ST Engineering's earnings drop to $125m

Lower returns in the aerospace, electronics and land systems business dragged down overall earnings at ST Engineering in the second quarter.

Net profit for the three months to June 30 declined 6.1 per cent from the same period a year ago to $125 million.

Revenue was 2.6 per cent lower at $1.55 billion with a 27 per cent drop in turnover at its marine business partially offset by higher sales in electronics and land systems.

The aerospace division generated about as much revenue as in the same period a year ago.

Sales from the marine sector fell 27 per cent to $254 million due to lower shipbuilding revenue from both local and United States operations and reduced engineering turnover. Revenue for the electronics sector was 8 per cent higher at $413 million, but its profit before tax slipped 3 per cent, due mainly to a less favourable sales mix and lower contributions from satellite communication product sales.

  • AT A GLANCE

  • REVENUE: $1.55 billion (-2.6%)

    NET PROFIT: $125 million (-6.1%)

    DIVIDEND PER SHARE: 5 cents (+25%)

Profit in the land systems business dropped 11 per cent despite an 8 per cent increase in revenue, due mainly to a higher allowance for inventory obsolescence and goodwill impairment.

The land systems division includes ST Engineering's trading, automotive and munitions and wea-pons businesses.

Deputy chief executive Lee Fook Sun noted in a statement that the company secured more new orders to end the quarter with a healthy order book of $12.4 billion.

Cash and cash equivalents, including funds under management, remained high at $1.5 billion after payment of the final dividend of $342 million for the 2014 financial year. Earnings per share for the second quarter stood at 4.01 cents, down from 4.28 cents in the same period a year ago.

Net asset value per share was 63.83 cents, slightly down from 63.86 a year ago.

Net profit for the half-year slipped 5.7 per cent to $254.96 million, while revenue dipped 2.6 per cent to $3.06 billion.

The group's order book stood at $12.4 billion as at the end of June, compared with $12.2 billion as at March 31.

ST Engineering expects to deliver $2.3 billion worth of orders in the remaining months this year.

"Barring unforeseen circumstances, the group expects financial year 2015 revenue and profit before tax to be comparable to 2014," said Mr Lee.

The board has approved an interim dividend of five cents per share, payable on Sept 3.

A version of this article appeared in the print edition of The Straits Times on August 15, 2015, with the headline 'ST Engineering's earnings drop to $125m'. Print Edition | Subscribe