Impairment of intangible assets, receivables, and fair value changes dragged it down.
ST Engineering saw its profit attributable to shareholders dip 4% YoY to $257.4m in H1 from $269.3m in H1 2019, an announcement revealed. Group revenue over the same period rose 2% YoY to $3.57b from $3.51b.
The group’s net profit was impacted negatively by impairment of intangible assets, receivables, and fair value changes as the business outlook for some lines of business. Further, its US shipbuilding business experienced some project losses. Net profit contribution was aided by cost reduction initiatives and government support.
In addition, its pre-tax profit likewise dropped 13% YoY to $286.4m in H1. Earning per share slipped 4% YoY to 8.26 cents.
Further, revenue from its marine business and acquisitions by the aerospace and electronics sectors in 2019 resulted in revenue growth for H1. However, this was largely offset by the impact of COVID-19 (namely, reduction in customer demand, supply chain challenges, and workforce disruption), especially on the aerospace and electronics sectors.
Revenue from its aerospace segment inched up 1% YoY to $1.47b, largely due to a full six months contribution from MRAS, compared to only two and a half months of contribution in the same period last year. Meanwhile, electronics revenue was 2% lower YoY at $1.07b, no thanks to delays in project milestones and delivery schedules and lower revenue recognition from communication projects.
Land systems revenue was down 4% YoY to $644m from $673m due mainly to lower sales from US Specialty Vehicle and MAN bus businesses, partially offset by stronger defence sales. Lastly, revenue from ST Engineering’s marine business jumped 34% YoY to $385m, however, net profit was down 19% to $21.4m from $26.3m.
This was largely due to weaker US shipbuilding performance where some vessel constructions had cost overruns and were also priced low at the trough of the marine industry in 2018 to cover fixed overheads.
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