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ST Engineering First Quarter Results

Ser Jing - ST Engineering First Quarter Results, Unchanged Revenue and Profit (pic)For the first quarter of 2013, Singapore Technologies Engineering (SGX: S63) posted a profit of $134m, just a smidge lower than last year’s $134.4m. The engineering company’s top line for the quarter stayed unchanged from last year’s $1.54b.

While there were no material increases in revenue or profit, the company did grow its order book to $13b as of March 2013 – an increase of 6.5% from $12.2b last year. ST Engineering expects roughly $3.6b from the order book to be delivered for the rest of the year.

The company divides itself into five sectors; Aerospace; Electronics; Land Systems; Marine; and Others. The first four sectors accounted for 97% of the recently completed quarter’s revenue so let’s take a quick look at how those sectors performed.

The Aerospace sector saw a 4% uptick in revenue from $456m a year ago to $476m led by growth in the Aircraft Maintenance & Modification (AMM) business group. That helped overcome lower sales coming from the Component/Engine Repair & Overhaul (CERO) and Engineering & Material Services (EMS) groups. Revenue for the sector only moved up slightly, but pre-tax profit jumped by 26% year-on-year from $59.8m to $75.1m.

Electronics’ sales slipped by 6% year-on-year from $452m to $424m but pre-tax profit fell by a smaller margin of 1% from $33.7m to $33.3m. The Communication & Sensor Systems Group’s (CSG) project milestones for the quarter carried lower value, which accounted for the drop in sales.

Land Systems grew the fastest as quarterly revenue increased by 9% from $317m a year ago to $346m, led by project-deliveries in the Automotive group. But the drag caused by lower-margin products, inventory obsolescence and increase in doubtful debts reduced pre-tax profits by 9% from $23.7m to $21.5m.

Lastly, in the Marine sector, Ship building revenue growth helped off-set declines in Ship repair and Engineering to post a 4% overall-increase in quarterly revenue from $244m a year ago to $254m. Pre-tax profit followed suit at a slightly slower pace – it inched up by 2% from $29.1m to $29.7m.

ST Engineering’s President and Chief Executive Officer, Tan Pheng Hock commented on the company’s quarter and outlook: “The Group’s Revenue and Profits of 1Q2013 were comparable with the corresponding quarter of 2012.

The Group successfully secured new orders from our diverse range of customers to register a record order book of $13.0b at the end of the first quarter of 2013. We continue to build on the Group’s robust financial position with improved cash and cash equivalents including funds under management of $2.5b.

Barring unforeseen circumstances, the Group expects to achieve higher Revenue and PBT for FY2013 compared to FY2012.”

Shares of the company closed 1.4% lower to $4.37 on Tuesday. At that price, shares are trading at a Price-Earnings multiple of 23 and sport a dividend yield of 3.8% based on last year’s full-year pay out.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.