ST Engineering H2 profit rises 19.6% to S$365.7 million

ST ENGINEERING on Thursday (Feb 27) reported a net profit of S$365.7 million for the second half ended Dec 31, up 19.6 per cent from S$305.9 million in the previous corresponding period

The defence and engineering group’s revenue rose 9.9 per cent to S$5.8 billion from S$5.2 billion. This was mainly driven by the defence and public security, as well as commercial aerospace segments.

Defence and public security revenue grew 20 per cent to S$2.6 billion from S$2.1 billion, on the back of higher contributions from all sub-segments. Commercial aerospace revenue rose 5 per cent to S$2.2 billion from S$2.1 billion. Meanwhile, revenue from the urban solutions and satellite communications (satcom) business was flat at S$1.04 billion, mainly due to margin mix.

Group earnings before interest and tax grew 17.7 per cent to S$553.5 million from S$470.5 million, driven by the defence and public security, as well as commercial aerospace segments. This was partially offset by the urban solutions and satcom segment.

ST Engineering’s board proposed a final dividend of S$0.05 per share, up from S$0.04 per share in the previous year. The dividend will be paid on May 15, following the record date of Apr 30. This brings the group’s dividend for the full year to S$0.17 per share, slightly higher than S$0.16 per share in FY2023.

For the full year, net profit rose 19.7 per cent to S$702.3 million from S$586.5 million as revenue climbed 11.6 per cent to S$11.3 billion from S$10.1 billion, the highest recorded. Earnings per share rose 19.7 per cent to S$0.2253 from S$0.1882 in FY2023. Net asset value per share was S$0.8574 as at end-December, slightly higher than S$0.7896 as at end-2023.

Group president and chief executive officer Vincent Chong said that the strong results in 2024 came “despite an uncertain and challenging environment”. He added: “We have a robust order book and a competitive market position which will underpin our continuing revenue growth and performance.”

As at end-2024, ST Engineering’s order book stood at S$28.5 billion. The group expects to deliver about S$8.8 billion from its order book in 2025.

Transcore has secured its first tolling solution contract in South-east Asia, but ST Engineering said that it is not at liberty to discuss contractual details at this point. “We have been talking about our cross-selling and synergies from this very big acquisition. We are heartened that this tolling contract win is extensive. It will cover numerous expressways and lanes,” said Cedric Foo, group chief financial officer of ST Engineering.

The tariff situation in the US is currently unclear, but ST Engineering sources mainly from suppliers in the US for its commercial aerospace business there. But these suppliers may be affected by the supply chain coming from outside the US, with the eventual situation subject to the final tariff policy.

ST Engineering is still facing near-term shortages in aircraft in converting passenger-to-freighter (P2F) work. The company is reallocating capacity and resources to tap stronger airframe maintenance, repair and overhaul work.

The Airbus A330, A321 and A320 P2F programmes are now an integral part of the business and have matured and stabilised over the years. Now with higher total commercial aerospace revenue compared to pre-Covid levels, ST Engineering will no longer single out P2F targets. “That said, it remains a valuable contributor to the segment’s revenue and profitability,” added Chong.

Shares of ST Engineering closed flat at S$5.06 on Wednesday.