STEng – BT

ST Engineering’s Q2 net profit rises 14% to $124m

SINGAPORE Technologies Engineering’s net profit rose 14.1 per cent year on year to $124 million in the second quarter, boosted by sharply higher revenue from the sale of land vehicles and equipment.

Its land systems division, which makes specialised military and industrial vehicles, contributed most to the increase in net profit, due to higher project deliveries and vehicle sales.

Its Q2 net profit of $124 million was 33.5 per cent higher than in Q1. For the first half of the year, ST Engineering’s net profit was $216.8 million, up 11.8 per cent year on year.

The group, whose businesses include aircraft repair, shipbuilding, and electronics and weapons manufacturing, had $11.3 billion in outstanding customer orders at end-June. And it expects $2.2 billion of these to be delivered in the current H2.

Part of ST Engineering’s sales come from supplying the Singapore Armed Forces and other military customers. Commercial sales made up 60 per cent, or $913 million, of its Q2 turnover.

Temasek Holdings has a 50.5 per cent stake in the company, comprising a direct holding of 49.6 per cent and smaller stakes held by Temasek-linked companies such as DBS Group and Keppel Corporation.

ST Engineering’s Q2 earnings per share came in at 4.11 cents, up from 3.62 cents a year back and 3.08 cents in Q1 this year. Its share price ended unchanged at $3.26 yesterday, before the earnings announcement.

The group expects 2010 full-year turnover and pre-tax profit to be higher than last year barring unforeseen circumstances, ST Engineering president and chief executive Tan Pheng Hock said in a statement. An interim dividend of three cents a share has been declared, unchanged from the payout a year back.

Turnover at two of ST Engineering’s four main business segments – aerospace and marine – was little changed in Q2 compared with a year ago, at $501 million and $246 million, respectively. A third segment, electronics, reported a 10 per cent drop in turnover to $314 million, due to lower-value project milestone completions during the quarter. But a sharp rise in turnover from the land systems division to $407 million – up 52 per cent from a year ago – boosted the group’s overall turnover 8 per cent year on year to $1.52 billion.

Pre-tax profit rose at all four main business segments in Q2, compared with Q1 and a year ago. The group expects profits to rise in the second half of the year for the aerospace and marine divisions compared with H1. It expects profit to be lower for the land systems segment and little changed for the electronics division.