ST Engineering second-half profit rises 19.9% to $305.9 million
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ST Engineering’s board proposed a final dividend of four cents per share, unchanged from the previous year.
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SINGAPORE - ST Engineering’s net profit for the second half ended Dec 31 rose 19.9 per cent to $305.9 million from $255 million in the second half of financial year 2022, the company said on Feb 29.
The defence and engineering group attributed its bottom line increase for the period to strong business growth, higher productivity and cost savings.
Revenue for the second half of financial year 2023 rose 9.9 per cent to $5.2 billion versus $4.8 billion a year prior, largely due to higher contributions from the commercial aerospace segment, where revenue grew 29 per cent year on year to $2.1 billion.
Defence and public security revenue remained flat at $2.1 billion in the absence of contributions from the recently divested US marine business.
The urban solutions and satellite communications (satcom) business registered a 4 per cent year-on-year revenue growth to $1.1 billion, due to contributions from transport solutions provider TransCore, which the group acquired in 2023.
This was however offset by weaker contributions from satcom, though the group said transformation efforts since mid-2023 are “on course to drive better future performance”.
Group earnings before interest and taxes grew 34.2 per cent to $470.5 million, driven by growth across all business segments.
ST Engineering’s board proposed a final dividend of four cents per share, unchanged from the previous year. This would bring the group’s dividend for the full year to 16 cents per share, similar to financial year 2022.
Earnings per share for the full year rose 9.6 per cent to 18.82 cents, from 17.18 cents in financial year 2022.
Full-year net profit was up 9.6 per cent to $586.5 million as revenue climbed 11.8 per cent to $10.1 billion.
Group president and chief executive Vincent Chong said the strong full-year results were supported by productivity and cost-saving measures, as well as investments made during the Covid-19 downturn.
“Our investment in TransCore became accretive in financial year 2023, ahead of plan,” he added.
As at end-2023, ST Engineering’s order book stood at $27.4 billion, after including new contract wins and adjusting for revenue delivery.
The group said it expects to deliver about $7.9 billion from its order book in 2024.
Looking ahead, DBS Group Research believes the group’s aerospace division should continue to benefit from a sustained rebound in global travel activity.
It also anticipates higher output rates in the original equipment manufacturing business, as the group is expected to open more passenger-to-freighter conversion lines while Airbus ramps up its production of A320neo aircraft.
“However, cost inflation is still a concern given lingering supply chain disruptions and a tight labour market,” noted the research house.
It further observed that other parts of the group’s urban solutions and satcom business also “seem to be performing well”, with the digital business’ revenue growth in the latest financial year, “suggesting considerable room for upside”.
The research house had a “buy” call on the stock with a price target of $4.50 as at Nov 14, 2023.
Shares of ST Engineering closed flat at $3.98 on Feb 29. THE BUSINESS TIMES
