LETTER TO SHAREHOLDERS from the rest of the world. By products and services type, Commercial revenue was $6.0b and Defence revenue was $3.0b. Our performance at the business segment level also showed strength in key areas. Revenue for Commercial Aerospace segment was $3.0b, up 21% from $2.5b though the aviation industry has yet to recover fully to pre-COVID level. EBIT grew 65% y-o-y to $301m from $182m, despite a $150m reduction in government support y-o-y, due to cost saving initiatives and business recovery. The aviation industry gained momentum in its recovery from COVID-19 as travel restrictions across the world were further lifted, leading to the reopening of more routes. Increased demand for air passenger and air cargo also spurred new aircraft orders and freighter conversions, signalling confidence in the sustainable growth of air passenger and air freight postCOVID. Our Aerostructures and Systems business saw several new developments during the year. The manufacturing business recovered steadily as the production rate improved in line with rising demand from OEMs. In addition, as mentioned earlier, the freighter conversion business also continued growing, with strong customer demand. Returning MRO demand was reflected in the healthy utilisation rate of all our facilities, which maintained, on average, an above 80% rate in 2022. Our airframe hangars were operating mostly at near full capacity. We expect to see further recovery in aviation in 2023, especially in the Asia Pacific region. The reopening of China will also present more opportunities, enabling our local operations to go back to full capacity sooner and help raise the efficiency of our MRO output. Revenue for Urban Solutions & Satcom segment grew 49% y-o-y to $1.8b from $1.2b, with contribution from TransCore. The segment EBIT was $29m, up 13% y-o-y from $26m despite TransCore T&I expenses, and in spite of Satcom’s weakness resulting from the impact of global chip shortages and its higher investment in product development. As part of returning to normalcy post-COVID, we saw a resumption of investments by some governments into infrastructure development. This led to more opportunities for large-scale projects, especially in the areas of Smart Mobility, IoT and Smart Security. Our Mobility Rail business continued to win contracts for landmark projects around the world that underscore our competitive differentiation and demonstrate our ability to move up the value chain. Our AGIL® Smart Street Lighting control solutions continue to gain traction in various parts of the world, reinforcing our credentials in quality solutions that deliver superior lighting performance, reduce energy consumption and ease maintenance regimes. While our Satcom business saw a gradual pickup in most of its markets, the global chip shortages continued to weigh down this business. Specific components used in our satcom products were still experiencing shortages due to imbalances of chip inventories. Even with mitigation measures to reduce business impact, we expect the shortage in chips on our Satcom business to improve only in 2023. Meanwhile, we have increased our investments in product development to better position our Satcom business towards virtualisation and the cloud as the industry moves towards a new hybrid of satellite and terrestrial Cloud and 5G networks. We have committed to invest up to 5% of our annual revenue on R&D, of which up to 75% will be spent on digital technologies. 08 ST ENGINEERING ANNUAL REPORT 2022
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