SIA Engineering Company has reported a net loss of $11.2 million for the FY2020/2021 ended March, compared to earnings of $193.8 million in the year before.
The group’s financial performance was “substantially cushioned” by grants from government support schemes, especially the jobs support scheme (JSS), without which, the group would have recorded a loss of $192.4 million for the FY2020/2021.
The group has made provisions for the impairment of asset values during the FY2020/2021 due to the negative impact of Covid-19 on the aerospace industry. This includes a $35.0 million impairment provision made on Base Maintenance unit’s assets and an $11.4 million impairment provision on the investment in an engine programme.
Basic loss per share for the year was 1.00 cent on a diluted basis, compared to earnings per share (EPS) of 17.26 cents in the year before.
Group revenue for the FY2020/2021 plunged 55.4% y-o-y to $443.0 million, due to low flight activities and the widespread grounding of aircraft, which resulted in a “sharp and severe reduction” in business volume.
Group expenditure fell 49.5% y-o-y to $468.0 million due to government grants and cost-saving measures. Staff costs and subcontract costs fell due to the group’s actions to match manpower requirements to lower business volume.
However, as the decline in revenue outpaced the lower expenditure, the group’s operating performance stood at a loss of $25.0 million for the FY2020/2021, compared to the profit of $67.7 million in the year before.
Share of profits of associated and joint venture companies fell 68.8% y-o-y due to a $9.9 million loss from the airframe and line maintenance segment, as well as a reduction in business volume as a result of low flying hours. This was offset by a positive contribution of $49.8 million from the engine and component segment.
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For the 2HFY2020/2021, the group reported earnings of $7.8 million, 92.7% lower than earnings of $106.2 million in the year before.
Earnings per share (EPS) for the period stood at 0.69 cent on a diluted basis, compared to 9.45 cents in the year before.
While the group said the gradual recovery of flight activities continued into the second half of the year, group revenue fell 54.3% y-o-y to $220.0 million.
Expenditure for the 2HFY2020/2021 fell 51.7% y-o-y to $217.8 million, mainly due to lower staff, subcontract and material costs.
Operating profit for the period plunged 92.8% y-o-y to $2.2 million.
Share of profits from associated and joint ventures fell 84.6% y-o-y to $11.5 million, with lower contributions from the engine and component segment, and offset by contributions from the airframe and line maintenance segment.
Due to the adverse results for the FY2020/2021, the board has not recommended a dividend for the period.
As at March 31, cash and cash equivalents stood at $616 million.
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Looking ahead, the group says the recovery of the aviation and aerospace sector is still “fraught with risks” even as vaccination programmes around the world are gathering pace.
“Amid the uncertainties and challenging operating environment, we will continue in our pursuit to emerge stronger through investment in new capabilities, technologies and services to expand our market reach. We will also accelerate the pace of our digitalisation, automation and adoption of Lean frameworks under our ongoing Transformation programme,” says the group in a May 4 statement.
“To position ourselves for the post Covid-19 aviation landscape, we will continue the diligent review and rationalisation of our portfolio of companies as well as seek out new opportunities, such as the recently-announced potential acquisition of SR Technics Malaysia, to expand our capabilities and geographic reach,” it adds.
Shares in SIAEC closed 2 cents higher or 0.9% up at $2.26 on May 4.