1999 Interim Results 1999 Interim Results
KEY POINTS • SembCorp Industries’ PATMI for 1H99 grew 6% to $61.1m. • We achieved $11m from merger cost savings and rationalisations. • We had no exceptional items at half time. Last year’s interim earnings were boosted by SembCorp Logistics’ vessel sales which contributed an exceptional gain of $11m. Net that off and our PATMI growth half year-on-half year is 30%. • Some of our SBUs showed lower or flat earnings due to the recession’s tail-end effects. • Our FY99 management target is achievable given the improving outlook for the next six months. 2
PROFIT & LOSS $M 1H99 1H98 % (Proforma) Turnover 1,853.95 2,070.38 (10) PBT (before Assocs & JVs) 121.88 105.88 15 Contribution from Assocs 4.49 16.98 (74) Contribution from JVs 6.31 4.64 36 PBT (after Assocs & JVs) 132.68 127.50 4 PBT (excl. vessel sales ) 132.68 107.64 23 PATMI 61.08 57.66 6 PATMI (excl. vessel sales) 61.08 46.81 30 EI 228.94 8.28 NM Profit Attributable to Shareholders 290.02 65.94 339.8 3
CONTRIBUTION TO PATMI $M 1H99 1H98 % (Proforma) Infrastructure 34.94 40.09 (13) Construction 13.77 13.52 2 Engineering 3.89 4.33 (10) Integrated Logistics 12.65 15.79 (20) Building Materials 0.66 3.47 (81) Industrial Parks 2.24 1.78 26 Others (incl. Heavy Infrastructure, Energy) 1.73 1.20 44 Marine Engineering 24.20 22.36 8 Information Technology 5.22 9.57 (45) IT Services 3.72 3.28 13 Internet Service Provider 1.50 6.29 (76) 4
CONTRIBUTION TO PATMI $M 1H99 1H98 % (Proforma) Lifestyle 16.79 12.59 33 Food Processing & Distribution 9.79 7.22 36 Food Retailing 2.97 2.56 16 Travel & Retail 1.33 0.85 55 Others (incl. Minting, Hotels & Resorts) 2.70 1.96 38 Corporate & Others (20.07) (26.95) (26) TOTAL 61.08 57.66 6 5
CONTRIBUTION TO PATMI (excl. vessel sales) $M 1H99 1H98 % (Proforma) Infrastructure 34.94 29.24 19 Construction 13.77 13.52 2 Engineering 3.89 4.33 (10) Integrated Logistics 12.65 4.94 156 Building Materials 0.66 3.47 (81) Industrial Parks 2.24 1.78 26 Others (incl. Heavy Infrastructure, Energy) 1.73 1.20 44 Marine Engineering 24.20 22.36 8 Information Technology 5.22 9.57 (45) Lifestyle 16.79 12.59 33 Corporate & Others (20.07) (26.95) (26) TOTAL 61.08 46.81 30 6
EXTRAORDINARY ITEMS (1H99) $M Gain / (Loss) on Disposal: PacNet 149.01 FCC 81.99 ST Logistics 19.80 Wah Kwong Shipping 7.89 Moulmein Rise site 2.05 Others 0.12 North Bridge Road shophouses (5.39) Net Gain 255.47 Write-downs (26.53) TOTAL 228.94 7
FINANCIAL RATIOS 1H99 1H98 % (Proforma) Annualised ROE (%) 14.56 8.66 68 Annualised ROTA (%) 4.46 4.22 6 EPS (cents) 3.79 3.57 6 EPS (excl. vessel sales) 3.79 2.88 32 Net Gearing (times) 0.74 0.76 (3) NTA per share (cents) 59.79 82.40 (27) CAPEX ($M) 87.72 282.52 (69) 8
GROSS BORROWINGS AS AT END-JUNE 99 (excluding SembCap) Currencies Amount ($M) Total S$M As a % ST LT Equivalent of Total S$ 428 1,026 1454 79 US$ 133 86 362 19 Others - - 32 2 (RM,¥,HK$,NZ$, B$) TOTAL 1,848 100 (Average interest rate for S$ & US$ were 5.55 per cent & 6.01 per cent p.a. respectively) 9
NET BORROWINGS (excluding SembCap) As at As at Jun 30, 1999 Dec 31, 1998 % Short Term 676 919 (26) Long Term 1,172 1,153 2 Gross 1,848 2,072 (11) Less cash 568 579 (2) Net 1,280 1,493 (14) 10
COST SAVINGS - 1H99 $M Merger cost savings and rationalisations at HQ and SBUs 11 CPF Savings 6 17 Full-year target: about $35m 11
Divestment 12
SAFE Superstore • SAFE Enterprises transferred its business and undertakings in SAFE Superstore to Elpizo Ventures (USA) for initial cash proceeds of $52m. • Final consideration could go above $52m, with a maximum upside of $11m computed on an agreed PER on SAFE Superstore’s earnings till Dec 31, 2000. • Financial effects on SembCorp Industries (assuming sale was completed on June 30, 1999): - Extraordinary gain of $16.6m. - NTA per share increases by 1.05 cents to 60.84 cents. - Gearing decreases from 0.74 to 0.7. - No material impact on EPS. 13
Delifrance • Now holding negotiations with four parties with due diligence progressing. All four are going strong and equally “alive”. • Too sensitive to discuss their identities or disclose any details now. • SembCorp Industries will make an announcement upon conclusion of a sale. 14
BUSINESS OUTLOOK 15
BUSINESS OUTLOOK CONSTRUCTION • Tail-end of recession, tender prices low, industry slowly picking up. • Concentrating our marketing efforts outside Singapore -- particularly China and India. • Order book is adequate to maintain profitability, book to bill ratio is 1.77. • PATMI target for FY99 should be attained comfortably. 16
BUSINESS OUTLOOK ENGINEERING • Oil and gas industry expected to recover over the next two years. • Chemicals and petrochemical industry flat for at least next year. • Focussing on offshore EPC projects -- in Malaysia, Philippines and beyond. • SUT makes its profit contribution this year. • Expect a stronger profit performance in 2H99. 17
BUSINESS OUTLOOK NATUNA GAS • The supply contract of gas to Singapore is not in question. The award of the pipeline contract is the issue. • Work has already started on the pipeline. • Our contractual position with Pertamina is legally sound. • This is an international, high-profile deal. • The moment we get official information on this matter, we will update you. 18
BUSINESS OUTLOOK LOGISTICS • Business has shifted focus to supply chain management and as a result, quality of earnings has improved. • China and India operations are performing better than forecasted. • More divestments of non-core businesses in progress. • Will meet management target announced in March. 19
BUSINESS OUTLOOK INDUSTRIAL PARKS • Investment climate is improving. More tenant take-up to be seen in BIE and VSIP. • G & A controls to further reduce losses in BIE and KMIC. • BIP and BIE still remain attractive to investors. • WSIP losses likely to stay at FY98 level due to weak land sales and high interest expenses. 20
BUSINESS OUTLOOK MARINE ENGINEERING • Offshore construction and shipbuilding will be backbone of company profitability. • Shiprepair is expected to show weakness. • A programme to reorganise our marine engineering operations is underway but the study is not yet complete. It is too early to disclose details -- ready around November. • Will meet management target for the year. 21
BUSINESS OUTLOOK INFORMATION TECHNOLOGY SCS • China is picking up well, expect more orders from this source. • Malaysia and New Zealand operations should perform strongly in FY99. • More e-commerce projects such as procurement services will be launched. • On track to achieve their management target. 22
BUSINESS OUTLOOK INFORMATION TECHNOLOGY PacNet • Pressure on profits due to competition, margins squeezed. • Broad-basing the business to increase e-content. • Focus on growing existing markets such as Australia, Hong Kong, Philippines and Singapore. • Expand into new territories such as India, Thailand, Korea and Japan. • Expect depressed profits (or even no profits) for two years at least but good growth in revenue and subscriber base. 23
BUSINESS OUTLOOK FOOD PROCESSING AND DISTRIBUTION • Overseas subsidiaries are starting to turn around. • Achieved market share of 50 per cent of present local pork consumption. • Moving more into higher value-added activities such as the handling of fresh foods. • Full impact of Nipah virus on live pig imports will weaken 2H99 earnings but company on track to meet FY99 PATMI target. 24
BUSINESS OUTLOOK RISKS • Tension or hostilities between China and Taiwan, India and Pakistan. • Possible devaluation of the Renminbi. • Socio-economic conditions in Indonesia. 25
PRIORITIES FOR 2H99 • Drive the earnings growth of our SBUs. • Push on with divestment programme. Manage post-merger integration. • Implement best practices to achieve our goals of becoming a global knowledge-based company. • Drive a group-wide e-commerce strategy. • Strengthen our core capabilities by expanding into new business areas. • Attain our management target for FY99. 26
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