SIA Engineering’s Q3 profit declines amid challenging environment

SIA Engineering reported a consecutive weak quarter amid a challenging operating environment, with third-quarter net profit declining to S$33.1 million, down some 40 per cent from a year ago.

The decrease was mainly due to a lower share of profits from associated and joint venture companies, which fell 52.9 per cent year-on-year to S$19.2 million.

The lower share of profits from associated and joint venture companies was a result of one-time events including, a revision in fee structure of an engine shop in 2018, a foreign exchange adjustment for the functional currency change of an associated company, and a one-time tax charge booked by certain associated companies.

In addition, revenue for the period dropped by 5.6 per cent to S$255.9 million mainly due to lower airframe and fleet management revenue, said SIA Engineering. However, it noted that the decline was partially mitigated by higher line maintenance revenue.

The company's operating profit was down 15.4 per cent year-on-year to S$15.9 million.

Earnings per share was 2.95 Singapore cents, down from 4.95 Singapore cents the year before.

For the nine months ended Dec 31, 2018, its net profit was down 14.5 per cent to S$111.6 million, compared to the year before.

Likewise, its revenue fell 6.5 per cent to S$764.9 million, while operating profit decreased by 35.1 per cent to S$37.4 million.

Earnings per share for the nine-month period was 9.97 Singapore cents, compared to 11.67 Singapore cents a year ago.

The period also saw an overall diminished share of profits of associated and joint venture companies - a 3.8 per cent decrease to S$81.6 million - with lower contributions from the engine and component centres and airframe and line maintenance segment.

Looking ahead, the company said it expects its operating environment to remain challenging and will "continue to focus on (its) transformation journey and investments in technologies".

The company also said it will manage its portfolio of joint ventures to "drive sustainable growth".

SIA Engineering shares finished on Friday two Singapore cents up, or 0.8 per cent higher, at S$2.52.

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