Aerospace unit gives ST Engineering earnings a lift

ST Engineering clinched $1.42 billion worth of new contracts for the quarter, comprising $770 million for the aerospace unit and $650 million for the electronics arm.
ST Engineering clinched $1.42 billion worth of new contracts for the quarter, comprising $770 million for the aerospace unit and $650 million for the electronics arm. ST FILE PHOTO

New subsidiary and electronics unit help boost net profit to $127m, a rise of 1.8%

Aerospace and defence conglomerate Singapore Technologies (ST) Engineering got an earnings lift for the second quarter from its new aerospace unit and its electronics unit.

Net profit rose 1.8 per cent to $127.3 million for the second quarter ended June 30, as revenue went up by 5.1 per cent to $1.62 billion.

The subsidiary, Elbe Flugzeugwerke (EFW), is a joint venture between its aerospace arm, ST Aerospace, and the Airbus Group. The Dresden-based company specialises in aircraft maintenance and the manufacturing of Airbus aircraft components. It boosted revenue for the aerospace arm by 20 per cent to $619 million, up from $515 million for the same period a year earlier.

The electronics unit took in revenue which was 8 per cent higher than the same period a year earlier.

It notched up sales of $445 million, from stronger sales of satellite communication products and project completions by the large-scale systems and communication and sensor systems business units.

Revenue for the land systems sector fell by 11 per cent to $283 million, but pre-tax profit jumped 71 per cent to $27.8 million because of its divestment of its speciality vehicle business in China.

  • AT A GLANCE

  • NET PROFIT
    $127.3 million (+1.8%)

    REVENUE
    $1.62 billion (+ 5.1%)

    DIVIDEND PER SHARE
    5 cents (unchanged)

Quarterly earnings per share was 4.1 cents, up from 4.01 cents a year earlier. Net asset value per share was 64.91 cents as at June 30, up from 63.83 cents a year earlier.

Mr Tan Pheng Hock, president and chief executive, said that the company expected revenue for the year to be higher compared with last year, but added that profitability would be lower.

"The global economic outlook remains challenging, with industry headwinds facing the marine business, the slowdown in the China economy, and negative business sentiment that is prevalent in Europe and other parts of the world," he said.

The company clinched $1.42 billion worth of new contracts for the quarter, comprising $770 million for the aerospace unit and $650 million for the electronics arm. It ended the quarter with a healthy order book of $11.6 billion, it said.

Contracts for the aerospace unit were for projects ranging from airframe maintenance and cabin interiors to engine wash and the repair and overhaul of components.

In the electronics sector, projects were in the areas of rail electronics and intelligent transportation, satellite and broadband communications, as well as advanced electronics and information communication technologies solutions.

The firm also secured projects such as a facility upgrade for a new air traffic control tower at Maun Airport in Botswana, and a project to maintain and support a large public-security project in China.

The company declared an interim dividend of five cents per share, which was the same as the corresponding period a year earlier.

Its shares closed flat at $3.41 yesterday.

A version of this article appeared in the print edition of The Straits Times on August 13, 2016, with the headline 'Aerospace unit gives ST Engineering earnings a lift'. Print Edition | Subscribe