Singapore Technologies Engineering Ltd (ST Engineering) has reported group revenue for the first six months was $3.65b, up 2% from $3.57bn a year ago in the same period. Group EBIT was $355.1m, up 13% year-on-year (y-o-y) from $314.1m, while group profit before tax (PBT) grew 19% y-o-y to $339.8m from $286.4m, and first-half group profit attributable to shareholders (net profit) grew 15% to $296.1m from $257.4m.
Commercial Aerospace revenue was $1.14b, 10% lower y-o-y from $1.27b as its sub-segments Aerospace MRO and Aerostructure & Systems continued to be impacted by the subdued aviation sector (COVID-19 impact not yet felt in 1Q2020). Comparing 1H2021 to 2H2020, Commercial Aerospace recovered partially and its revenue grew 7%. EBIT was 37% higher y-o-y at $102.6m, contributed by government support. The underlying EBIT was $25m lower than 1H2020 due to a pre-COVID first quarter in 2020, with the extent of EBIT reduction mitigated by cost management measures, but offset by weaker operating performance as stated above. Its EBIT for 1H2021 strengthened compared to 2H2020.
1H2021 Group Net Profit of $296.1m came in 12% stronger than 2H2020 Group Net Profit of $264.4m, despite lower government support. This was on the back of partial recovery in Commercial Aerospace and realisation of disciplined cost savings measures across the businesses.
Earlier in February, the Group guided that it expects a reduction of $250m in government support in 2021 compared to 2020. However, due to a higher than expected level of government support it will receive from its global operations, the Group now expects the government support reduction to be at $150m. The impact of the reduction in government support will mainly manifest in the second half of 2021.
“We delivered a good set of results for the first half of 2021 amidst a challenging operating environment. We had also secured contract wins across our businesses that led to a robust order book, which continues to provide revenue visibility in the periods ahead,” said Vincent Chong, Group President & CEO. “We remain steadfast in the pursuit of our strategy to emerge stronger as the business environment improves. The diversity of our business portfolio, and our focus on seizing growth opportunities, coupled with productivity and cost management measures will continue to position us well into the future.”
In the first half, commercial sales and defence sales accounted for $2.24b and $1.42b respectively of Group revenue. As at 30 June 2021, the Group held $583m in cash and cash equivalents, $241m higher than the same period last year.
In the second quarter of 2021, the Group secured new contracts of about $1.82b, comprising $874m from Commercial Aerospace. In the second quarter, Commercial Aerospace clinched new contracts across a spectrum of its aviation manufacturing and MRO businesses, including passenger-to-freighter (P2F) conversion orders for A321P2F and A330P2F units from freight operators and lessors, a five-year airframe heavy maintenance contract to support an Asian Pacific airline’s Boeing 787 fleet and engine heavy maintenance contracts from Alaska Airlines and an Asian airline.