3 factors dragged down ST Engineering earnings to S$131.4m

PATMI down 9.9% in 3Q13.

Singapore Technologies Engineering (STE) suffered a disappointing 3Q13 as revenue grew only slightly by 0.5% yoy and PATMI fell 9.9% to S$131.4m, reported OCBC Investment Research.

The research firm highlighted 3 factors that hurt STE's latest quarterly results. First, the Aerospace and Land Systems division reported lower gross profit. Second, the company recognised an impairment of S$23.7m for ROPAX due to the prolonged softness in the shipping market in Europe, partially offset by a write-back of warranty provisions of S$14.4m that were no longer required.

Lastly, STE saw an increase in net finance costs of S$5.1m driven by a S$3m lower FX gain and a S$2.8m lower gain on disposal of investments.

The lower-than-expected 3Q13 results led STE to temper its FY13 guidance to achieve comparable revenue and PBT for FY13 versus FY12, as opposed to expecting higher revenue and PBT as it did previously, noted OCBC.