SIA Engineering fiscal 3Q net profit drops 40 percent amid one-offs at joint ventures

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SIA Engineering reported on Friday that its fiscal third quarter net profit dropped 40.1 percent on-year to S$33.1 million, a decline of S$22.2 million, with S$20.9 million of the fall attributed to one-time events at associated and joint-venture companies.

The share of profits of associated and joint venture companies fell 52.9 percent on-year in the quarter, to S$19.2 million, mainly on a change in the fee structure of an engine shop in 2018, which evened out revenue over the year instead of a lump-sum adjustment as in the year-ago quarter, it said.

In addition, the one-time events included a foreign-exchange adjustment for the functional currency change at an associated company and a one-time tax charge for certain associates during the quarter, it said.

SIA Engineering issued a cautious outlook.

“The operating environment remains challenging. The company will continue to focus on our transformation journey and investments in technologies. We will manage our portfolio of joint ventures to drive sustainable growth,” it said in the filing.

Operating profit for the third quarter was S$15.9 million, down 15.4 percent on-year, and earnings per share was 2.95 Singapore cents, down 40.4 percent on-year, SIA Engineering said.

Revenue for the quarter ended 31 December fell 5.6 percent on-year to S$255.9 million, mainly on lower airframe and fleet management revenue, partly offset by higher maintenance revenue, it said in a filing to SGX after the market close on Friday.

Daiwa forecast fiscal third quarter net profit of S$48.9 million and operating profit of S$12.6 million on revenue of S$257.5 million.

For the nine-month period, net profit fell 14.5 percent on-year to S$111.6 million, on revenue of S$764.9 million, down 6.5 percent on-year, it said. EPS for the nine-months was 9.97 Singapore cents, down 14.6 percent on-year, SIA Engineering said.

UOB KayHian had tipped the quarter’s earnings could “surprise on the upside,” on expectations engine maintenance earnings for its associate would grow. It forecast net profit for the full year ending 31 March would be S$194 million on net turnover of S$1.02 billion.

For the nine-month period, UOB KayHian forecast earnings per share of 17.4 Singapore cents.

Maybank KimEng forecast full-year net profit of S$168.0 million on revenue of S$1.08 billion.

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