ST Engineering hit by S$689 million impairment as H2 net profit falls 83.6%; defence growth seen underpinning 2026

[SINGAPORE] ST Engineering recognised S$689 million in one-off impairment losses in its 2025 financial year, tied largely to its satellite communications (satcom) unit, iDirect. This weighed down its second-half net profit.

But group president and chief executive officer Vincent Chong noted on Friday (Feb 27) at ST Engineering’s full-year results briefing that activity is picking up in 2026, with more orders secured and cost cuts under way as the company focuses on turning the business around.

“Our priority remains supporting customers, executing the turnaround, and evaluating the strategic path forward for the satcom business,” he said.

Even as it evaluates “strategic actions” for the business, ST Engineering has implemented S$43 million in annualised cost savings for the satcom unit. It has more plans to bring these savings up to S$63 million.

For satcom, the group is targeting H1 revenue that is stronger year on year (yoy), following its dive in net profit for H2 FY2025.

The urban solutions and satcom segment sank into the red with a S$567.7 million loss in H2, reversing from earnings of S$31.1 million in the year-ago period.

However, the segment’s H2 revenue rose 6 per cent yoy to S$1.1 billion, from S$1 billion the previous year. Urban solutions drove the improvement, which was partially offset by lower satcom contributions.

ST Engineering reported a net profit of S$59.9 million for H2 FY2025, an 83.6 per cent decline from S$365.7 million in the previous corresponding period. Its operating profit for H2, however, stood at S$448 million, an increase of 22.5 per cent from S$365.7 million the year before.

The group’s revenue came in at S$6.4 billion for the half-year, up from S$5.8 billion in H2 FY2024.

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ST Engineering expects positive H2 net profit

Earnings per share for FY2025 stood at S$0.1484.

Growth driven by defence and aerospace

As the group irons out its urban solutions and satcom business, its other two segments – commercial aerospace, and defence and public security – posted higher profits in FY2025.

ST Engineering’s commercial aerospace profits for H2 rose to S$319 million, from S$210.5 million in the year-ago period. The segment’s revenue increased 23 per cent to S$2.6 billion, from S$2.2 billion the previous year.

“This growth was contributed by stronger sales from engines, MRO (maintenance, repair and operations) and nacelles,” said Cedric Foo, group chief financial officer of ST Engineering.

The defence and public security segment reported S$551.4 million in H2 earnings, up from S$311.9 the previous year. Its revenue stood at S$2.7 billion, rising 5 per cent on the year from S$2.6 billion.

For the full year, commercial aerospace accounted for 40 per cent of the group’s revenue, and defence and public security made up 43 per cent. The urban solutions and satcom segment contributed 16 per cent of the revenue.

Overall, ST Engineering’s revenue stood at S$12.3 billion for FY2025, up 9.5 per cent from S$11.3 billion in FY2024.

Full-year net profit fell 34.1 per cent yoy to S$462.8 million, from S$702.3 million.

Nonetheless, the group’s fiscal outlook remains positive. It cited contract wins, a strong order book and a structural shift in global defence spending.

As at Dec 31, 2025, its order book stood at S$33.2 billion, of which S$9.9 billion is expected to be delivered this year.

“Our record order book is a clear leading indicator of revenue growth in the years ahead,” said Chong.

Mervyn Tan, group chief operating officer for technology and innovation, as well as president of defence and public security, said: “We continue to stick to our assessment that the increase that we see in the investment in defence for various countries (appears) to be a structural shift.”

The group proposed a final dividend of S$0.06 per ordinary share and a special dividend of S$0.05 a share.

In total, the dividend for FY2025 is S$0.23 per ordinary share, translating to a dividend yield of 3.52 per cent.

Shares of ST Engineering ended Friday 0.5 per cent or S$0.05 lower at S$9.97, after the results were released.