest & tax (EBIT) 316.3 (65.1) 381.4 381.0 ▲ 0.4 - Other income, net 5
Slide 19: Financial Highlights
Financial Highlights for the nine months ended 30 September 2016 $'m 9M2016 9M2015 Change Revenue 4,863 4,556 ▲ 307 7% Earnings before interest & tax (EBIT) 316.3 381.0 ▼ 64.7 17% Other income, net 57.4 32.9 ▲ 24.5 74% Finance (costs)/income, net (14.8) 9.1 ▼ 23.9 263% Profit before tax (PBT) 407.3
Slide 20: Group Revenue by sector
Group Revenue by sector Higher Revenue by $307m or 7% $'m 9M2016 % 9M2015 % Change Aerospace 1,804 37 1,510 33 ▲ 294 19% Electronics 1,368 28 1,198 26 ▲ 170 14% Land Systems 901 19 982 22 ▼ 81 8% Marine 672 14 738 16 ▼ 66 9% Others 118 2 128 3 ▼ 10 8% Group 4,863 100 4,556 100 ▲ 307 7% ST Engineerin
Slide 21: EBIT by sector
EBIT by sector EBIT lower by $64.7m or 17% $'m 9M2016 9M2015 Change Aerospace 173.7 166.9 ▲ 6.8 4% Electronics 130.0 121.4 ▲ 8.6 7% Land Systems 37.6 38.1 ▼ 0.5 1% Marine 53.2 55.4 ▼ 2.2 4% Others (13.1) (0.8) ▼ 12.3 >500% Group (excluding China SVC) 381.4 381.0 ▲ 0.4 - China SVC (65.1) - ▼ 65.1 100
Slide 22: Group PBT by sector
Group PBT by sector Lower PBT by $56.4m or 12% $'m 9M2016 % 9M2015 % Change Aerospace 214.5 46 205.3 44 ▲ 9.2 4% Electronics 143.6 31 130.8 28 ▲ 12.8 10% Land Systems 52.8 11 52.3 11 ▲ 0.5 1% Marine 62.6 14 68.9 15 ▼ 6.3 9% Others (11.5) (2) 6.4 2 ▼ 17.9 278% Group (excluding China SVC) 462.0 113 46
Slide 23: Balance Sheet
Balance Sheet $m 30-Sep-16 31-Dec-15 Property, plant and equipment 1,601 1,709 Associates & joint ventures 391 462 Investments 322 328 Intangible assets 980 736 Long-term receivables, non-current 5 5 Amount due from related parties, non-current 5 5 Finance lease receivables, non-current - 1 Derivati
Slide 24: Agenda
Agenda ► Financial Highlights ► 3Q2016 vs 3Q2015 ► 9M2016 vs 9M2015 ► Business Review ► Outlook ST Engineering Page 24
Slide 25: 3Q2016 In Review: Aerospace
3Q2016 In Review ► Aerospace ► New contracts worth $520m, including: ► A five-year agreement with an international airline to provide airframe heavy maintenance support, A330-300P2F conversion launch contract with DHL Express, extension contract from airline customer for pilot- training ► New busine
Slide 26: 3Q2016 In Review: Electronics
3Q2016 In Review ► Electronics ► New contracts worth about $480m, including: ► Platform Screen Doors for a metro operator in Gulf States, Airport Operation Control & Management System for Taiwan Taoyuan International Airport, and various contracts to supply satcoms systems to customers worldwide ► N
Slide 27: 3Q2016 In Review: Land Systems
3Q2016 In Review ► Land Systems ► New contracts include: ► United States Postal Service’s Next Generation Delivery Vehicle prototypes ► Supply contract for 40mm High & Low Velocity munitions from customers in Europe and North America ► MRO contract for fleet of vehicles from Lion City Rentals ► Show
Slide 28: 3Q2016 In Review: Marine
3Q2016 In Review ► Marine ► Delivery: ► Delivered Offshore Barge “Columbia Freedom” for Pacific Hawaiian Line ► New business development: ► Formed ZHR Marine, LLC., a joint venture between VTHM, Raytheon Company and Zamil Group, in the Kingdom of Saudi Arabia, to bid for projects under the Royal Sau
Slide 29: Agenda
Agenda ► Financial Highlights ► 3Q2016 vs 3Q2015 ► 9M2016 vs 9M2015 ► Business Review ► Outlook ST Engineering Page 29
Slide 30: Outlook For FY2016: Aerospace
Outlook For FY2016 ► Aerospace ► Ground-breaking for Pensacola hangar ► Complete the construction of the second hangar in Guangzhou ► Pursue launch customer for A320P2F conversion ST Engineering Page 30
Slide 31: Outlook For FY2016: Electronics
Outlook For FY2016 ► Electronics ► LSG: Sales recognition from the Land Transport Authority’s and Bangkok MRT projects ► CSG: Sales recognition from various communication system projects, the supply of telematics systems & satellite communication products ► SSG: Sales recognition from the milestone
Slide 32: Outlook For FY2016: Land Systems
Outlook For FY2016 ► Land Systems ► Continue to pursue and secure key defence and commercial programmes both locally and overseas, and deliver secured contracts on schedule ST Engineering Page 32
Slide 33: Outlook For FY2016: Marine
Outlook For FY2016 ► Marine ► Launch 3rd of eight Littoral Mission Vessels (“LMV”) ► Keel-lay the 5th of eight LMV ST Engineering Page 33
Slide 34: Group Outlook for FY2016
Group Outlook for FY2016 Barring unforeseen circumstances, the Group expects FY2016 Revenue to be higher, while PBT is expected to be lower than that of FY2015. ► For Aerospace sector, Revenue for FY2016 is expected to be higher, while PBT is expected to be comparable to that of FY2015. ► For Electr
Slide 35: President & CEO's Message
President & CEO’s Message “The Group reported higher Revenue but lower PBT for the third quarter as well as the first nine months of 2016, compared with the corresponding periods last year. In 3Q2016, Land Systems sector took a one-off charge of $61.1m, net of non-controlling interests, for its Spec
Slide 36: Thank You
Thank You Engineering Our Future
Singapore Technologies Engineering — Q3 2016 Earnings Presentation on 6ix