Singapore Technologies Engineering Ltd’s Latest 2016 Earnings: A Better Year

Singapore Technologies Engineering Ltd (SGX: S63) released its 2016 full year earnings report this morning.

The engineering firm, known as ST Engineering for short, has its fingers in many pies, thus making it a conglomerate. Its major business segments include Aerospace, Electronics, Land Systems, and Marine. These business segments are in a variety of sectors including defense, information communication technologies (ICT), and global maintenance, repair and overhaul (MRO).

You can read more about ST Engineering in here and its subsidiaries in here and here. You can also catch up with the results from the company’s previous quarter here.

Financial highlights

The following’s a quick rundown on some of ST Engineering’s latest financial figures:

  1. Revenue for 2016 was $6.68 billion, a 6% increase compared to 2015.
  2. Profit attributable to shareholders, though, receded to $590.6 million, down 8% from a year ago.
  3. For 2016, ST Engineering’s earnings per share (EPS) was 15.6 cents, 9% below the 17.05 cents recorded in 2015.
  4. For the full year, ST Engineering’s cash flow from operations came in at $759 million while capital expenditure was $251 million. This gave the conglomerate free cash flow of $508 million for the year. This is a major improvement from a year ago, when ST Engineering had $192 million in free cash flow ($465.5 million in cash flow from operations and $273 million in capex).
  5. As of 31 December 2016, ST Engineering had $903 million in cash and equivalents and borrowings of about $1.08 billion. This was an improvement from a year ago, when it had $951 million in cash and equivalents and borrowings of $1.19 billion.

ST Engineering had a sluggish year in 2015, but had a better one in 2016. In the latter year, ST Engineering experienced top-line growth, improved its balance sheet, and, more than doubled its free cash flow. The only blemish was the conglomerate’s net profit.

The company’s board of directors proposed a final dividend of $0.10 per share. Together with the interim dividend of $0.05 per share, ST Engineering will pay out $0.15 per share in dividend for 2016, unchanged from 2015.

Operational highlights

For 2016, ST Engineering’s Aerospace business segment increased its revenue by 19% to end the year at $2.5 billion. Elsewhere, its Electronics business segment also had a strong showing, with sales increasing 10% to $1.9 billion.

On the other hand, the Marine segment suffered a 12% decline in revenue to $841 million. Land Systems was another segment that did not perform well; its revenue was down 7% to $1.3 billion.

ST Engineering ended 2016 with an orderbook of $11.6 billion, of which $3.7 billion is expected to be delivered in 2017. For perspective, the conglomerate reported an orderbook of $11.7 billion at end-2015.

Vincent Chong, ST Engineering’s president and chief executive officer, rounded off the year with the following comments:

“As a Group we achieved a commendable performance for FY2016, against headwinds that continue to subdue economic growth.

Comparing FY2016 against FY2015, Group revenue grew 6% to $6.68b, and Group PBT and Net Profit came in lower at $590.6m and $484.5m respectively mainly as a result of the one-off charge in 3Q2016 for the Land Systems sector’s Specialty Vehicle business in China.

Excluding the one-off charge, Group PBT and Net Profit for FY2016 would have been comparable to that in FY2015. For 4Q2016, the Group posted comparable Revenue with a higher PBT compared to the same quarter last year.

At the end of 2016, the order book showed a healthy level of $11.6b. The Group’s cash and cash equivalents including funds under management at the end of FY2016 was at $1.4b. Barring unforeseen circumstances, the Group expects FY2017 Revenue to be comparable, while PBT is expected to be higher than that of FY2016.”

At its opening share price of $3.39 today, ST Engineering trades at 21.7 times trailing earnings and has a dividend yield of 4.4%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.