STEng – BT
ST Engg net up 13%, sees slower growth this year
Profit hits $503.5m last year; it expects single-digit growth this year
SINGAPORE Technologies Engineering expects to see growth slow this year, despite posting double-digit year-on-year growth in both top and bottomline for the year ended December 2007 and breaking the $5 billion mark in turnover for the first time.
The group expects to achieve ‘modestly higher turnover and profit before tax’ for FY2008 compared to FY2007, it said.
‘We’ve used the word ‘modestly’ before. It indicates single digits, somewhere in the middle’, said Tan Pheng Hock, group chief executive.
ST Engg achieved 13 per cent year-on-year growth in net profit to $503.5 million last year, as revenue also rose 13 per cent to $5.05 billion.
Group profit before tax (PBT) would have been $15 million higher if not for the weak US dollar, Mr Tan said. ST Engg earned 31.5 per cent of revenues from the US, 49.2 per cent from Asia, and the rest from Europe and elsewhere.
With the US slowdown, ‘it’s still very uncertain and too early to know what will happen, other than what is in our contracts. The next three months we can tell you, six months would be hard’, said Mr Tan.
Orders as at end-2007 stood at $9.49 billion – 29 per cent up from a year ago – with about $3.49 billion expected to be delivered this year. This figure does not include the several hundred million dollars worth of contracts announced this quarter.
Earnings per share rose 12 per cent to 16.95 cents. The group has proposed a final dividend of 14.88 cents per share, which included an earlier interim dividend of two cents, meaning it has maintained its practice of fully paying out earnings.
Sector-wise, ST Aerospace saw PBT rise 12 per cent to $341.2 million, as revenues grew a tenth to $1.84 billion. The unit plans to grow its Total Aviation Support programme, as well as its customer base at new facilities in Shanghai and Panama.
It looks unlikely to restart its airframe maintenance work in Europe, which was divested in 2006 due to lack of volume. European national airlines, unlike US ones, do maintenance work in-house, said Tay Kok Kiang, president of ST Aero.
And in Eastern Europe, where ST Aero had previously thought of investing, low-cost carriers are widely dispersed with just a few planes each. Each country has its own airframe facility, it being an easier business to enter into than components or engines, where ST Aero will focus for now, he said.
ST Electronics saw revenues cross $1 billion with 8 per cent annual growth, with PBT growing 10 per cent to $115.3 million. Besides e-government and transport management services, the unit is also banking on its digital media venture into movies.
iDirect, the satellite communications arm, was ‘slightly weaker’ in 2007, as it was investing in new products, said Seah Moon Ming, president of ST Electronics. It will prove stronger in 2008, thanks partly to more government sales.
Government sales are a key new area across the group, added Mr Tan.
The land systems arm saw a 14 per cent rise in PBT to $80 million, as turnover rose 17 per cent to $1.19 million. It will focus on growing the specialty vehicles business, not only in its current markets of China and the US, but also in the Middle East, said Mr Tan.
ST Marine did better than expected due to ‘outstanding shiprepair performance’, with PBT growing 22 per cent to $96.6 million and revenue up 23 per cent to $865 million. However, it expects a poorer performance in 2008 that will pull down group earnings.