ST Engineering's Q1 earnings dip 5.3%

Singapore

ST ENGINEERING reported a 5.3 per cent year-on-year slide in net profit to S$129.97 million for the first quarter ended March 31, 2015, impacted by headwinds in its US shipbuilding operations.

Revenue for the quarter dipped 2.6 per cent to S$1.51 billion due to lower contributions from its aerospace, electronics and marine businesses. On the other hand, revenue from its land systems business was up six per cent at S$346 million.

Meanwhile, earnings per share for the quarter worked out to 4.17 Singapore cents, down from 4.41 cents previously.

"For the first quarter of 2015, the group reported comparable revenue with a lower profit before tax (PBT) compared to the same quarter last year," said Tan Pheng Hock, president and chief executive of ST Engineering. "The difficulties faced by our US shipbuilding operations affected the group's overall performance."

For the quarter under review, its aerospace business reported a 2 per cent dip in revenue to S$489 million, partly due to lower revenue from aircraft maintenance and modification. Meanwhile, its electronics business reported a 3 per cent slip in revenue to S$356 million as both the large scale systems group and software systems group chalked up lower revenue due to lower value project milestone completions.

Its marine sector reported a 13 per cent decline to S$280 million in revenue due to lower shipbuilding revenue from both its US and local operations, which was partially offset by higher ship-repair revenue.

With cost of sales flat, gross profit came in 10.2 per cent lower at S$292.46 million. Operating profit for the quarter was S$110.07 million or down 17.5 per cent, while share of results of associates and joint ventures fell 47.1 per cent to S$11.16 million.

Mr Tan added: "Barring unforeseen circumstances, the group expects to achieve comparable revenue and PBT for FY2015 when compared to FY2014."

Its marine business is expected to post lower revenue and PBT year on year for H1FY15. However, the aerospace and electronics sectors are expected to chalk up comparable revenue and PBT, while revenue for its land systems will be higher in H1FY15 although PBT is expected to be lower year on year.

As at end March, the group had an order book of S$12.2 billion, of which about S$3 billion is expected to be delivered over the remaining course of this year.

"We deem these results to be broadly in line with the company's guidance as well as our forecast, given that topline met about 23 per cent of our FY15 forecast, while core earnings met 26 per cent," said OCBC Investment Research analyst Carey Wong.

The counter closed at S$3.60, down three cents, on Wednesday.