|Financial Highlights for the year ended 31 December 2019||2019
|Earnings before interest and tax (EBIT) ($m)||654.0||570.3||15%|
|Other income, net ($m)||38.9||35.0||11%|
|Finance costs, net ($m)||(36.6)||(33.6)||9%|
|Profit before tax (PBT) ($m)||695.2||620.7||12%|
|Profit attributable to shareholders (Net Profit) ($m)||577.9||494.2||17%|
|Earnings per share (cents)||18.53||15.85||17%|
|Economic value added (EVA) ($m)||317.0||306.0||4%|
|Return on equity (%)||26.0||22.0||4pp|
|Dividend per share (cents)
N.B.: All currencies are in Singapore dollars
Singapore, 24 February 2020 - Singapore Technologies Engineering Ltd (ST Engineering) today reported strong growth in revenue and profits for its full-year financial results for the year ended 31 December 2019.
The Group posted a revenue of $7.9b, a 17% increase from $6.7b a year ago in the same period. Profit before Tax (PBT) grew 12% y-o-y to $695.2m from $620.7m, and Profit attributable to shareholders (Net Profit) was up 17% y-o-y to $577.9m from $494.2m.
At the business sectors, revenue for the Aerospace sector grew 30% y-o-y to $3.5b from $2.6b largely due to MRAS’ contribution and revenue recognised from various end-of-programme reviews. Its Net Profit was up 10% y-o-y to $268.9m from $244.6m mainly due to MRAS’ contribution and end-of-programme reviews partly offset by assets impairment including rotables, and the absence of prior year’s divestment gain. Revenue for the Electronics sector was $2.3b, up 6% from $2.1b a year ago driven by broad-based growth across its business groups, and its Net Profit was 2% higher y-o-y at $190.7m from $186.5m, largely due to favourable sales mix partly offset by transaction and integration costs associated with the acquisitions of Newtec and Glowlink.
Revenue for the Land Systems sector was $1.4b, up 11% y-o-y from $1.3b and its Net Profit at $77.3m, was up 46% from $52.9m a year ago in line with higher revenue and absence of portfolio rationalisation loss incurred in 4Q2018. Revenue for the Marine sector was up 13% y-o-y to $647m from $574m mainly due to better performance of its U.S. operations, and its Net Profit grew 14% to $51.5m from $45.2m a year ago despite impact of the arbitration outcome, helped by improved U.S. operations and sale of ROPAX. Revenue for “Others” was up 17% y-o-y to $61m from $52m and Net Loss narrowed to $10.5m from $35.0m the year before mainly due to improved performance of Miltope, its ruggedised computer business and the absence of one-time costs incurred for the early redemption of MTN.
“The Group’s focus in executing its strategy in 2019 produced a good set of financial results. In addition to achieving double-digit revenue and profit growth, we made three strategic acquisitions to strengthen the Group’s position for the future. We also recorded a strong order book which provides near-term revenue visibility.”
Vincent Chong, President & CEO, ST Engineering
Commercial sales and defence sales accounted for $5.6b and $2.3b respectively of Group revenue in 2019. As of 31 December 2019, the Group held $452m of cash and cash equivalents.
4Q2019 versus 4Q2018
In the fourth quarter ended 31 December 2019 (4Q2019), the Group achieved revenue of $2.3b, up 29% from $1.8b a year ago. PBT was 24% higher at $198.8m from $160.5m the year before and Net Profit grew 36% y-o-y to $169.5m from $124.5m.
The Aerospace sector recorded revenue of $941m, up 45% from $647m and its Net Profit was 21% higher at $76.9m versus $63.5m a year ago. Revenue for the Electronics sector was 28% higher y-o-y at $686m from $536m and its Net Profit increased 17% to $51.6m from $44.1m the year before. The Land Systems sector revenue grew 3% y-o-y to $448m from $435m and it turned in a Net Profit of $26.7m compared to a Net Loss of $0.7m a year ago. Revenue for the Marine sector was $204m, up 47% y-o-y from $139m, and its Net Profit grew 51% y-o-y to $21.8m from $14.5m.
Dividend Payout and Dividend Yield
The Board of Directors proposes a Final Dividend of 10.0 cents per share. Together with the Interim Dividend of 5.0 cents per share distributed in September 2019, shareholders will receive a total dividend of 15.0 cents per share for FY2019. This translates to a dividend yield of 4%, computed using the average closing share price of the last trading day of 2019 and 2018.
New Contract Wins in 2019
New contracts announced for 2019 stood at $8b, including $1b for the one unit of Polar Security Cutter. For 4Q2019, the Group announced a total of $1.5b new contracts, of which about $1.1b was secured by the Aerospace sector across its aviation manufacturing (including nacelle component and floor panel) and MRO service businesses. Another $449m was secured by its Electronics sector for products and solutions in smart mobility, satellite communications, Internet of Things, cybersecurity, public safety and security, and defence. In addition to these new contract highlights, the Group also had other contract wins in 2019.
Strong Order Book
The Group ended the year with an order book of $15.3b, and it expects to deliver about $5.9b in 2020.
Change in Quarterly Reporting
We refer to amendment of the SGX Mainboard listing rules effective 7 February 2020 for quarterly reporting (QR) requirements for listed companies. The new rules take a risk-based approach to QR while strengthening continuous disclosure requirements for all listed companies. Pursuant to the new rules and in line with the long-term nature of the Group’s businesses, the Group will henceforth publish its financial results on a half-yearly basis. The group will also augment its half-yearly financial results with relevant operating information on a quarterly basis.
ST Engineering is a global technology, defence and engineering group specialising in the aerospace, electronics, land systems and marine sectors. The Group employs about 23,000 people across offices in Asia, the U.S., Europe and the Middle East, serving customers in the defence, government and commercial segments in more than 100 countries. With more than 700 smart city projects across 130 cities in its track record, the Group continues to help transform cities through its suite of Smart Mobility, Smart Security and Smart Environment solutions. Headquartered in Singapore, ST Engineering reported revenue of $7.9b in FY2019 and it ranks among the largest companies listed on the Singapore Exchange. It is a component stock of the FTSE Straits Times Index, MSCI Singapore, SGX ESG Transparency Index and SGX ESG Leaders Index.
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 Arbitration proceedings between VT Halter Marine, Inc. and Hornbeck Offshore Services, LLC were settled on 22 Oct 2019.
 The sale of the Roll-on/Roll-off Passenger Vessel (ROPAX), MV Nova Star to Polish ferry operator, Polferries was completed in Oct 2019.
 The acquisition of MRAS was completed on 18 Apr 2019, the acquisition of Glowlink was completed on 17 Sept 2019 and the acquisition of Newtec was completed on 1 Oct 2019.