ST Engineering first-half profit slips 4.4% with aerospace, electronics hit by Covid-19 pandemic

ST Engineering's revenue for the half year inched up by 1.7 per cent on the year to $3.57 billion.
ST Engineering's revenue for the half year inched up by 1.7 per cent on the year to $3.57 billion.ST PHOTO: KUA CHEE SIONG

SINGAPORE (THE BUSINESS TIMES) - Singapore Technologies Engineering's (ST Engineering) net profit edged down by 4.4 per cent to $257.4 million for the first half of fiscal 2020, from $269.3 million a year ago.

The impact to its bottom line came from the impairment of intangible assets, receivables and fair value changes as the business outlook for some lines of business was forecast to be poorer as a result of the novel coronavirus pandemic.

Further, its US shipbuilding business experienced some project losses, said the global technology, defence and engineering group in results released on Friday morning.

Earnings per share stood at 8.26 cents for the six months ended June 30, 2020, down from 8.63 cents in the corresponding period last year.

Revenue for the half year inched up by 1.7 per cent on the year to $3.57 billion, from $3.51 billion previously, helped by the marine sector's revenue performance as well as acquisitions by the aerospace and electronics sectors in 2019.

However, the revenue growth was largely offset by the impact of the Covid-19 pandemic, namely the decline in customer demand, supply chain challenges and workforce disruption. The pandemic took an especially heavy toll on the aerospace and electronics sectors, ST Engineering said.

Excluding the effects of the acquisitions by the aerospace and electronics sectors made in 2019, revenue for H1 2020 would have been 7 per cent lower on the year.

The board of directors approved an interim dividend of $0.05 per share for the financial year ending Dec 31, 2020, the same as the previous year. It will be paid on Sept 2, after books closure on Aug 25.

The financial statements for H1 2020 do not reflect this interim dividend, as the dividend will be accounted for in shareholders' equity as an appropriation of retained earnings for FY2020.

 
 
 

ST Engineering is maintaining its guidance for FY2020 revenue to come in between 5 per cent and 15 per cent lower than FY2019 levels, said Vincent Chong, president and chief executive officer.

The group also expects to receive more than $300 million in government support for the full year of 2020, including financial stimulus packages in locations where the group's locally incorporated businesses operate.

Mr Chong noted the tailwinds from government support, especially the Singapore government's Jobs Support Scheme, but said the group does not expect to receive such support beyond this year.

"We are working to position the group to come out of the pandemic stronger and more competitive. This means focusing on cost reduction, productivity and talent acquisition, organising for growth and serving our customers better," he added.

ST Engineering is also "well positioned" to benefit from areas such as passenger-to-freighter conversion and smart city solutions, including safe access control management, Mr Chong said.

Shares of ST Engineering ended flat at $3.27 on Thursday.