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Singapore Technologies Engineering Ltd’s Latest Quarter: 2 Slides That Explain its Marine 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 Marine 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 Marine division was the smallest of the four in terms of revenue contribution, but it still earned a sizeable $164.4 million in revenue for the quarter.

The Marine division can be broken down into three parts, namely Shipbuilding, Shiprepair, and Engineering. From the chart above, we can see that the Shiprepair and Engineering sub-segments were relatively more stable compared to the Shipbuilding sub-segment. But, all three sub-segments still reported year-on-year declines in both revenue and profit before tax in the third quarter of 2017.

Sales by region


Source: ST Engineering’s earnings presentation

The slide above is a quick summary of the geographical sources of revenue for ST Engineering’s Marine business.

We can see that the bulk of the Marine division’s revenue was generated in Asia and USA (95%) in the third quarter of 2017. In fact, Asia’s share increased significantly from 56% in the third quarter of 2016 to 70%.

The chart above also reflects the challenging environment for ST Engineering’s Marine business in the US and Europe markets – revenue from both regions were down collectively by 40% in the reporting quarter.

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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.