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How Did The Electronics Business Segment Of Singapore Technologies Engineering Ltd Fare In 2016?

Singapore Technologies Engineering Ltd (SGX: S63) is an engineering conglomerate with four main business segments, namely, Aerospace, Electronics, Land Systems, and Marine.

The company recently announced its 2016 full year results. Given the complexity of ST Engineering’s business, I thought it would be useful for investors to take a separate look at the performance of each of the four segments.

In this article, I will have a quick review of the Electronics segment’s 2016 business performance and its future outlook.


Note: Reviews of the Marine, Aerospace, and Land Systems segments’ performances have been published. They can be found right herehere, and here.


2016 business performance

According to ST Engineering’s 2015 annual report, the Electronics segment has government, commercial, defence, and industrial customers all over the world.

The segment “specialises in the design, development and integration of advanced electronics and communications systems, such as broadband radio frequency and satellite communication, e-Government solutions, information communications technologies and IT, rail and traffic management, real-time command and control,” and more.

The follow table shows some important financial numbers from ST Engineering’s Electronics business segment for 2015 and 2016:

ST Engineering Electornics segment income statement
Source: ST Engineering 2016 results announcement

You can see that the segment managed to deliver high single-digit revenue and profit growth in 2016. Ravinder Singh, president of ST Electronics, shared the following comments about the business performance of the segment in 2016:

“The Electronics sector achieved strong results for FY2016. We have crossed the S$200M mark for PBT [profit before tax] in FY2016 and secured S$695M of contract wins in 4Q2016 bringing the total of new orders secured in FY2016 to S$2.3B. These achievements, coupled with our proven track record, have given us greater confidence in our products and solutions offerings as we pursue new opportunities locally and overseas.”

The Electronics segment’s business can be further broken down into three sub-segments, namely, Large-Scale Systems Group, Communication & Sensor Systems Group, and Software Systems Group. Here’s how the three sub-segments performed in 2016:

ST Engineering Electornics segment sub-segment revenue and PBT table
Source: ST Engineering 2016 results announcement

We can see that growth in the Electronics segment was pretty broad-based as all three sub-segments also delivered healthy growth in both their top-lines and bottom-lines.

A future outlook

ST Engineering is expects the Electronics segment to continue growing its revenue and profit before tax in 2017. The Electronics segment is the second-largest contributor to ST Engineering’s revenue and profit before tax in 2016.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.