Aerospace and defence conglomerate Singapore Technologies Engineering (ST Engineering) has reported a slide in first-quarter net profit as its land systems and marine businesses did poorly.
Net profit for the first quarter ended March 31 dropped 15.2 per cent to $110.2 million from the same period a year earlier. However, revenue rose 7.7 per cent to $1.63 billion, thanks to higher sales from the aerospace and electronics sectors.
Revenue for the aerospace sector jumped 27 per cent to $622 million, mainly due to contributions from a new subsidiary, German Airbus parts supplier Elbe Flugzeugwerke.
Revenue for the electronics sector also increased, by 28 per cent to $457 million. Meanwhile, the land systems sector suffered an 18 per cent drop in revenue to $284 million and marine sector revenue fell 24 per cent to $213 million.
The latter was mainly due to weaker shipbuilding performance in Singapore and US operations.
The firm said higher distribution and selling expenses were incurred in the first quarter, mainly as a result of the Singapore Airshow in February. The group exhibited more than 100 products and services in aviation, smart combat and smart city sectors, totalling about $9 million in expenses.
AT A GLANCE
REVENUE: $1.63 billion (+7.7%)
NET PROFIT: $110.2 million (-15.2%)
EARNINGS PER SHARE: 3.53 cents (-15.2%)
Chief executive Tan Pheng Hock said that against a "weakening global economic environment", the group is adopting a "cautious approach to its businesses".
Mr Tan noted: "Our business operations, including shipbuilding, continue to face industry headwinds and the impact of the slowdown in China."
ST Engineering announced $948 million worth of new contracts, comprising $443 million for the aerospace sector and $505 million for the electronics sector in the first quarter, which ended with an order book of $11.5 billion. The group expects to deliver about $3 billion of these orders this year.
Earnings per share fell to 3.53 cents from 4.17 cents in the same period a year earlier, while net asset value per share stood at 71.3 cents as at March 31, up from 70.45 cents a year earlier.