SIA Engineering's Q2 profit slips on challenging environment

Singapore

A CHALLENGING operating environment continued to dog aircraft maintenance, repair and overhaul services company SIA Engineering.

The company reported a 1.6 per drop in net profit to S$38 million for its fiscal second quarter ended Sept 30, 2018, from S$38.6 million the year before.

Revenue for the period declined to S$251.3 million, from S$274.7 million, mainly because of lower airframe and fleet management revenue, it said.

Its operating profit was down 43.8 per cent year-on-year to S$11.3 million.

Earnings per share (EPS) was 3.39 Singapore cents, down from 3.44 Singapore cents the year before.

SIA Engineering declared an interim dividend of three Singapore cents per share. For the same period last year, it paid out dividends of four Singapore cents per share.

For the half-year, its net profit was up slightly at S$78.5 million, from S$75.3 million the year before.

Its revenue, however, was down 7 per cent year-on-year to S$509 million, while its operating profit was 44.6 per cent lower at S$21.5 million.

EPS for the six months ended Sept 30, 2018, was 7.01 Singapore cents, compared to 6.71 Singapore cents a year ago.

For both the second-quarter and half-year periods, SIA Engineering's bottomline was helped by an increased share of profits from its associated and joint venture companies.

For Q2 FY19, SIA Engineering said the share of profits of associated and joint venture companies increased 31 per cent to S$30 million, with a S$6.3 million increase in share of profits from the engine and component centres and a S$0.8 million increase in contributions from the airframe and line maintenance segment.

For the half-year, its share of profits of associated and joint venture companies increased 41.8 per cent to S$62.4 million, with the engine and component centres contributing S$62.1 million, a 40.8 per cent increase, while the airframe and line maintenance segment earned a profit of S$0.3 million, a turnaround from a S$0.1 million loss incurred in the same period last year.

Looking ahead, the company said it expects its operating environment to remain challenging, "with longer maintenance intervals and lighter work content arising from new-generation aircraft".

"The transformation journey we have started has been gaining momentum with the progressive implementation of a wide range of measures including innovation and technology. The full benefits will materialise over time," it said.

It added that its initiatives to build new capabilities and enter into synergistic partnerships have served it well, and that it expects the engine and component businesses of some of its major joint ventures and associated companies to continue to contribute positively to its bottom line.

SIA Engineering shares finished Thursday two Singapore cents down at S$2.91.