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ST Engineering sees 3Q earnings edge up 3% as most divisions face drag

Benjamin Cher
Benjamin Cher • 3 min read
ST Engineering sees 3Q earnings edge up 3% as most divisions face drag
SINGAPORE (Nov 11): ST Engineering’s 3QFY2019 results ended Sept 30 saw revenue up 27% to $2.07 billion as all divisions posted revenue increases across the board.
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SINGAPORE (Nov 11): ST Engineering’s 3QFY2019 results ended Sept 30 saw revenue up 27% to $2.07 billion as all divisions posted revenue increases across the board.

However, earnings grew just 3% to $139.1 million, dragged by most divisions except for aerospace and others, which posted y-o-y increases.

Revenue for the aerospace division saw the biggest increase, up 53% to $1.1 billion, driven by the new income stream from the MRAS acquisition and revenue recognised from various end-of-life programmes.

Aerospace earnings also saw the biggest increase, rising 17% to $65 million, mainly contributed by MRAS, favourable impact from end-of-life programme reviews and recognition of tax credit.

The increase was offset by absence of gain from portfolio rationalisation, timing differences in project revenue recognition, and impairment of assets.

Revenue from the others category jumped 50% to $18 million, mostly due to Miltope, the ruggedised laptop business. This helped the segment to reverse out of the red and post a net profit of $4.1 million in 3QFY2019 on the back of the improved performance and lower expenses.

The marine division saw the next largest increase in revenue, climbing 13% to $155 million, with all its business groups contributing to the increase.

However, the division saw the biggest drop in earnings, slumping 73% to $3.4 million. The decline was mainly due to a provision payable to a customer for an arbitration outcome, and offset by higher revenues from the engineering business.

The electronics division posted a 10% increase in revenue to $538 million, mainly attributed to the large-scale systems group and software systems group. However, electronics earnings fell 7% to $51.5 million due to increased investments in new growth areas.

Land systems saw the smallest increase in revenue, edging up 3% to $307 million. The higher revenue was driven by the munitions & weapon and services, trading and others business, offset by the lower revenue from the automotive business.

The division saw its earnings drop 14% to $15.1 million due to an absence of a tax credit a year ago, as well as higher operating expenses from continued investments in robotics capabilities.

“Amidst the trade tensions and geopolitical uncertainties which continue to weigh on the global economy, we continue to pursue growth areas, build capabilities, and integrate MRAS, Newtec and Glowlink into the Group,” says Vincent Chong, president and chief executive officer, ST Engineering.

“Our core business remains strong and our Group’s robust order book of $15.9 billion continues to provide revenue visibility for the next few years,” he adds.

As at 1.20pm, shares in ST Engineering are trading 4 cents lower at $4.08.

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