STEng – BT

ST Engineering Q2 net up 5%; revenue dips

Interim dividend of 3 cents per share declared

SINGAPORE Technologies Engineering’s second quarter net profit rose 5 per cent to $130.5 million from a year ago, even as revenue dipped 2 per cent to $1.48 billion.

If not for the US dollar’s depreciation against the Singapore currency, the group said it would have posted a revenue increase and stronger profit growth.

For the half year ended June 30, the conglomerate’s net profit grew 11 per cent to $241.6 million, while revenue rose 6 per cent to $3.1 billion. The impact of the US dollar’s slide relative to the Sing dollar was even greater on the half-year results – revenue growth would have been 10 per cent, or $120 million higher otherwise.

Earnings per share for the group rose to 4.29 cents for Q2, from 4.11 a year ago. For the first half, EPS was 7.93 cents, up from 7.18 cents a year ago.

The group’s net asset value as at the end of Q2 also rose to 50.28 cents, from 48.63 cents at the end of the same quarter last year.

For the second quarter, its Marine arm was the only one to post 5 per cent revenue growth, thanks to higher shiprepair activities.

Both the Aerospace and Electronics divisions posted marginal revenue growth of 1 per cent each. For Aerospace, higher revenue from the engines repair and overhaul business was offset by the impact of a weakening US dollar on aircraft maintenance and modification business turnover. Electronics, meanwhile, saw higher revenue from the completion of the Integrated Resort and communication projects under its communication and sensor systems business offset by lower value project milestone completions under its large-scale systems business.

Land Systems was the only arm to post a 14 per cent drop in revenue, due to lower scheduled project deliveries from its automotive business group.

The group, which also supplies to military customers globally, said that commercial sales made up 62 per cent or $925 million of its Q2 revenue.

At the results briefing yesterday, ST Engineering president and CEO Tan Pheng Hock said the second half is likely to be challenging globally, with Europe not fully out of the woods and US debt still facing a ratings downgrade risk. But he was confident that the group would achieve higher profits in the second half compared to the first.

The group’s order book stood at $10.8 billion as at end June. In the second quarter, aerospace secured new projects worth over $260 million, Electronics secured $126 million worth of contracts and Marine won a shipbuilding contract worth about $171 million.

Its board of directors yesterday announced an interim ordinary dividend of 3 cents per share, to be paid on Sept 2.

ST Engineering gained two cents to close at $3.05 yesterday, before its results were out.

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