Inter-Roller Engineering

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Inter-Roller Engineering 1st Quarter 08 Results
Written By Net Research on 04 Jul 2008 Net Research Add comments (0) Contact Author

Inter-Roller Engineering Limited (IRL) reported yet another disappointing financial performance for 1Q08. After reporting a loss of $4.2m in 4Q07, net after-tax profit of $36,000 was positive for this quarter but fell short of our expectation of $3.1m by a substantial margin. Net after-tax profit for the previous corresponding 1Q07 was $4.7m. Revenue this quarter was down 49% as compared to 1Q07. The company attributed this to a delay in revenue recognition because major projects are still in its early stages or have been delayed.

Order book is still relatively strong at $125.7m with $34.6m worth of new orders secured in 1Q08. However, potential for further new orders in the next few quarters appears gloomy. The International Air Transportation Association (IATA) painted a dim and uncertain outlook for the airline industry at its 64th AGM and World Air Transport Summit at Istanbul held on 2nd June 2008. The IATA forecasted a loss of US$2.3b for the airline industry for 2008 based on a consensus oil price of US$106.5 per barrel, down from its previous forecast of US$4.5b profit. Rising fuel prices are forcing the airline industry into more losses. We feel that airlines may be less willing to spend on baggage handling and airport logistics systems in the near term. Furthermore, IRL noted that a number of tenders have been delayed.

High materials costs continue to pose a challenge, but IRL appears to be controlling this with gross profit margin of 42% in 1Q08 as compared to 36% in 1Q07. However we remain cautious on the impact of higher materials costs, in particular steel and copper.

We are revising our revenue forecasts for FY08 and FY09 downward to $138.9m and $112.5m respectively. Reasons for our revisions are due mainly to an expected decrease in new contracts we think IRL can secure and delays in existing projects. Forecast earnings are also lower, leading to a reduced DCF fair value of $0.304. We maintain our SELL recommendation.

[millionairemind]

Inter-Roller’s first foray into South America with project in Quito City, Ecuador
Inter-Roller Engineering Limited (Inter-Roller) is awarded a contract to design, supply and install a Baggage Handling System for the New Quito International Airport in Ecuador. The contract value is USD5.8 million (SGD7.9 million) and is expected to complete in August 2010. This contract represents Inter-Roller’s first project in South America. The contract includes the design, supply and installation of mechanical, electrical and high-level controls that will integrate with 100% Hold Bag Screening.

[millionairemind]

Inter-Roller Bags New Contracts
Inter-Roller Engineering was awarded a US$5.8m contract to design, supply and install a Baggage Handling System (BHS) for the New Quito International Airport in Ecuador. Expected to complete in August 2010, this contract represents the company’s first project in South America. Inter-Roller also clinched $13.5m BHS deal for the Calgary International Airport in Canada, the company’s second in North America

[winston]

Not vested.

Inter-Roller reports Q2 $1.9 mln loss
By CHOW PENN NEE

Inter-Roller Engineering, the builder of airport logistics systems such as baggage handling and in-flight catering systems, reported a net loss of $1.9 million (US$1.4 million) for its second quarter ended June 30, 2008. This is in stark contrast to the S$15.1 million net profit earned a year ago. This comes on the back of a 55 percent plunge in revenue to $17.6 million.

On a half-year basis, the group reported a net loss of $1.87 million or 0.56 cent per share, compared to $19.8 million a year ago. Revenue was S$37.2 million, a 52 per cent drop.

The group said it had an outstanding order book of $125.7 million as at 31 Mar 2008, but most jobs are in the design phase and current major projects have been delayed. The company said its bottomline has also been hit by higher cost and expenses across the board, 'consistent with the global inflationary pressure'.

On its outlook, the company said that due to the soaring jet fuel prices, airport authorities and airlines are taking a more cautious approach on capital expenditure. 'As such, there may be delays in some of the tenders for expansion.'