Transcript Boeing Corporate PPT Template

Boeing Co.
Presented By:Darshil Shah
Anjana Reddy
Pratik Kamdar
May 3, 2011
BOEING is a trademark of Boeing Management Company.
Copyright © 2007 Boeing. All rights reserved.
Agenda
 Company Overview
 Management Discussion and Analysis
 SWOT Analysis
 Industry Overview
 Porters Five Force Model
 Competitors
 Valuation
 Recommendation
Copyright © 2007 Boeing. All rights reserved.
Company Overview
 Boeing is the world’s largest aerospace company and leading manufacturer
of commercial airplanes and defense, space and security systems
 It supports airlines and U.S. & allied government customers in more than 90
countries
 Headquartered out of Chicago Boeing employs more than 160,000 people
across the United States and in 70 countries
 Products include commercial and military aircraft, satellites, weapons,
electronic and defense systems, launch systems, advanced information and
communication
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
Boeing - Divisions
Market Segment ( 2010)
Commercial Aircrafts
Revenue %
50%
Defense, Space & Security(BDS)
Boeing Military Aircraft (BMA)
22.14%
Network and Space Systems (N&SS)
14.7%
Global Services and Support (G&SS)
12.83%
Boeing Capital Corporation (BCC)
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
0.99%
Commercial Aircraft-Products
 Manufactures family of jetliners – Cargo and passenger
 Narrow body model-737
 Wide body model-767 and 777
 Under Development wide body models-747-8 and 787
 Offers aviation services support, aircraft modifications, spares, training and
technical advice
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
Boeing – Commercial Aircrafts
 Delivered 462 airplanes in 2010
 Revenue grew by 11% for the year 2010
 Boeing 787 has 847 orders from 57 customers in 37 countries
 More efficient production lines
Year
Commercial Airplane Deliveries
2006
398
2007
441
2008
375
2009
481
2010
462
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
BDS - Products
 Boeing Military Aircraft
 Engaged in R&D production and modification of manned and unmanned military
weapons
 Mobility – AH-64 Apache, F/A-18 E/F Super Hornet
 Network and Space Systems Segment
 Assists customers in transforming their operations through network integrations
– International Space System, Satellite System
 Global Services and Support Segment
 Operates, maintains, trains, upgrades and provides logistic support functions for
military platform and operations – KC-767 International Tank
 82 % of revenues of BDS department have come from defense
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
Geographic Sales
59%
11%
5%
12%
6%
3%
1%
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
1%
1%
Key Financials
 2010 Net Income of $3.3 billion vs. $1.3 billion in 2009
 Market Capitalization: $58.6bn
 P/E: 17.53
 Current Share Price: $79.39
 Operating Margin: 7.31%
 Net Profit Margin: 5.14%
 Dividends Yield: 2.10 %
Source http://finance.yahoo.com/q?s=BA&ql=0
Copyright © 2007 Boeing. All rights reserved.
Recent Financials
2010 Financial (US dollars in millions except per share data)
2010
2009
2008
2007
2006
64,306
68,281
60,909
66,387
61,530
3,307
1,312
2,672
4,074
2,215
EPS
4.46
1.87
3.65
5.26
2.84
Operating Margin
7.7%
3.1%
6.5%
8.8%
4.9%
Contractual
Backlog
303,955
296,500
323,860
296,964
216,563
Total Backlog
320,826
315,558
351,960
327,137
250,211
Revenues
Net Earnings
Source :http://finance.yahoo.com/q?s=BA&ql=0
Copyright © 2007 Boeing. All rights reserved.
Stock Movement
Source :http://finance.yahoo.com/q?s=BA&ql=0
Copyright © 2007 Boeing. All rights reserved.
SWOT Analysis
Strengths
• Growth through acquisitions
• Strong focus on research and
development
• Realignment for growth and
expansion to new markets
Opportunities
• Boeing's global outlook for aircraft
demand
• Surge in the US defense spending
Weakness
•
•
•
•
Highly leveraged
Declining profits and margins
Sluggish performance of business divisions
Dependence on United States Department of
Defense as they account for 82% of BDS revenue
in 2010.
Threats
•Increasing prices of titanium and aluminum
•Increasing fuel prices
•Intense competition
•Heavy dependency on US government contracts
•Government regulations
•Environmental regulations
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
Management Discussion & Analysis
 Revenues in 2010 decreased by 6 % compared to 2009
 Lower 777 deliveries as production rate changed from 7 to 5 per month
 No deliveries on 747 program because of transition from 747-400 to 747-8
 BDS revenues decreased by $1,718 m due to lower revenues in Network and Space Systems Segment
 Operating earnings in 2010 increased by $ 2,875 m compared to 2009
 Commercial Airplanes earnings increased by $ 3,589 m primarily due to $ 2,693 m costs related to first
three 787 flight test aircraft included in R & D in 2009
 Long term outlook for the industry remains positive due to fundamental drivers of air travel growth such as:
 Economy growth
 Trade
 Liberalization of air traffic rights between countries
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
Management Discussion & Analysis
 To increased the manufacturing of existing commercial airplanes
 The company expects the R&D costs to go down in the future
Copyright © 2007 Boeing. All rights reserved.
R&D
Commercial
Airplanes
BMA
Network & Space
Systems
Global Services &
Support
Total
2010($ mn)
2009 ($ mn)
2008 ($ mn)
2975
5383
2838
72.19%
82.74%
74.96%
589
582
486
14.29%
8.95%
12.84%
417
397
298
10.12%
6.10%
7.87%
130
122
149
3.15%
1.88%
3.94%
4121
6506
3786
Source: 10k http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=85482&fid=7357199
Copyright © 2007 Boeing. All rights reserved.
Industry Overview
 Industry – Aerospace and Defense
 Revenues accrued by manufacturers from civil and military aerospace and defense
procurements
 Major products and services:
 Aircraft
 Aircraft engines and engine parts
 Other aircraft parts and auxiliary equipment
 In 2014, the market value is expected to be $1,190.5 billion, an increase of 29.3% since
2009
 Defense is the largest segment accounting for 71.8 % of the sector’s total value
 $ 3.6 trillion market for 30,900 new airplanes over the next 20 years
Source: Datamonitor Industry Report
Copyright © 2007 Boeing. All rights reserved.
Industry Overview
 Global aerospace and defense industry segmentation:
Category
% Share
Americas
59.1 %
Europe
22.0 %
Asia – Pacific
19.0 %
Total
100 %
 External Drivers:
 Federal Funding for Defense
 Demand from international airlines
 Industry systems and technology
 Demand from domestic airlines
Source: Datamonitor Industry Report
Copyright © 2007 Boeing. All rights reserved.
Porters Five Force Analysis
 Supplier Power (Moderate)
 Suppliers are small. However, the high quality inputs provided by suppliers
dilute the bargaining power of players
 The quality and availability of these inputs is highly important to the quality
of the end products in the aerospace and defense industry, increasing the
power of the suppliers
 Too many suppliers
 Buyer Power (Moderate)
 Large size of competitors due to merger activity
 Players are limited as Airbus and Boeing have a virtual duopoly
 Buyers typically government organizations which flex their financial muscles
to dilute the bargaining power of players
Source: Datamonitor Industry Report
Copyright © 2007 Boeing. All rights reserved.
Porters Five Force Analysis
 Threat of New Entrants (Low)
 High capital outlay and expertise
 The arms industry has become highly concentrated, nationally and internationally
 Threat of Substitutes (Low)
 No real threat of substitutes in defense and aircrafts, however air freight section
might be affected with increase in concerns of carbon emissions as companies are
seeking eco-friendly reputation
 Degree of Rivalry (Strong)
 Due to duopoly, Airbus and Boeing are the sole rivals and they are quite evenly
matched
 Competition is intense in terms of winning defense contracts and companies use
innovation and new technology to differentiate their service
Copyright © 2007 Boeing. All rights reserved.
Source: Datamonitor Industry Report
Historic Growth
Year
$ Billion
% Growth
2005
658.8
2006
737.7
12 %
2007
830.9
12.6 %
2008
917.3
10.4 %
2009
920.6
0.4 %
CAGR – 2005 - 2009
8.7 %
CAGR – 2009 – 2014
5.3 %
Copyright © 2007 Boeing. All rights reserved.
Key Players
Companies
Market Share
Boeing
7.4 %
EADS
6.5 %
Lockheed Martin
Corporation
4.9 %
BAE Systems Plc
3.8 %
Other
77.4 %
Source:
Industry
Copyright ©Datamonitor
2007 Boeing. All rights
reserved. Report
Competitor Analysis (Fiscal year
12/31/2010)
Comparables
Revenue (USD
billions)
Boeing
Lockheed Martin
BAE Systems Plc
64
46.10
35.258
3.38
2.93
1.758
Operating Margin (%)
7.06 %
8.50 %
7.4 %
Profit Margin (%)
5.27 %
6.34 %
7.0 %
Debt/Capital(%)
81.3 %
57.5 %
36 %
ROE (%)
135.15 %
68.40 %
20.3 %
ROA (%)
5.06 %
6.71 %
4.0 %
17.57 %
9.77 %
270.54 %
Net Income (USD
millions)
PE (%)
Source: Datamonitor Industry Report
Copyright © 2007 Boeing. All rights reserved.
Comparable Valuation
Copyright © 2007 Boeing. All rights reserved.
Discount Rate Valuation
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DCF Valuation
Discounted Cash Flow (Amounts in Millions $)
Year Ending
Net Income
Add: D & A
Less: Changes in NWC
Less: Capex
Free Cash Flow (FCF)
2010
3467.00
1727.00
2262
Sum of PV of FCFs
18979
Terminal Value
Enterprise Value
Shares Outstanding
Net Debt
Equity value
Value Per Share
55056
74035
736
12420
61615
84
Copyright © 2007 Boeing. All rights reserved.
2012
4599.36
1870.47
2013
5133.45
1882.79
2014
5671.60
1777.06
2015
6352.14
1861.68
2784.951974 3510.563795 12.89972221 1536.373244 2328.329075 2930.903182
147
343
185
189
193
197
2262
1797
6297
5291
4927
5086
PV FCF w/ r = 10%
Discount Rate
Terminal Value Growth Rate
2011
3935.27
1715.90
11%
5%
1615
5082
3836
3209
2976
Recommendation
 Based on a strong future growth and a heavy backlog of orders we
expect the company to do well going forward
 We recommend that the company be kept on the watch list
Copyright © 2007 Boeing. All rights reserved.