CFA Society Singapore
SINGAPORE (Aug 9): Singapore Technologies Engineering (ST Engineering) saw its earnings grow 10% to $117.5 million for the 2Q ended June, from $106.8 million a year ago.
This was largely attributable to higher profitability from the Aerospace and Electronics sectors, which saw 2Q18 net profit rise by 26% and 22%, respectively.
The improved performance from Aerospace was largely due to the gain on divestment of an associate, Airbus Helicopters Southeast Asia, as well as share of higher profits from associates and joint ventures.
Meanwhile, the Electronics sector saw its increase in net profit driven by higher gross profit from favourable sales mix and lower operating expenses.
2Q18 revenue slipped 3% to $1.65 billion, from $1.71 billion a year ago.
ST Engineering’s revenue in 2Q18 was led by a 12% rise in Aerospace revenue to $713 million on the back of improved performance from the Component/Engine Repair and Overhaul business group.
However, this was offset by declines in revenue from all its other sectors.
Revenue from the Electronics sector fell 10% to $512 million during the quarter, mainly due to the absence of a one-time revenue increase in 2Q17 as a result of a modification of revenue recognition estimates.
2Q18 revenue for Land Systems sector declined by 11% to $270 million on the back of lower project revenue recognition from Automotive and lower sales from Munitions & Weapon business groups.
Revenue for Marine sector in 2Q18 came in at $148 million, 9% lower than a year ago. The decrease in revenue was mainly attributable to Shiprepair and Engineering business groups.
Under the “Others” segment, 2Q18 revenue fell 74% to $8 million due mainly to lower sales from Miltope.
On a fully diluted basis, earnings per share (EPS) grew 9.3% to 3.75 cents in 2Q18, from 3.43 cents a year ago.
As at end June, cash and cash equivalents stood at $1.17 billion.
The group has recommended an interim dividend of 5 cents per share for the period, similar to the interim dividend payouts in the last three years.
ST Engineering’s order book stood at $13.4 billion at end June 2018, of which about $2.7 billion is expected to be delivered in the remaining months of 2018.
“Our order book remained robust at $13.4 billion, contributed by new orders including those in the Smart City spaces,” says Vincent Chong, president and CEO, ST Engineering.
“On the whole, we are tracking well on our strategy of strengthening our core as well as actively pursuing growth opportunities in defence exports and Smart City projects,” he adds.
Shares in ST Engineering closed 4 cents higher at $3.45 on Wednesday.