News - ST Engineering Reports Lower Profits in 2Q2017 vs 2Q2016

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ST Engineering Reports Lower Profits in 2Q2017 vs 2Q2016

ST Engineering Reports Lower Profits in 2Q2017 vs 2Q2016

Ended the Quarter with Strong Order Book of $13.5b

FINANCIAL HIGHLIGHTS

For the second quarter ended

30 June 2017

 

2017
2Q

2016
2Q

Growth
%

2017
1H

2016
1H

Growth
%

Revenue ($m)

1,756

1,623

8

3,295

3,250

1

Earnings before interest and tax (EBIT) ($m)

130.8

137.2

(5)

247.5

234.3

6

Other income, net ($m)

10.7

24.6

(57)

22.4

46.7

(52)

Finance costs, net ($m)

(3.3)

(3.9)

14

(8.4)

(15.3)

45

Profit before tax (PBT) ($m)

149.8

170.3

(12)

286.8

300.7

(5)

Profit attributable to shareholders ($m)

111.5

127.3

(12)

215.0

237.5

(10)

Earnings per share (cents)

3.59

4.10

(12)

6.91

7.65

(10)

 

  • Strong order book of $13.5b at end June 2017, of which about $2.1b is expected to be delivered in the remaining months of 2017
  • Diverse business portfolio mitigated overall impact of weak Marine sector
  • Commercial sales and defence sales constituted 64% or $1.1b and 36% or $0.7b respectively
  • Economic value added for first half of 2017 was $116.1m (1H2016: $128.7m)
  • Cash and cash equivalents including funds under management totalled $1.3b

Group 2Q2017 Unaudited Results and ST Engineering Results Presentation 2Q2017

N.B.: All currencies are in Singapore dollars

Singapore, 11 August 2017 - Singapore Technologies Engineering Ltd (ST Engineering) today announced that Group revenue for its second quarter ended 30 June 2017 (2Q2017) came in 8% higher at $1.76b compared to $1.62b in the same period last year.  Group quarterly Profit before tax (PBT) fell 12% year-on-year to $149.8m from $170.3m, mainly due to an $8.1m loss from the Marine sector impacted by weak industry conditions and its US operations. Profit attributable to shareholders (Net profit) at $111.5m was 12% lower compared to $127.3m the year before.  The Group’s diverse business portfolio mitigated the impact of the weak Marine sector.

At the business sector level compared to the same period last year, revenue for the Aerospace sector was comparable at $639m, and its PBT grew 6% to $78.9m from $74.2m. The Electronics sector saw a 40% year-on-year increase in its second quarter revenue to $621m from $445m largely due to the modification of estimates of revenue recognition for long term contracts from milestone completion per customer acceptance to monthly work done. Its PBT remained flat at $52.1m due to less favourable sales mix. Revenue for the Land Systems sector at $302m was flat year-on-year, and its PBT at $29.3m was comparable due mainly to the absence of a divestment gain in the same period last year.  The Marine sector posted 34% drop in revenue to $163m from $248m and incurred a loss before tax of $8.1m versus a PBT of $20.4m a year ago, due mainly to the weak industry conditions and its US operations.

Commercial sales and defence sales accounted for 64% or $1.1b and 36% or $0.7b respectively of the Group’s 2Q2017 revenue.  Order book remained strong at $13.5b, compared to $13.3b as at end March 2017.  The Group expects to deliver $2.1b of orders in the rest of 2017. Cash and cash equivalents including funds under management remained high at $1.3b after payment of the FY2016 final dividend of $312m.

Six Months Results: 1H2017 versus 1H2016

On a half-yearly basis, the Group revenue and PBT were comparable year-on-year at $3.3b and $286.8m respectively.  Net profit fell 10% to $215.0m from $237.5m.

The Aerospace sector posted comparable revenue and PBT of $1.19b and $157.0m respectively.  Revenue for the Electronics sector was $1.14b, up 27% year-on-year from $902m, and its PBT was flat at $93.8m.  Revenue for the Land Systems sector was down 6% to $574m from $614m, and its PBT down 7% to $45.6m from $49.0m. The Marine sector revenue was down 26% to $342m from $461m, and its PBT dropped 96% to $0.9m from $23.8m.

Barring unforeseen circumstances, the Group expects FY2017 Revenue and PBT to be comparable to FY2016.

“In the last few months, we have made several acquisitions and investments to position us for long term growth.  The acquisition of 51% of SP Telecommunications provides us with a fibre-optic grid to market ICT solutions to government and enterprise customers.  The soon-to-be completed acquisition of Aethon, a US-based robotics company, will provide the Group with autonomous mobile robots for deployment in the healthcare, industrial and hospitality sectors.

The US$150m Corporate Venture Capital unit, the setting up of technology scouting overseas offices and the Open Innovation Lab will complement and support our development of new technologies and capabilities. 

We remain focused on strengthening our core defence and commercial businesses, whilst pursuing opportunities in new growth areas.” ~ Vincent Chong, President & CEO, ST Engineering

Interim Dividend

In consideration of the Group’s strong cash flow from operations, the Board has approved to maintain the interim dividend at 5 cents per ordinary share, similar to the interim dividend payouts in the last two years.  Shareholders will receive the payment on 29 August 2017.

Steady Contract Win Momentum in 2Q2017

In the second quarter, the Group announced $1.14b worth of new contracts.  Of these, $650m was from the Aerospace sector and $490m from the Electronics sector.  New wins for the Aerospace sector included additional four firm and 10 optional A330-300P2F conversions for DHL Express, as well as a long-term agreement to provide heavy maintenance services to Air Canada’s flagship 787 Dreamliner fleet.  Contracts for the Electronics sector were for Rail Electronics & Intelligent Transportation, Satellite & Broadband Communications, as well as Advanced Electronics and Information Communications Technologies solutions.

In addition to these new contracts, the Land Systems sector continued to secure orders for its 40mm munitions from customers in Asia and the Middle East, as well as for its Road Construction Equipment and Specialty Vehicles from customers in Asia, Latin America and North America.  The Marine sector secured various ship repair projects in Singapore and the US, as well as a contract to build an ATB tug in its US yard.

ST Engineering is an integrated defence and engineering group specialising in the aerospace, electronics, land systems and marine sectors. It has global presence with offices in Asia, the Americas, Europe and the Middle East and employs about 22,000 employees. Across the globe, its employees bring innovation and technology together to create smart engineering solutions for its customers in the defence, government and commercial segments. Headquartered in Singapore, ST Engineering reported revenue of S$6.68b in FY2016 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 and the SGX Sustainability Leaders Index. Please visit www.stengg.com for more information.

For further enquiries, please contact:

Lina Poa
Head, Corporate Communications & Investor Relations
ST Engineering
Tel: (65) 6722 1883    
Email: linapoa@stengg.com

Sylvia Lee
Assistant Manager, Investor Relations
ST Engineering
Tel: (65) 6722 1849
Email: lee.ruiting.sylvia@stengg.com

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