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A Quick Review Of Singapore Technologies Engineering Ltd’s Marine Business Performance

Singapore Technologies Engineering Ltd (SGX: S63), or STE in short, is a conglomerate with business interests in various sectors, namely Aerospace, Electronics, Land Systems, Marine and others.

Given the complexity of this business, it may be useful that investors take a separate look at each of the business segments within the company.

In this article, we will do a quick review of the Marine business segment’s performance in two slides.

Revenue and profit before tax

Source: STE Q2 2017 Result Presentation

From the above, we can see that second quarter revenue plunged 34% year-on-year mainly due to a decline in shipbuilding business. On a positive note, ship repair business held up well with revenue growing 7% as compared to last year.

Clearly, the plague of low oil price and weak shipping rates impacted STE’s marine segment performance, just as it affected the performance of other major players like Keppel Corporation Limited (SGX: BN4) and Sembcorp Marine Ltd (SGX: S51).

Revenue by location of customers

Source: STE Q2 2017 Result Presentation

The above is a quick summary of the geographical revenue source for STE’s Marine business.

We can see that the bulk majority of income was generated in Asia and USA, with the former growing its share further from 63% last year to 74% this year.

The above chart also reflects the challenging environment in the US market as revenue was down by about 70%.

Conclusion

Overall, the Marine segment delivered poorer performance for the quarter mainly due to weak ship building activities.

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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.