ST Engineering's Q1 profits grew 11% to $131.1m

Its aerospace sector recorded a 6% profit increase to $62.7m.

Singapore Technologies Engineering (ST Engineering) started 2019 on a high note after profits jumped 11% YoY to $131.1m in Q1 from $117.7m in 2018, an announcement revealed. Revenue also edged up 5% YoY from $1.65b to $1.73b.

Also read: ST Engineering's FY18 profits down 1.7% to $494.24m

At the business sector level, revenue for the aerospace sector increased 4% YoY to $622m from $599m, and net profit was up 6% YoY to $62.7m from $59.2m. Revenue for the land systems sector was also up 34% to $377m from $281m, driven by broad-based growth across its business groups, although its net profit dropped 3% YoY to $15.2m from $15.6m mainly due to the absence of a favourable tax finalisation adjustment.

Meanwhile, revenue for the electronics sector was $563m, down 7% from its high base in Q1 2018 which was a strong quarter with 22% YoY growth. Notwithstanding the lower revenue, its net profit was up 8% YoY to $43.4m from $40.3m due to favourable sales mix.

The marine sector’s revenue was flat at $149m, and its net profit grew 38% YoY to $12m from $8.7m, largely due to improved US shipbuilding performance.

As at 31 March 2019, the group’s order book stood at a high of $14.1b, of which $4.2b is expected to be delivered in the remaining months of 2019.

ST Engineering announced a combined value of $2.1b new contracts for the aerospace and electronics sectors, of which $1.3b was from the aerospace sector for services ranging from a 10-year heavy maintenance support for a major North American operator’s entire fleet of A300s and Boeing 757 and component support for new African and European airline customers. The electronics sector received $818m worth of contracts from global customers for its mobility, satellite communications, Internet of Things, cybersecurity, public safety and security, and defence solutions.

In addition to the new wins, the land systems sector hit a major milestone with its first seaport contract to supply 80 automated guided vehicles to Singapore’s container port operator, PSA Corporation.

Also read: ST Engineering to close acquisition of MRAS in Q2

“On the mergers and acquisitions (M&A) front, we have agreed to acquire Newtec Groupi, which operates in the high-tech satellite communications industry driving connectivity. This acquisition is expected to complete in H2 2019,” Vincent Chong, president & CEO, revealed.

The group has completed the acquisition of MRA Systemsii, LLC at a net consideration of about $683m (US$506m) on 18 April 2019 and is focused on integrating the business with the aerospace sector.

On 24 April 2019, ST Engineering also announced that the US Department of the Navy has awarded its US shipyard the Polar Security Cutter (PSC) contract, which includes options that, if exercised, would bring the cumulative value of the contract to about $2.6b (US$1.9b). The first PSC is expected to be delivered in 2024.