SINGAPORE (Aug 11): ST Engineering reported 12% lower 2Q17 earnings of $111.5 million compared to $127.3 million in 2Q16, impacted by the weak marine sector.
Group revenue for 2Q17 ended June came in 8% higher at $1.76 billion compared to $1.62 billion in the same period last year.
Group quarterly Profit before tax (PBT) fell 12% to $149.8 million from $170.3 million, mainly due to an $8.1 million loss from the marine sector impacted by weak industry conditions and its US operations.
The group says its diverse business portfolio mitigated the impact of the weak marine sector.
At the business sector level compared to the same period last year. Revenue for the aerospace sector was comparable at $639 million, and its PBT grew 6% to $78.9 million from $74.2m.
The Electronics sector saw a 40% increase in revenue to $621 million from $445 million largely due to the modification of estimates of revenue recognition for long-term contracts. Its PBT remained flat at $52.1 million due to less favourable sales mix.
Revenue for the Land Systems sector at $302 million was flat year-on-year, and its PBT at $29.3 million was comparable due mainly to the absence of a divestment gain in the same period last year.
The Marine sector posted 34% drop in revenue to $163 million and incurred a loss before tax of $8.1 million versus a PBT of $20.4 million a year ago.
Commercial sales and defence sales accounted for 64% or $1.1 billion and 36% or $0.7 billion respectively of the group’s 2Q17 revenue.
Order book remained strong at $13.5 billion, compared to $13.3 billion as at end March 2017.
The Group expects to deliver $2.1 billion of orders in the rest of 2017.
Cash and cash equivalents including funds under management remained high at $1.3 billion after payment of the FY16 final dividend of $312 million.
In the last few months, ST Engineering have made several acquisitions and investments to position itself for long term growth.
It acquired a 51% of SP Telecommunications that will provide ST Engineering with a fibre-optic grid to market ICT solutions to government and enterprise customers.
The soon-to-be completed acquisition of Aethon, a US-based robotics company, will provide the group with autonomous mobile robots for deployment in the healthcare, industrial and hospitality sectors.
The US$150 million Corporate Venture Capital unit, the setting up of technology scouting overseas offices and the Open Innovation Lab will complement and support ST Engineering’s development of new technologies and capabilities.
The board has approved to maintain the interim dividend at 5 cents per ordinary share, similar to the interim dividend payouts in the last two years.
Shares in ST Engineering closed 5 cents higher at $3.82 on Thursday.
