SIA Engineering still struggling with cost control

Staff and other costs led to an 8% decline in operating profit.

SIA Engineering Company might be getting a headache just finding a way to control its spending.

According to UOB Kay Hian analyst K Ajith, cost control remains a challenge for the group and was apparent in its recent quarterly results.

To recall, the group's net profit declined 13% YoY in the past quarter. At the operating level staff costs have risen by 5% YoY and this, along with higher depreciation & amortisation and subcontract costs, led to an 8% slump in core operating profit.

"This highlights the challenges and the tight labour environment that SIAEC operates in. SIAEC’s wage cost increase contrasts with SATS’ relatively flat wage cost for the same period," the analyst explained.

At the non-operating level, associate and JV profits were bolstered by higher profits from Eagle Services Asia (ESA) resulting in a 1.9% rise in associate and JV income. However, this was unable to offset the decline at the operating level, leading to the decline in core earnings.