STEng – BT

ST Engg Q1 profit falls 30.4% to $85.2m

The company increases its order book to an all time high of $11.03b

SINGAPORE Technologies Engineering’s net profit for the first quarter ended March 31, 2009, fell 30.4 per cent to $85.2 million, from $122.5 million a year earlier.

The defence and aerospace group said sales were largely flat, rising just 0.2 per cent to $1.32 billion. Earnings per share fell to 2.84 cents, from 4.11 cents a year ago.

Chief executive officer Tan Pheng Hock said the company increased its order book to ‘an all time high’ of $11.03 billion, while maintaining operating cash flow of $351 million and held $1.38 billion in cash and cash equivalent at the end of the quarter.

‘Barring unforeseen circumstances, the group expects, based on the order book and schedule deliveries, to achieve comparable turnover and (profit before tax) for FY2009 against FY2008,’ Mr Tan said.

ST Engineering also disclosed it received ‘other’ income of $9.4 million from the Jobs Credit scheme.

Much of the fall in profitability came at the group’s key aerospace division, where profit before tax halved to $39.8 million, from $82.6 million in the first quarter last year.

The company said that this was due to the absence of freighter conversion re-deliveries, reduced sales, no investment income and higher financial expenses due to recognition of fair value of an interest rate swap following refinancing of a bank loan.

Profit before tax at its land systems division fell 20 per cent to $26.4 million on lower sales in the United States, while its marine and electronics arms recorded profit growth of 19 per cent and 8 per cent respectively.

For the first half of the year, aerospace is likely to see similar sales but lower profits, while electronics and marine could see more of both sales and profit, the company guided. Sales and profits for land systems are expected to be lower compared to H1 2008, ST Engineering said.

The company had total borrowings of $912.7 million at the end of the quarter, from $881.4 million at Dec 31. However, the amount repayable within a year halved to just under $250 million, from $586.7 million three months earlier.

ST Engineering also recorded as a current asset on its balance sheet that amounts due from ‘related corporations’ were almost $600 million, from $234 million three months earlier.

Included for the first time as part of changes in the financial reporting standards was a statement on other comprehensive income. The company said it booked total comprehensive income of $127.1 million for the quarter, up 70 per cent from $74.7 million a year ago. Much of the increase was due to $39.6 million gain from foreign currency translation, against a charge of $20.2 million in the year-ago period.

The counter gained six cents, or 2.3 per cent, to $2.63 yesterday on volume of 6.6 million units, matching the gain in the benchmark Straits Times Index.

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