MENU

Singapore Technologies Engineering Ltd’s Latest Quarter: 2 Slides that Explain its Aerospace Segment’s Performance

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

Earlier this month, the company released its 2017 third quarter earnings. Given the vast scale of its business, it may be useful for investors take a separate look at each of the four segments within the company.

In today’s article, we will do a quick review of ST Engineering’s Aerospace business performance, summarised in the two slides below.

Segment sales and profits

Source: ST Engineering’s earnings presentation

For context, ST Engineering posted $1.6 billion in total revenue in its latest quarter. The Aerospace division is a major contributor with $608 million in sales. The Aerospace division can be further broken down to CERO (component/engine repair and overhaul), EMS (engineering and material service) and AMM (aircraft maintenance and modification).

For the quarter, CERO was the only segment that reported sales growth compared to a year ago. In terms of profit, both the CERO and EMS segments posted higher profit before tax (PBT). AMM, though, was the laggard with lower sales and lower PBT.

Sales by region

Source: ST Engineering’s earnings presentation

The slide above provides is a quick summary ST Engineering’s Aerospace business sales organized by region.

From this view, we can see that revenue grew in Asia and Europe year-on-year, but declined in USA and other regions. Asia is the largest contributor of sales, with 51% of sales or $309 million. USA is the second largest with $132 million while Europe, as the third biggest, accounted for $130 million.

The diversification of revenue among the three regions reduces concentration risk for ST Engineering.

Overall, the Aerospace segment delivered a positive performance in third quarter of 2017, posting both higher sales and profit compared to same period last year.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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.