Singapore Technologies Engineering Ltd’s Latest Quarter: 2 Slides That Explain its Land Systems 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 Land Systems 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 Land Systems division contributed a sizeable $331.4 million in revenue for the quarter.

The Land Systems division can be broken down into three parts, namely, Automotive (Auto), Munitions & Weapon (M&W), and Services, Trading and Others (S&T). From the chart above, we can see that revenues for the Auto and M&W sub-segments were down. Despite the lower top-line, the Auto sub-segment’s profit before tax increased substantially due to the absence of a one-off charge seen in the third quarter of 2016.

During the reporting quarter, the segment also acquired Aethon, a US robotics company that is best known for its TUG AMR (autonomous mobile robot). The TUG is a heavy duty robot that can carry loads of up to 635kg. The acquisition of Aethon should position ST Engineering well to benefit from growth in the robotics sector.

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 Land Systems business.

We can see that the majority of the Land Systems division’s revenue was generated in Asia and USA (91%) in the third quarter of 2017. Asia alone accounted for a significant 61% of revenue.

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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.