SINGAPORE (THE BUSINESS TIMES) - Mainboard-listed ST Engineering will be reorganised into two main clusters from the new year - commercial, and defence & public security, which replace the sector-structure of aerospace, electronics, land systems and marine.
The change in structure was announced in a regulatory filing on Tuesday (Nov 17), which ST Engineering said will position the group for its next phase of growth, and propel it towards becoming a global technology, defence and engineering powerhouse.
On Wednesday, ST Engineering announced it expects full-year revenue to be around 10 per cent lower for FY2020 than in FY2019, in a third-quarter business update.
ST Engineering had previously provided revenue guidance in August that FY2020 revenue was expected to be between 5 per cent and 15 per cent lower than FY2019. It said on Wednesday that group revenue performance to date remained within the guidance, and the expectation was now for revenue to be close to the midpoint of its earlier guidance.
For its aerospace segment, ST Engineering said that a faster recovering domestic travel sector augurs well for its narrowbody maintenance repair and overhaul (MRO) work.
It also said it is pursuing passenger-to-freighter conversion opportunities, as there is market demand for dedicated freight aircraft, given limited passenger flights with belly load capacity. ST Engineering also noted that fleet retirements of passenger planes have added to feedstock availability.
It secured around $600 million in aerospace orders for the quarter, taking the total for the first nine months of 2020 to about $2 billion.
ST Engineering also secured around $1.1 billion in new orders for its electronics segment in the third quarter, taking its nine-month total to $2.3 billion. The orders include rail electronics projects, smart digital building solutions, and defence and public security projects.
The company said its full workforce is back at its Singapore yards for the marine sector, and it completed numerous ship repair projects, rig repair and related fabrication works.
It added that its defence land platform business remains steady. However, it noted that tenders for road construction and specialty vehicles are on hold.
As at September 2020, its order book stood at $15.8 billion, slightly lower than the $15.9 billion in June.
ST Engineering said it will focus on opportunities to capitalise on new demand arising from Covid-19, such as cybersecurity and sensors. It also has group-wide efficiency and productivity initiatives on track to target to offset the effect of lower level of government support in 2021.
On its reorganisation, the company said the commercial cluster will drive the group's international growth in commercial aerospace, urban solutions and satellite communications. This cluster combines into one integral unit the group's smart-city technologies and capabilities, which now reside in the four sectors.
The commercial aerospace team will continue to drive long-term growth of the aerospace businesses in aero structures and systems, maintenance, repair and overhaul (MRO), and aviation-asset management. Urban solutions and satellite communications teams will drive the group's smart-city business growth, said ST Engineering.
The defence & public cluster will integrate capabilities in digital systems and cyber, land systems, marine and defence aerospace. This cluster will focus on serving the evolving needs of its customers in defence and public security, and in critical infrastructure segments. It will also continue to pursue growth in international defence, and public safety and security businesses.
Vincent Chong, chief executive of ST Engineering said: "The environment today is one where technological advancements and shifting customer demands are catalysing disruptive business models and rapidly transforming the competitive landscape. The time is now right for us to create a sharper and more agile organisation that will be highly attuned and responsive to our customers' needs in the new world."
The change in organisation will be reflected in its financial results for the first half-year to June 2021, with financial reporting to be based on the new operating segments.
However, it is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year, the company said.
ST Engineering shares were trading up three cents or 0.8 per cent at $3.83 at 11.23am on Wednesday.