This article was originally published on Thursday, 21 February 2019 at 8:23 A.M. SGT; it has since been updated.
ST Engineering reported on Thursday that its fourth quarter net profit dropped 26 percent on-year to S$124.5 million as aerospace revenue fell and on costs related to its MRA Systems acquisition.
It also said it had a loss from the disposal of business entities.
Revenue for the quarter ended 31 December rose 5 percent on-year to S$1.77 billion, it said in a filing to SGX before the market open on Thursday.
That missed a forecast from Daiwa for fourth quarter net profit of S$192.2 million on revenue of S$1.89 billion.
ST Engineering pointed to efforts to restructure its business priorities.
“The group delivered a resilient set of results and maintained the momentum for new contracts. Excluding one-off charges mainly incurred to rationalise our portfolio, the underlying operating performance of our business sectors remained strong,” it said in its outlook.
“The group continue to invest in growth initiatives and capabilities including data analytics and cybersecurity to drive long-term sustainable growth, backed by a healthy level of order book that provides revenue visibility for the next few years,” it added.
It announced new contracts of around S$5.24 billion in 2018, comprising S$2.06 billion for the aerospace sector, S$2.19 billion for the electronics sector and S$991 million for the marine sector, which included options for five newbuilds. The land system segment also obtained new weapons and munitions contracts, and deals to supply 20 electric buses and 111 two-door double-deck euro 6 diesel buses to Singapore’s Land Transport Authority.
Aerospace revenue for the quarter fell 13 percent on-year to S$647 million, mainly on lower project milestone completion for existing Airbus passenger-to-freighter conversions, while net profit fell 26.8 percent on-year to S$63.48 million, it said.
Electronics sector revenue for the quarter rose 16 percent on-year to S$536 million, but its net profit fell 20 percent on-year to S$44.1 million on a less-favorable sales mix, ST Engineering said.
The land systems sector posted a revenue increase of 29 percent on-year to S$435 million on higher project deliveries, but it reported a net loss of S$700,000, swinging from a year earlier net profit of S$42.6 million, on one-off charges of around S$20 million on “portfolio rationalization” and the absence of favorable U.S. tax adjustments.
For the full year, ST Engineering posted net profit of S$494.2 million, down 2 percent on-year, on revenue of S$6.70 billion, up 3 percent on-year.
That missed full-year forecasts from Maybank KimEng, which had expected net profit of S$564.9 million on revenue of S$7.03 billion, and from RHB, which had forecast net profit of S$531 million on revenue of S$6.88 billion.
ST Engineering proposed a final dividend of 10.0 Singapore cents a share, which together with the 5.0 Singapore cent interim dividend, brought the total dividend to 15.0 Singapore cents for the year. That was unchanged from a year earlier.
In September 2018, ST Engineering entered a deal to acquire all of MRA Systems from General Electric for US$630 million.