STEng – BT
ST Engg Q3 earnings rise 9.1%
Results boosted by earnings in the group’s marine and aerospace divisions
SINGAPORE Technologies Engineering (ST Engg) yesterday reported a 9.1 per cent year-on-year rise in third-quarter net profit to $125.5 million, thanks to improved earnings in its marine and aerospace divisions.
Revenues for the group rose 6.6 per cent year on year to $1.24 billion for the quarter.
While this is the first time this year that the group’s quarterly earnings growth has dipped into single digit, chief executive Tan Pheng Hock said the results were despite a fall in investment and interest income of nearly $20 million, due to a weaker interest rate and gains from divestments last year.
Core businesses are doing well, with Ebit (earnings before interest and tax) growing by a fifth during the quarter and return on equity improving to 8.4 per cent, Mr Tan said.
But the housing market slowdown in the United States has had ‘some impact’ on ST Engg’s specialty vehicles business there, he said.
Though the unit saved about half a million dollars from synergistic benefits through acquisitions, the slowdown has eroded these savings, he said.
The strategy is now ‘to go into military vehicles, which we have never entered before and are new to, and to export to markets like Latin America’, said Mr Tan.
Research and development (R&D) expenses also led to higher costs at the Land Systems division, which saw revenue dip slightly to $267 million and profit before tax (PBT) fall by a fifth to $14.5 million, he said.
Notwithstanding the above, the division’s results will improve going forward, Mr Tan said.
ST Aero, the group’s aerospace division, saw revenue remain flat year on year at $443 million, though PBT grew 10 per cent to $83.9 million.
This was thanks to better sales mix in the Aircraft Maintenance and Modification business, but offset by reduced investment income from the Engineering and Materials Services unit.
ST Marine saw revenue rise by 38 per cent to $256 million, thanks to significantly higher turnover from shipbuilding in the US, and from ship conversions.
The segment’s PBT increased by 7 per cent to $19.7 million, offset by higher administrative expenses.
The electronics sector saw a 5 per cent growth in revenue to $237 million, though PBT stayed flat at nearly $30 million.
The group’s earnings per share rose 8 per cent year on year to 4.24 cents for the third quarter. Its share price closed at $3.78 yesterday.
Mr Tan also said the group had won a landmark project in Saudi Arabia for an integrated traffic management and security system, which would prime it for further contracts in the Gulf region.
ST Engg’s order book now stands at $9.91 billion, with $1.09 billion to be delivered by the end of the year.