bae systems/media/files/b/...3 • difficult defence budget environment but:- – growth from...
TRANSCRIPT
1
BAE Systems
2008 Half Year Results
1 August 2008
2
Overview - First half 2008
• Continued good performance– good programme execution
• Further progress against strategy– broad base of business– multi-Home Market positions
• Excellent visibility– large order book – appropriate terms of trade– realistic plans
First halfSales by Sector
25%Electronics, Intelligence & Support
33%Land &
Armaments
18%InternationalBusinesses
24%Programmes
& Support
First halfEBITA by Sector
23%Electronics, Intelligence & Support
28%Land &
Armaments
26%InternationalBusinesses
23%Programmes
& Support
Building the foundations for long-term sustainable growth
3
• Difficult defence budget environment but:-
– Growth from sustainable through-life business
– Multi-year commitment to key large programmes
• Air– Typhoon
– multi-year Tranche 2 delivery programme– Tranche 3 dialogue underway
• Naval– Type 45 six ship programme
– FSC planning underway– CVF manufacturing contract – BVT transaction completed
– Astute long lead now into boat five– working on Successor Submarine
• Land– FRES timing uncertainty
– upgrade opportunities eg Warrior– MASS underpins ammunition throughput
UK businesses
Robust, realistic, business planning assumptions
4
US businesses - Electronics, Intelligence & Support
BAE Systems - the 6th largest US defence supplier
Electronics & Integrated Solutions
– Continued good demand for Electronic Warfare systems – eg thermal sights, CMWS
– F-22 EW production– transition to F-35 production underway
Customer Solutions
– Ship Repair– successfully addressing upgrade opportunities
– MTC Technologies acquisition completed– advances US readiness and sustainability strategy
5
US businesses - Land & Armaments
Tracked vehicle programmes
– Continued high level of reset activity– expected to sustain beyond operational demand
– Progression to new generation programmes underway– FCS / NLOS-C
Wheeled Vehicle programmes
– Mine Protected Vehicle– MRAP follow-on contracts and MMPV– MRAP sustainment contracts
– FMTV– large follow on contract and rising production rate
– JLTV – longer term opportunity
Benefiting from high priority programmes
6
Other Home Markets
• Saudi Arabia– Salam Typhoon in final assembly, training underway– modernisation activities continue on-track
• Sweden– Danish and Dutch CV90 deliveries underway
• South Africa– further RG31 opportunities
• Australia– Tenix Defence acquisition completed
– adds Naval and enhances Land and Air systems capabilities
7
Other Home Markets
• India - opportunities to develop as new Home Market– pursuing Land systems opportunities with M&M– implementing Indian Hawk programme with HAL
• Saudi Arabia– Salam Typhoon in final assembly, training underway– modernisation activities continue on-track
• Sweden– Danish and Dutch CV90 deliveries underway
• South Africa– further RG31 opportunities
• Australia– Tenix Defence acquisition completed
– adds Naval and enhances Land and Air systems capabilities
8
Top Ten Objectives - 2008
1. Meet 2008 financial targets and set challenging/realistic longer term plans
2. Develop partnering approach to meet customers’ capability requirements
3. Ensure continued quality application of our mandated business processes
4. Further enhance programme execution - schedule and cost performance
5. Progress development of security capabilities in our home markets
6. Grow our US business including execution of planned investments
7. Progress industrialisation plan and further business in Kingdom of Saudi Arabia
8. Continue to implement the UK Defence Industrial Strategy
9. Progress export opportunities from each of our home markets
10. Continue to drive performance in Safety, Ethics and Diversity
9
George Rose
10
Financial Highlights
* earnings before amortisation and impairment of intangible assets, finance costs and taxation** excluding amortisation and impairment of intangible assets and non-cash finance movements
• Sales - continuing
• EBITA - continuing *
• Underlying earnings per share - continuing **
• Cash outflow from operating activities
• Net debt
• Order book
• Interim dividend per share
£7,751m
£881m
17.5p
£(387)m
£(708)m
£41.1bn
5.8p
11
6,891 700
31 (49)(2)
(20)
(179)(3)
498
6,891 700
31
(50)(180)
501
Income Statement - Continuing Operations
First Half2007
Reported
First Half2008
Reported
7,751 881
30
(102)(210)
599
7,751 881
30 (21)(41)(32)
(221)(13)
615
First Half2008
Underlying
First Half2007
Underlying
SalesEBITA *
Finance Incomededuct: Pension Interest
Mark to MarketUnderlying Finance Costs
Amortisation/ImpairmentTaxMinority Interests
Profit after Tax
* earnings before amortisation and impairment of intangible assets, finance costs and taxation £ millions
12
9,559
1,887
787
(5,481)
(1,629)
63
52
64
700
6,002
31/12/07
Balance Sheet
30/06/08
9,966
2,022
892
(4,498)
(2,288)
297
153
-
(708)
5,836
Intangible fixed assets
Tangible fixed assets
Investments
Working capital
Retirement benefit obligations
Tax assets & liabilities
Financial assets & liabilities
Assets held for resale
Net (debt) / cash
Net assets
£ millions
13
Operating Business Cash Flow
(387)(216)
17 (586)
Cash outflow from operating activitiesCapital expenditure (net) & financial investmentDividends from equity accounted investments
Operating business cash flow
Electronics, Intelligence & SupportLand & ArmamentsProgrammes & SupportInternational BusinessesHQ & Other Businesses
Operating business cash flow
28 84
134 (739) (93)
(586)
£ millions
First Half 2008
14
Movement in Net Cash / (Debt)
700
(586)
(189)
(274)
(416)
(19)
51
7
18
(708)
Net Cash 31.12.07
Operating business cash flow
Interest and taxation
Equity dividends paid
Acquisitions & disposals
Net purchase of equity shares
Other non-cash movements
Foreign exchange
Movement in cash on customers’ account
Net Debt 30.06.08
£ millions
First Half 2008
15
Business Groups
First Half 2008Sales by Sector *
Strong performance – well balanced business
25%Electronics, Intelligence & Support
33%Land &
Armaments
18%InternationalBusinesses
24%Programmes
& Support
First Half 2008EBITA by Sector *
23%Electronics, Intelligence & Support **
28%Land &
Armaments
26%InternationalBusinesses
23%Programmes
& Support
* excluding HQ & Other Businesses** excluding profit on disposal of Surveillance and Attack business
16
First Half2007
$3,857m
$380m
$380m
9.9%
$6.7bn
$187m
First Half2008
$3,870m
$512m
$392m
10.1%
$7.2bn
$55m
Electronics, Intelligence & Support
Sales
EBITA
EBITA *
Margin *
Order book
Cash flow
* First Half 2008 excluding $120m profit on disposal of Surveillance and Attack business
17
Land & Armaments
Sales
EBITA
Margin
Order book
Cash flow
First Half2008
$5,126m
$476m
9.3%
$15.8bn
$166m
First Half2007
$2,366m
$230m
9.7%
$10.0bn
$(93)m
18
Programmes & Support
Sales
EBITA
Margin
Order book
Cash flow
First Half2008
£1,917m
£191m
10.0%
£20.7bn
£134m
First Half2007
£2,354m
£231m
9.8%
£17.3bn
£184m
19
International Businesses
Sales
EBITA
Margin
Order book
Cash flow
First Half2008
£1,397m
£219m
15.7%
£9.8bn
£(739)m
First Half2007
£1,550m
£221m
14.3%
£7.2bn
£26m
20
First Half2008
£113m
£(29)m
£(93)m
HQ & Other Businesses
Sales
EBITA
Cash flow
First Half2007
£124m
£(62)m
£(134)m
21
Financial Summary
* earnings before amortisation and impairment of intangible assets, finance costs and taxation** excluding amortisation and impairment of intangible assets and non-cash finance movements
• Sales - continuing
• EBITA - continuing *
• Underlying earnings per share - continuing **
• Cash outflow from operating activities
• Net debt
• Order book
• Interim dividend per share
£7,751m
£881m
17.5p
£(387)m
£(708)m
£41.1bn
5.8p
22
Mike Turner
23
Summary
• Continued good performance– good programme execution– good financial performance
• Further progress against strategy– broad base of business– multi-Home Market positions
• Excellent visibility– large order book – appropriate terms of trade– realistic plans
• Management succession– seamless transition
Building the foundations for long-term sustainable growth
First halfSales by Sector
25%Electronics, Intelligence & Support
33%Land &
Armaments
18%InternationalBusinesses
24%Programmes
& Support
First halfEBITA by Sector
23%Electronics, Intelligence & Support
28%Land &
Armaments
26%InternationalBusinesses
23%Programmes
& Support