ST Engineering Q3 profit falls 42.5%, dragged down by one-off charge

SINGAPORE - Singapore Technologies Engineering (ST Engineering) reported a 42.5 per cent fall in net earnings to S$76.7 million for its third quarter from S$133.3 million a year ago, after a hefty one-off charge.

Group revenue for the quarter rose 8 per cent to S$1.6 billion from S$1.5 billion for the same period in 2015. But the bottomline was hurt by a one-off charge of S$61.1 million, net of non-controlling interests, for its specialty vehicle business in China. The one-off charge consists of an impairment of asset carrying values and provision for closure costs for JHK, its road construction equipment business in China. Excluding this business, group pre-tax profit for the third quarter was higher than a year ago.

Its aerospace division posted higher quarterly revenue of S$563 million, up 11 per cent year on year, while its pre-tax profit of S$65.2 million was comparable to the same quarter last year.

Quarterly revenue for the electronics division was 9 per cent higher at S$466 million, with a 7 per cent rise in pre-tax profit to S$52.8 million.

The land systems division posted comparable year-on-year revenue of S$334 million. However, it reported a net loss before tax of S$41.4 million, as a result of the S$61.1 million one-off charge.

At the marine division, while revenue of S$211 million was comparable to the same quarter last year, its pre-tax profit of S$38.7 million was 143 per cent higher as all its business groups reported better performance.

Looking ahead, ST Engineering said its operating environments remain challenged by uncertainties in the global economy, although the electronics sector continues to do well.

It said the group maintained a healthy order book of S$11.4 billion at end-September, with cash and cash equivalents including funds under management of S$1.3 billion after the payment of interim dividend of S$155 million.

Barring unforeseen circumstances, the group expects FY2016 revenue to be higher, while pre-tax profit is expected to be lower than that of FY2015, it said.