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What You Need To Know About Singapore Technologies Engineering Ltd’s Latest Earnings Release

Singapore Technologies Engineering Ltd (SGX: S63) reported flat revenue and a 7.7% year-on-year decline in net profit for the third quarter. This was announced on Friday morning.

ST Engineering is an engineering group that is involved in the aerospace, electronics, land systems, and marine sectors. It is a constituent of the Straits Times Index (SGX: ^STI) and it has a competitor in the aerospace sector in SIA Engineering Company Limited (SGX: S59).

In the quarter ended 30 September 2014, revenue came in at S$1.55 billion, comparable to the previous year. Higher revenue of 14% at the Marine sector largely offset the lower revenue seen at the Aerospace sector, which declined 8% year-on-year. Lesser revenue for the Component/Engine Repair & Overhaul business caused the poor showing in the Aerospace sector. Turnover at the Electronics and Land Systems sectors were almost similar year-on-year.

Despite the steady top-line, net profit declined from S$131.4 million a year ago to S$121.3 million. Weaker performance from ST Engineering’s European operations for its Aerospace sector had a big role to play in the profit decline.

As of 30 September 2014, the firm had total borrowings of S$1 billion and a cash balance of S$1.4 billion. This is a slight step backwards from the end of 2013 when both figures were at S$1.4 billion and S$1.9 billion respectively. The weaker balance sheet can be partly traced to the company’s lower operating cash flow of S$39.7 million for the quarter – a year ago, ST Engineering had generated S$224.8 million in operating cash flow.

Tan Pheng Hock, President and Chief Executive Officer of ST Engineering, gave some brief comments on the quarter’s happenings:

“The weak economic environment in Europe had impacted our aviation business in the third quarter. We will continue to review the aerospace sector’s European business. The Group maintained a healthy order book of $13.2b at the end of the third quarter 2014.”

Investors might be happy to know that ST Engineering’s current order book is a fair bit higher than the S$12.5 billion it logged in the third quarter of 2013. As the order book essentially represents future revenue for the firm, changes in the figure are important for investors to keep an eye on.

Tan also added that barring unforeseen circumstances, ST Engineering expects to achieve comparable revenue, with a lower profit before tax for 2014 as compared to 2013. Shares of the engineering group started trading at S$3.66 on Friday.

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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.