SIA Engg hit by rising costs, competition

Singapore

SIA Engineering Company (SIAEC) reported a near 41 per cent year-on-year slump in net profit to S$42.1 million for the second quarter ended Sept 30, partly due to declining share of profits from associated and joint venture companies.

Revenue was lower for the three months by 3 per cent at S$285.2 million as lower airframe and component overhaul revenue was offset in part by higher fleet management revenue. Earnings per share for the quarter worked out to 3.75 Singapore cents, down from 6.39 cents a year ago.

During the quarter under review, expenditure edged up 1.5 per cent to S$269.3 million on the back of higher subcontract costs. As a result, operating profit was also lower, falling 44.2 per cent to S$15.9 million.

Share of profits from associated and joint venture companies worked out to S$29.1 million, down 36.2 per cent from the corresponding quarter a year prior, while contributions from the engine repair and overhaul centres was 40.1 per cent lower at S$20 million.

Meanwhile, for the six months ended Sept 30, net profit was down 31.7 per cent at S$95.6 million, while revenue was 0.7 per cent lower, at S$579.3 million. Revenue was affected by the lower number and work content of aircraft checks, which caused a decrease in airframe and component overhaul revenue in the first six months of the financial year.

The group has declared an interim dividend of six Singapore cents per share, payable on Nov 25, versus an interim dividend of seven Singapore cents a year ago.

"The group's performance continues to be affected by the decline in engine shop visits and heavy checks," SIAEC said. "Pressure on margins has not abated with rising business costs and intense competition. We are stepping up efforts to improve productivity to stay competitive in this overall challenging environment."

SIAEC added that it continues to seek value-added collaborations with strategic partners to capitalise on long-term growth opportunities in the region.

Shares in SIAEC closed at S$4.80 on Tuesday, unchanged.