STEng – BT

ST Engg posts 2.7% rise in Q3 earnings to $128.9m

Turnover up 11.8%, of which 66% were commercial sales

SINGAPORE Technologies Engineering has reported a 2.7 per cent increase in net profit to $128.9 million for its third quarter ended Sept 30, as turnover rose 11.8 per cent to $1.38 billion.
Commercial sales accounted for 66 per cent ($918 million) of turnover. Earnings per share were 4.31 cents, up from 4.24 cents a year earlier.

The group’s order book grew to $9.54 billion from $9.29 billion at June 30, with $1.25 billion of orders to be delivered in the current Q4. At end-September, cash, cash equivalents and funds under management totalled $1 billion.

For the nine months to Sept 30, profit grew 4 per cent to $371.3 million on 6.5 per cent growth in turnover to $3.99 billion.

ST Aerospace, which contributed 48 per cent of group profit, saw net profit slide 10 per cent to $61.6 million, despite revenue rising 13 per cent to $501 million.

The drop in profit was due to foreign exchange losses arising from the US dollar, higher passenger-to-freighter aircraft prototyping costs and higher depreciation resulting from investments in new capabilities and capacity.

In addition, Sterling Airlines and Essential Aircraft Maintenance Services – customers of ST Aerospace subsidiary ST Aerospace Solutions (Europe) – filed for bankruptcy on Denmark. The contract to support

Sterling Airlines was worth about $45 million over three years from 2007. And the impact of the bankruptcy filings on pre-tax profit could be $10 million ‘on a conservative basis’.

ST Aerospace president Tay Kok Khiang said the company is in a good position to weather a short-term slide in the aviation industry thanks to its strong customer base, diverse offerings and market position.

Q3 turnover for the ST Engineering’s land systems sector was $333 million or about 25 per cent higher year-on-year, helped by stronger exports by its munitions and weapons group.

But net profit plunged 20 per cent to $13 million, dragged down partly by a poorer performance in the auto segment.

ST Electronics contributed revenue of $298 million, a jump of 26 per cent from Q3 2007, as its three business groups – large-scale systems, communication and sensor systems, and software systems – completed various projects. But net profit was 2 per cent lower at $21.7 million as margins fell.

Although net profit for the marine sector was 7 per cent higher at $16.5 million, revenue took a hit, dropping 20 per cent to $205 million in Q3 from $256 million a year earlier. The stronger profit reflected a favourable sales mix and lower expenses, while weaker demand for conversion services contributed to the fall in revenue.

‘Barring unforeseen circumstances, under a weaker global economic environment, ST Engineering still expects to achieve modestly higher turnover, though a lower profit before tax and a marginally weaker Patmi (profit after tax, minorities and interest) in FY 2008 than FY 2007,’ ST Engineering said in a statement.

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