Singapore Technologies Engineering posted a dip in net profit, which it blamed mainly on higher taxes and lower contributions from its aerospace, land systems and marine business units.
The engineering conglomerate posted a 6.1 per cent drop in net profit to $103.4 million for the first quarter to March 31. This was on the back of a 5.4 per cent drop in revenue to $1.54 billion.
While profit before tax rose 5.1 per cent to $137 million, the net profit fell as taxation rose by 37.7 per cent.
Earnings per share fell to 3.33 cents for the quarter from 3.53 cents previously, while net asset value was 72.52 cents as at March 31, up from 71.3 cents a year ago.
Electronics was the star performer, with revenue growing 14 per cent to $523 million, while profit before tax rose 5 per cent to $41.7 million.
Group CEO Vincent Chong said at yesterday's press conference that the segment achieved a significant milestone recently. It won a consultancy contract to design Sri Lanka's first National Cyber Security Operations Centre - its first overseas project for a cyber security centre. This brings its order book to $464 million worth of new contracts.
AT A GLANCE
NET PROFIT: $103.4 million (-6.1%)
REVENUE: $1.54 billion (-5.4%)
Revenue for the aerospace segment fell 12 per cent to $549 million, while that for the marine segment fell 16 per cent to $179 million.
However, both segments achieved higher pre-tax profits. Aerospace posted $78.1 million, up 4 per cent due to a favourable sales mix of products, while the marine segment's shot up 165 per cent to $9 million, largely due to higher allowance for doubtful debts.
Mr Chong said that with the provisions for debt, the company's "net exposure is no longer significant".
He stressed that the firm was not exiting the marine segment, but that it will shift its business away from higher risk and be "very judicious in selecting our customers, given the industry environment".
Revenue for the land systems unit slid 14 per cent to $273 million, while pre-tax profit fell 11 per cent to $16.2 million, largely due to the company's exiting of its China speciality vehicle business.
But Mr Chong remained optimistic about this segment. The company launched the Singapore Autonomous Vehicles (AV) consortium in April to develop AV standards and accelerate adoption of AV technologies here. It is betting specifically on autonomous buses and not driverless cars, he said, as buses make up the core of the public transport system here and help to address challenges in labour.
The company expects to deliver comparable revenue for 2017 and expects pre-tax profit to improve.