STEng – BT

ST Engg Q3 profit rises 8% to $130.2m

Turnover up 10% to $1.49b; all core divisions post improved results

SINGAPORE Technologies Engineering yesterday said its third-quarter net profit rose 8 per cent to $130.2 million from a year ago.

Higher sales from all four arms – aerospace, electronics, land systems and marine – lifted the group’s turnover by 10 per cent to $1.49 billion for the three months ended Sept 30.

Net profit for the quarter would in fact have risen by a larger 18 per cent if the Jobs Credit Scheme’s boost to Q3’s earnings last year was stripped out, Seah Moon Ming, group deputy CEO and president, defence business, said yesterday.

Earnings per share rose 30 cents from a year ago to $4.31.

In Q3, commercial sales made up 58 per cent of turnover for the group, which also supplies equipment to the Republic of Singapore Armed Forces (RSAF) and other military customers.

Its order book, which includes only a fifth of the RSAF Advanced Jet Trainers contract announced in September, stands at $10.8 billion. $1.2 billion of these orders are to be delivered in the current quarter.

The group’s cash and cash equivalents and short-term investments came to $1.63 billion as at end September, and its advance payments from customers was $1.4 billion.

All core divisions posted improved performance, but land systems and electronics contributed more to the group’s higher turnover in Q3.

For land systems, turnover jumped 30 per cent to $368 million thanks mainly to higher project deliveries in its automotive business, while the electronics sector’s sales grew 10 per cent to $338 million with more telematics systems sales and the completion of communication, software system and simulator projects.

More modest sales growth of 3 per cent to $486 million was reported by the aerospace sector which enjoyed higher engine sales, while the marine sector’s top line rose 4 per cent to $254 million on more commercial ship repair activity as well as higher engines repair activity and naval logistics management sales.

Net profit thus rose across all four business segments as well.

The group’s overall pre-tax profit margin held steady at 11 per cent for Q3, but aerospace and electronics slipped a point to 14 and 9 per cent respectively, while land systems margin fell two points to 8 per cent due to unfavourable product mix.

ST Engineering now expects, ‘barring unforeseen circumstances’, to achieve higher turnover and profit before tax for FY 2010 compared to FY 2009, group president and CEO Tan Pheng Hock said in a statement yesterday.

Its performance in the third quarter reflects the ‘gradually improving operating environment’, he added.

Before yesterday’s results announcement, ST Engineering’s shares closed seven cents up at $3.47.

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