ST Engineering 2Q18 net profit rose 10 percent amid higher Aerospace revenue

Singapore five-dollar note Photo by Leslie Shaffer

Singapore Technologies Engineering reported on Wednesday that its second quarter net profit rose 10 percent on-year to S$117.5 million as higher contributions from the aerospace and electronics segments offset declines from land systems and marine.

Revenue for the quarter ended 30 June fell 3 percent on-year to S$1.651 billion, due to a year-earlier one-off revenue increase in the electronics sector, ST Engineering said in a filing to SGX before the market open on Wednesday.

The company said it had a one-time interest cost of S$15.3 million in the second quarter after its announcement in June that it would redeem all of its outstanding US$500 million 4.8 percent notes due 2019; “The group expects the interest savings to exceed the one-time cost over the next twelve months,” it said.

The aerospace segment’s revenue rose 12 percent on-year in the quarter to S$713 million and its net profit rose 26 percent to S$66.6 million, amid higher revenue from the CERO business group, partially offset by lower contributions form the AMM and EMS businesses, it said.

The electronics sector’s revenue fell 10 percent on-year in the second quarter to S$512 million, while its net profit rose 22 percent on-year to S$46.7 million, ST Engineering said. In addition to the one-off increase in the year-earlier period’s revenue from modifying revenue recognition estimates for milestone completion, the SSG business group also reported lower revenue, it said, adding this was partially offset by higher underlying revenue from LSG and CSG business groups.

In the land systems sector, revenue fell 11 percent on-year in the quarter to S$270 million, while net profit was 3 percent lower on-year at S$20.4 million, affected by lower revenue from the auto and M&W business groups, partly offset by a higher revenue from the S&T group, it said.

The marine sector saw revenue for the quarter fall 9 percent on-year to S$148 million, while it swung to a net profit of S$9.2 million from a year-earlier loss of S$1.4 million in the quarter, it said. Revenue for the segment was hurt by a lower contribution from ship repair and engineering, partially offset by higher revenue from shipbuilding, it said.

The order book as of 30 June was at S$13.4 billion, with around S$2.7 billion set to be delivered in the second half of 2018, ST Engineering said.

For the first half, ST Engineering reported net profit rose 14 percent on-year to S$235.2 million, while revenue was up 2 percent on-year to S$3.298 billion.

ST Engineering declared an interim dividend of 5.0 Singapore cents a share.

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