|Financial Highlights for the first half-year ended 30 June 2021||2021
|Profit from operations (PFO) ($m)||332.2||302.3||10%|
|Earnings before interest and tax (EBIT) ($m)||355.1||314.1||13%|
|Finance costs, net ($m)||(15.3)||(27.7)||(45%)|
|Profit before tax (PBT) ($m)||339.8||286.4||19%|
|Profit attributable to shareholders (Net Profit) ($m)||296.1||257.4||15%|
|Earnings per share (cents)||9.50||8.26||15%|
N.B.: All currencies are in Singapore dollars
Singapore, 12 August 2021 - Singapore Technologies Engineering Ltd (ST Engineering) today reported its first half-year financial results ended 30 June 2021 (1H2021) under its new financial reporting framework that reflects the organisational structure [i] in place since 1 January 2021. Under this organisational structure, Commercial Aerospace (CA), Urban Solutions & Satcom (USS), and Defence & Public Security (DPS) constitute the three reportable business segments of the Group. At these business segments level, revenue and EBIT will be reported, and revenue will also be reported at the sub-segments level.
Group revenue in the first six months was $3.65b, up 2% from $3.57b a year ago in the same period. Group EBIT was $355.1m, up 13% year-on-year (y-o-y) from $314.1m, while Group Profit before tax (PBT) grew 19% y-o-y to $339.8m from $286.4m, and first-half Group Profit attributable to shareholders (Net Profit) grew 15% to $296.1m from $257.4m.
The stronger y-o-y Group revenue was due to partial recovery of businesses across Urban Solutions & Satcom and Defence & Public Security, which more than offset the y-o-y revenue decline in Commercial Aerospace as this segment continued to be impacted since the second quarter of 2020 by the subdued aviation sector (COVID-19 impact not yet felt in 1Q2020).
Similarly, the higher y-o-y Group Net Profit was contributed by better operating performance of Urban Solutions & Satcom and Defence & Public Security, and aided by lower finance cost, which more than offset the weaker operating performance of Commercial Aerospace, lower government support received and higher tax expense.
1H2021 Group Net Profit of $296.1m came in 12% stronger than 2H2020 Group Net Profit of $264.4m, despite lower government support. This was on the back of partial recovery in Commercial Aerospace and realisation of disciplined cost savings measures across the businesses.
Government Support Schemes
Earlier in February, the Group guided that it expects a reduction of $250m in government support in 2021 compared to 2020. However, due to a higher than expected level of government support it will receive from its global operations, the Group now expects the government support reduction to be at $150m. The impact of the reduction in government support will mainly manifest in the second half of 2021.
Business Segments: Revenue and EBIT [ii]
Commercial Aerospace: Revenue was $1.14b, 10% lower y-o-y from $1.27b as its sub-segments Aerospace MRO and Aerostructure & Systems continued to be impacted by the subdued aviation sector (COVID-19 impact not yet felt in 1Q2020). Comparing 1H2021 to 2H2020, Commercial Aerospace recovered partially and its revenue grew 7%. EBIT was 37% higher y-o-y at $102.6m, contributed by government support. The underlying EBIT was $25m lower than 1H2020 due to a pre-COVID first quarter in 2020, with the extent of EBIT reduction mitigated by cost management measures, but offset by weaker operating performance as stated above. Its EBIT for 1H2021 strengthened compared to 2H2020.
Urban Solutions & Satcom: Revenue grew 12% y-o-y to $528m from $471m, contributed by Smart Mobility and Satcom. EBIT was $10.8m compared to a negative EBIT of $21m the year before, largely due to contribution from higher revenue and lower operating expenses, partially offset by lower government support.
Defence & Public Security: Revenue grew 8% y-o-y to $1.99b from $1.83b, contributed by sub-segments of Digital Systems & Cyber, Land Systems and Defence Aerospace. EBIT was down 7% y-o-y to $241.7m from $260.4m due to lower government support (compared to the higher government support received during the two circuit-breaker months in 2Q2020), partially offset by contribution from higher revenue and gain recognised on the receipt of liquidation proceeds of subsidiaries.
“We delivered a good set of results for the first half of 2021 amidst a challenging operating environment. We had also secured contract wins across our businesses that led to a robust order book, which continues to provide revenue visibility in the periods ahead.
We remain steadfast in the pursuit of our strategy to emerge stronger as the business environment improves. The diversity of our business portfolio, and our focus on seizing growth opportunities, coupled with productivity and cost management measures will continue to position us well into the future.”
Vincent Chong, Group President & CEO
In the first half, commercial sales and defence sales accounted for $2.24b and $1.42b respectively of Group revenue. As at 30 June 2021, the Group held $583m in cash and cash equivalents, $241m higher than the same period last year.
New Contract Wins in 1H2021 and Order Book
In the second quarter of 2021, the Group secured new contracts of about $1.82b, comprising $874m from Commercial Aerospace, $284m from Urban Solutions & Satcom, and $660m from Defence & Public Security. Including the $1.55b announced for the first quarter of 2021, the total new contract value for 1H2021 (excluding undisclosed wins due to customer confidentiality reasons) was $3.37b.
In the second quarter, Commercial Aerospace clinched new contracts across a spectrum of its aviation manufacturing and MRO businesses, including passenger-to-freighter (P2F) conversion orders for A321P2F and A330P2F units from freight operators and lessors, a five-year airframe heavy maintenance contract to support an Asian Pacific airline’s Boeing 787 fleet and engine heavy maintenance contracts from Alaska Airlines and an Asian airline.
Urban Solutions & Satcom won contracts from global customers for smart mobility, smart utilities and smart security, and satcom. These include the Group’s first rail electronics contract in Egypt to provide its Passenger Information System solution for the 10th of Ramadan City Railway, as well as smart utilities and integrated security management systems for government agencies in Singapore. Its Satcom business also clinched various contracts across key market verticals, including a contract with Eutelsat for the launch of their flexible and scalable global Network-as-a-Service offering.
The business segments of the Defence & Public Security cluster secured various contracts including the construction of T-AGS 67 Oceanographic Survey Ship for the U.S. Navy, supply of cybersecurity products and solutions, as well as deployment of mission critical & data analytics systems and cloud managed services for government agencies, enterprise and defence customers.
These new contracts, together with other contracts won but not disclosed, and after adjustments of revenue delivery and project cancellations, bring the Group’s order book to a robust level of $16.8b as at 30 June 2021. The Group expects to deliver about $3.6b from the order book in the remaining months of 2021.
The Board of Directors has approved an Interim Dividend of 5.0 cents per share. Shareholders will receive the payment on 31 August 2021.
[i] Organisation structure as of 1 January 2021: Commercial and Defence & Public Security clusters have replaced the sector-structure of Aerospace, Electronics, Land Systems and Marine. The Commercial cluster comprises Commercial Aerospace, Urban Solutions and Satellite Communications (Satcom), and the Defence & Public Security cluster comprise Digital Systems and Cyber, Land Systems, Marine, and Defence Aerospace.
[ii] Segment information restated: The restated business segment information encompasses Revenue and EBIT restated according to the new reporting framework effective as of 1 January 2021.
For investor enquiries, please contact email@example.com.