ST Engineering net profit improves slightly to $147.9m

Up 3.3% from 2Q 2012.

ST Engineering reported the minimal net profit improvement over the second quarter ended 30 June 2013 (2Q2013) despite the softening of global business sentiment and market volatility due to fears of the tapering of the US economic stimulus programme and the softening Chinese economy.

Through what it called a "period of uncertainty," Singapore Technologies Engineering Ltd (ST Engineering) maintained a steady business momentum with revenue and earnings performance comparable to that achieved for the same period in 2012.

The Group posted quarterly revenue of $1.59b, compared with the prior year revenue of $1.57b for the same period. Revenues for the Group’s Aerospace, Electronics and Land Systems sectors at $506m, $354m and $392m respectively were comparable to 2Q2012. Marine sector’s revenue increased 12% from $277m in 2Q2012 to $311m, due mainly to higher shipbuilding activities from its Singapore operations.

EBIT totalled $177.7m, an increase of 7% from $165.9m a year earlier. Group profit before tax (PBT) was $189.3m versus $187.8m for 2Q2012. All sectors, except for Aerospace sector which recorded comparable PBT, achieved higher PBT growth of between 7% and 13%. Of note, PBT for the prior year period included a non-recurring gain of $12.8m from the disposal of properties by the Aerospace and Land Systems sectors.

Quarterly net profit after tax (Net Profit) was $147.9m, compared with the prior year $143.1m for the same period. This leads to an earnings per ordinary share of 4.78 cents, compared to 4.67 cents in the same period last year.

For the six months ended 30 June 2013 (1H2013), the Group registered revenue of $3.14b compared to $3.11b in the same period last year. PBT and Net Profit at $351.4m and $281.9m respectively were comparable to 1H2012.

"The Group’s EBIT increased by 7% and Net Profit grew 3%, while Revenue was comparable to 2Q2012.

1H2013 Revenue was comparable to 1H2012, while Net Profit grew 2%. The Group continued to secure new orders and ended the period with a strong order book of $12.7b and cash and cash equivalents including funds under management remained high at $2.1b after payment of final dividends for FY2012 of $428m.

The Board of Directors has approved the payment of an interim ordinary dividend of 3 cents per share, payable on 13 September 2013.

Barring unforeseen circumstances, the Group expects to achieve higher Revenue and PBT for FY2013 compared to FY2012.” said TAN Pheng Hock, President & CEO, ST Engineering.

Commercial sales constituted 62% or $1.0b of 2Q2013 revenue. For the rest of the year, the Group expects to deliver $2.8b out of the order book, which stood at $12.7b at end June 2013.

The Group’s four business sectors ended the second quarter with several contracts secured. Specifically, its Aerospace sector announced contracts of about $430m for airframe, component and engine maintenance, as well as VIP interior modifications. Its Electronics sector announced contracts worth $206.8m for projects in the areas of rail electronics, satellite communications and communications systems. For the Land Systems and Marine sectors, there were a number of contract wins which were for regular specialty vehicles and services for the Land Systems sector, and regular ship repair works for the Marine sector.

In keeping with the Group’s commitment of rewarding its shareholders, the Board approved an interim ordinary dividend of 3 cents per share, payable on 13 September 2013.