SIA Engineering Co H2 earnings rebound on one-time tax writeback, wage support

MAINBOARD-LISTED SIA Engineering Co : S59 0% (SIAEC) saw second-half earnings rebound on a writeback of associates’ tax provisions, its latest results showed on Thursday (May 5).

But the maintenance, repair and overhaul service provider was still ringing up operating losses, with its full-year bottom line sustained only by what it called “substantial government wage support” - and the board warned of risks to its business outlook, despite early signs of recovery.

Net profit surged to S$42.6 million for the 6 months to Mar 31, 2022, up from S$7.8 million before, as turnover grew by 37.5 per cent year on year, to S$302.6 million.

The latest performance took SIAEC to a full-year net profit of S$67.6 million, reversing the loss of S$11.2 million in the year-ago period, as revenue rose by 27.8 per cent to S$566.1 million.

Yet net profit was shored up by associate and joint venture contributions, which came to S$79.1 million for the 12 months. SIAEC had incurred a tax charge from its associates and joint ventures in the year-ago period, and an impairment provision on its base maintenance assets.

SIAEC disclosed in its financial statements that the group would have recorded a full-year loss of S$25.9 million without the uplift from government wage support grants.

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And, even with the revenue growth - which was attributed to a higher number of flights handled - SIAEC continued to notch operating losses, amid rises in staff, sub-contract and other costs.

The operating loss in the second half was S$15.1 million, compared with an operating profit of S$2.2 million previously, as SIAEC noted that higher revenue “was insufficient to offset” costs from the rollback of government wage support and manpower measures.

Meanwhile, SIAEC recorded an operating loss of S$21.8 million for the 12 months, narrowing by 12.8 per cent from S$25.0 million in the year before.

Earnings per share (EPS) stood at 3.79 cents for the 6 months, up from 0.69 cent previously, while full-year EPS was 6.02 cents, against a loss per share of 1.00 cents before.

Net asset value was 143.5 cents a share, compared with 136.8 cents as at end-March 2021.

The board did not recommend any dividend for the financial year, unchanged from the previous year. Though it described the company as “confident of recovery”, it also said: “While flight activities are showing clear signs of recovery, they remained low against pre-pandemic levels.

“Against a backdrop of geopolitical tensions and continuing threat of rising infection in some countries and new variants emerging, there are significant risks to the pace of recovery.”

SIAEC’s performance “will be highly dependent on the degree of our revenue recovery vis-à-vis rising costs and declining government wage support”, it added in its outlook statement.

Shares closed flat on Thursday at S$2.66, before the results were released.