Aerospace and land systems divisions drag ST Engineering's Q3 earnings

SINGAPORE - Earnings at ST Engineering fell in the third quarter, dragged down mainly by its aerospace and land systems businesses.

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Here is the full statement from ST Engineering:

Singapore Technologies Engineering Ltd (ST Engineering) today reported steady performance for its third quarter (3Q) financials ended 30 September 2013, achieved in a period when global corporate sentiment and business confidence were weighed heavily by the expectation of a QE3 scale-back.

3Q2013 versus 3Q2012

3Q2013 Group revenue was $1.55b compared to the prior year revenue of $1.54b for the same period. Group profit before tax (PBT) declined 8 per cent year-on-year to $170.3m and net profit after tax (Net profit) dropped 10 per cent to $131.4m, compared to the same period last year. This quarter saw an impairment charge in the Marine sector of $23.7m for ROPAX* and this was partially offset by write-back of warranty provisions of $14.4m that were no longer required.

The Aerospace sector posted comparable revenue of $510m, and lower PBT of $80.2m, down 6 per cent compared to the prior year same period. The Electronics sector registered comparable revenue of $350m, and higher PBT of $43m, up 7 per cent year-on-year. Revenue and PBT for the Land Systems sector dropped 11 per cent to $348m and 9 per cent to $18.1m respectively, compared to the same period last year. Revenue for the Marine sector surged 25 per cent to $296m and PBT rose 12 per cent to $34.1m year-on-year.

9M2013 versus 9M2012

On a nine months basis, Group revenue was $4.69b, against $4.65b registered in the prior year same period. 9M2013 Group PBT and Net profit at $521.7m and $413.3m respectively were comparable to the same period a year ago.

"For the first nine months of the year, the Group reported comparable Revenue and PBT. Compared to 3Q2012, 3Q2013 recorded comparable Revenue and a decrease in PBT by 8 per cent. The last quarter saw a pessimistic business sentiment due to speculation of the US Federal Reserve QE tapering, along with a challenging European environment and softening of the China economy. While these factors have weakened demand in several business areas, the Group secured new commercial orders and several new contracts from governments around the world. We currently maintain a healthy order book of $12.5b. The Group's cash and cash equivalents including funds under management remains strong at $2.1b.

Our strong order book gives us the ability to ride out market volatilities in the future. The diversified competencies across our business sectors put us in a good position to face the uncertain business climate that lies ahead.

Barring unforeseen circumstances, the Group expects to achieve comparable Revenue and PBT for FY2013 over FY2012." ~ TAN Pheng Hock, President & CEO, ST Engineering.

Business Highlights

In the third quarter, commercial sales constituted 63 per cent or $1b of Group revenue. The Group expects to recognise about $1.5b out of the $12.5b order book in the remaining months of 2013.

The Group's Aerospace and Electronics sectors announced contracts worth over $1b in 3Q2013. The Aerospace sector secured about $600m worth of projects for airframe, component and engine maintenance, as well as commercial airline cabin retrofit and freighter conversions. The Electronics sector secured contracts of about $416m for rail electronics, satellite communications and ICT solutions. Separately, the Land Systems sector was awarded several export contracts for its 40mm solutions, including a contract for the Canadian Armed Forces' Tactical Armoured Patrol Vehicle programme. The Marine sector continued to win projects for its ship repair business.

* Roll-on/Roll-off Passenger ferry