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The Good And Bad That Investors Should Know About Singapore Technologies Engineering Ltd’s Latest Earnings

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

Last week, the company released its 2017 third quarter earnings. There are both positive and negative takeaways that investors may want to learn about. But first, let’s run through the company’s numbers.

The results

Here’s a condensed income statement for ST Engineering from its reporting quarter:


Source: ST Engineering 2017 third quarter earnings announcement

We can see that ST Engineering experienced both revenue as well as earnings growth in the third quarter of 2017.

The positives

Firstly, there was higher revenue, as mentioned earlier, and this was driven by strong double-digit growth in revenue from the company’s Aerospace (up 35%) and Electronics (up 29%) segments.

Secondly, the company’s order book remained strong at S$13.3 billion as of 30 September 2017. To put the size of the order book into perspective, it is roughly two years of revenue for ST Engineering, based on its current revenue run rate.

Thirdly, the engineering conglomerate’s pre-tax profit margin improved from 7% a year ago to 10% for this quarter. This was mainly driven by the absence of a one-off charge of S$61.1 million that was recorded in the third quarter of 2016 for the Land Systems segment.

The negative

Firstly, the Marine segment continued to face challenges. It experienced a 22% year-on-year decline in revenue to S$164 million in the quarter; its profit before tax also fell by 45% to S$21.1 million.

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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.