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ST Engineering Y-O-Y Profits Slip

Maritime Activity Reports, Inc.

February 27, 2015


Singapore Technologies Engineering Ltd  reported today its full year financial results ended 31 December 2014 (FY2014) with a Group revenue of $6.54b compared to $6.63b as reported for FY2013. Profit before tax (PBT) of $650.7m was $79m or 11% lower year-on-year compared to $729.7m, and Net Profit of $532.0m was $48.8m or 8% lower year-on-year compared to $580.8m.

At the business sector level, revenue for the Aerospace sector was comparable at $2.06b, and PBT was down 11% to $283m from $319.4m reported for FY2013. The Electronics sector achieved higher PBT of $184m, up 8% compared to $170.3m in FY2013 on the back of comparable year-on-year revenue of $1.58b. The Land Systems sector posted comparable year-on-year revenue of $1.4b, and a lower PBT of $56.2m, down 50% from $111.8m in FY2013. The Marine sector $1.34b revenue was 8% higher compared to $1.24b, and its PBT of $122.8m was 16% down from $146.3m in FY2013.

4Q2014 versus 4Q2013

In the fourth quarter ended 31 December 2014 (4Q2014), the Group posted revenue of $1.85b compared to $1.94b reported for the prior year same period. The comparable revenue was a result of lower contributions from the Aerospace, Electronics and Marine sectors which saw a drop of between 6% and 11% in their revenues.  The Land Systems sector achieved a 8% year-on-year increase in revenue.

Compared 4Q2014 against 4Q2013, Group PBT was $167.4m, down $48.7m or 23% from $216.1m, and Net Profit $140.3m, down $27.2m or 16% from $167.5m.

“The Group registered comparable Revenue of $6.5b with a lower PBT and Net Profit of $650.7m and $532m respectively for FY2014 compared to FY2013. A challenging business environment in Europe, the weakness in our Specialty Vehicles business in China as well as the poor performance in our US shipbuilding operations impacted our performance. We succeeded in securing contracts worth about $4b and ended the year with a healthy order book of $12.5b. Our cash & cash equivalents including funds under management remain high at $1.7b. Barring unforeseen circumstances, the Group expects Revenue and PBT for FY2015 to be comparable to FY2014.” ~ TAN Pheng Hock, President & CEO, ST Engineering.

Commercial sales accounted for 61% or $4.0b of Group revenue at the end of 2014. Revenue mix of the Group comprised Aerospace sector 32%, Electronics sector 24%, Land Systems sector 21% and Marine sector 21%.

Dividend payout and dividend yield

The Board of Directors proposes a Final Dividend of 11 cents per share, consisting of an Ordinary Dividend of 4 cents per share, and a Special Dividend of 7 cents per share. Together with the Interim Dividend of 4 cents per share paid to shareholders in September 2014, the total dividend for the full year will amount to 15 cents per share, same as FY2013. This translates to a dividend yield of 4.08%, computed using the average closing share price of the last trading day of 2014 and 2013.

Order book and new contracts announced in 2014
The Group announced about $4.0b of new contracts in 2014, maintaining a healthy level of orders. As at end December 2014, order book was $12.5b, of which about $3.8b is expected to be delivered in 2015.

The Aerospace sector announced about $310m worth of contracts for 4Q2014, making it a total of $1.7b for the year. These contracts won in 2014 spanned the total aviation support programmes offered by the company, including heavy maintenance, Maintenance-By-the-Hour, pilot training and VIP completions. The Electronics sector announced $2.2b of new contracts for the year, with about $509m added in the fourth quarter.

These contracts were for local and international rail electronics projects, satellite communication solutions and advanced electronics and ICT. In mid-2014, the Land Systems sector announced a contract of about $100m for the supply of MAN articulated buses to SMRT, while the Marine sector announced a contract to build two 130-foot ATB tugs in its US yards.

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