What dragged ST Engineering's marine segment down in Q2?

There were cost provisions made on two LNG-powered vessels.

The main source of headache ST Engineering had in the past quarter was its marine segment.

According to DBS Group Research, cost provisions were made for two liquefied natural gas (LNG)-powered ConRo vessels under construction at VT Halter Marine, ST Engineering’s US shipbuilding subsidiary.

This accounted for the majority of the $22m profit before taxes (PBT) loss at the shipbuilding business and thus a $8m PBT loss for the marine segment as a whole.

"Without the provisions, both the shipbuilding business and marine segment as a whole would have been in positive PBT territory," analyst Suvro Sarkar said.

The analyst said ST Engineering reckons that it has made sufficient provisions for these two vessels – which are at advanced stages of completion more than 90% for the first and more than 70% for the second.