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SIA Engineering’s First-Quarter Profits Dip

SIAEngAircraft maintenance, overhaul and repair company SIA Engineering (SGX: S59), a subsidiary of Singapore Airlines (SGX: C6L), posted a 3.7% year-on-year decline in quarterly sales to S$289m. Its bottom line slipped 1.6% to S$69m.

The decrease in the top line was mainly due to lower material and fleet management revenue. The company’s earnings fell by a smaller percentage because of lower expenses as subcontract and material costs dropped.

In addition, SIA Engineering’s share of profits from associates and joint ventures had increased by 14% for the quarter to S$45.6m, which ultimately added to its bottom-line.

The company ended the quarter with a stronger balance sheet compared to last year. For the recently completed quarter, SIA Engineering had net cash (i.e. cash net of debt) of S$619m. In the previous year, it had net cash of S$572m.

SIA Engineering still sees a challenging operating environment brought on by an uncertain global economy. But the company expects its performance to “remain stable in the near term”.

SIA Engineering added that “marketing efforts to increase sales and measures to strengthen [SIA Engineering’s] competitiveness across [its] core businesses, coupled with initiatives to manage costs and improve productivity, will stand [the company] in good stead.

Additionally, it is confident of being able to seize onto any opportunities that falls on its lap due to existing good working relationships the company has with original equipment manufacturers.

The company’s shares closed at S$5.16 on Monday evening. At that price, the shares are valued at 21 times historic earnings and carry a trailing dividend yield of 4.3%.

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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.