SIA Engineering's Q2 net profit down 19% to $36.8m

Higher material and staff costs crushed its earnings.

SIA Engineering Company's net profit slumped 19% to $36.8m in the quarter ending in September 30. This is in contrast with the strong $45.5m net profit recorded last year which included a $2.8 million gain arising from the partial disposal of an associated company, and a $1.5 million dividend from HAESL which ceased upon its divestment.

"Profit attributable to owners of the parent was $35.5 million for the quarter ended 30 September 2016, $9.0 million or 20.2% lower than the corresponding quarter last year," the group noted.

Meanwhile, its revenue of $264.8 million decreased by $1.2 million or 0.5%. Expenditure at $240.3 million increased by $1.3 million or 0.5%, mainly due to increases in material and staff costs, which were offset in part by lower subcontract costs. As a result, operating profit of $24.5 million was lower by $2.5 million or 9.3%.

Share of profits from associated and joint venture companies was $17.2 million, $1.5 million or 8.0% lower than the same quarter last year. Contributions from the engine repair and overhaul centres at $9.5 million were $2.2 million or 18.8% lower. Basic earnings per share was 3.17 cents for the current quarter

Looking forward, the group stated it will continue to restructure and streamline operations to enhance operating efficiencies. It also pledged to pursue strategic partnerships and undertake initiatives to strengthen its competitiveness for long term growth, including investing in new technologies and advancing innovation.

"During the quarter, we completed the merger of Singapore Aero Engine Services Pte Ltd and International Engine Component Overhaul Pte Ltd, and have approved the integration of International Aerospace Tubes-Asia Pte Ltd and Component Aerospace Singapore Pte Ltd. Heavy Maintenance Singapore Services Pte Ltd, the Company's joint venture with Airbus, was incorporated on 28 October 2016 and is expected to commence operations within this financial year," SIA said.

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