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What Investors Need to Know about the Latest Earnings at SIA Engineering Company Limited

Aircraft engineering outfit, SIA Engineering Company Limited (SGX: S59), which is a subsidiary of Singapore Airlines (SGX: C6L), released its second-quarter earnings after market closed on Tuesday.

For the quarter, total revenue declined 3% year-on-year to $285.2 million, due to lower airframe and component overhaul revenue, which was offset slightly by increased revenue from fleet management.

Share of profits from associated and joint venture companies, which contributed to 61.8% to the engineering company’s pre-tax profits, dropped 36.2% to S$29.1 million. Currently, it has 25 joint ventures, spread over nine countries worldwide.

Net profit declined around 41% to S$42.1 million while basic earnings per share (EPS) fell by the same amount to 3.75 Singapore cents.

For the first half, total revenue fell 0.7% to S$579.3 million while net profit and basic EPS slumped 32% to S$95.6 million and 8.54 Singapore cents respectively. Total revenue slipped mainly due to lower number and work content of aircraft checks, giving rise to lower airframe and component overhaul revenue.

As of 30 September 2014, the firm had a total debt of S$26.7 million, with a cash balance of S$33.9 million. This translates to a net cash position of S$7.2 million. Six months ago, it had a better net cash position at S$29 million.

An interim dividend of 6.0 Singapore cents per share was declared for the latest quarter. This is a fall from 7.0 cents given out last year.

The firm said that its performance continues to be hampered by the decline in engine shop visits and heavy checks. Rising business costs and intense competition have also caused margin compression. Net profit margin for the first half fell to 16.5% from 24% last year. It also added that it is “stepping up efforts to improve productivity to stay competitive in this overall challenging environment”.

SIA Engineering shares closed at S$4.80 on Tuesday.

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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 Sudhan P doesn’t own shares in any companies mentioned.