STEng – BT

ST Engg Q3 profit drops 6.7% to $120.3m

It says it continued to get new orders, contracts despite a challenging market

ST Engineering yesterday reported net profit for the third quarter to Sept 30, 2009 fell 6.7 per cent to $120.3 million, from $128.9 million a year ago, largely due to substantially higher taxation and a lower share of results from associates.

Revenue was largely stable, falling 2.2 per cent to $1.35 billion from $1.38 billion in the same quarter last year. But cost of sales fell 4.8 per cent, helping to lift pre-tax earnings 3.3 per cent to $149.1 million.

Fully diluted earnings per share fell to four cents from 4.29 cents.

The company also recorded a 45 per cent increase in other income to $12.9 million, largely due to $9.9 million received in the quarter from the government’s Job Credits scheme.

As at end-September, the company’s cash and cash equivalents and short-term investments totalled $1.64 billion and advance payments from customers stood at $1.37 billion. Net cash from operating activities for the quarter doubled to $197 million from $100.5 million a year ago. This was due to lower income tax paid and favourable working capital movements, the company said.

The company said its land systems and marine sectors recorded higher before-tax profit, offset by profitability at its aerospace division, a major contributor. ST Engineering said this was due to lower turnover partially offset by profit from its ongoing 757 freighter conversion programme.

Quarter on quarter, aerospace profitability was higher by 15 per cent or $9.3 million, while land systems was higher than in Q2 by some 62 per cent, or $10.7 million. Overall, quarter-on-quarter profit before tax rose 7 per cent and commercial sales made up 62 per cent of group turnover.

The group’s order book remained strong at $10.3 billion, with about $970 million due for delivery in the last quarter of 2009.

President and chief executive officer Tan Pheng Hock said: ‘In Q3 2009, the group continued to secure new commercial orders and also won several new contracts from governments around the world despite a challenging market.’

The company said it expected, barring unforeseen circumstances, to achieve comparable turnover and before-tax profit in 2009, compared to 2008. Turnover for its aerospace segment is expected to be stable, but profitability could be lower, the company guided.

ST Engineering gained seven cents or 2.4 per cent to close at $2.95 yesterday, just one cent off its 12-month high of $2.96 reached on Oct 21.

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