Singapore, 21 February 2019
One-off Charges Impacted Results
For the year ended 31 December 2018
|2018 FY||2017 FY (Restated)*||Growth %|
|Earnings before interest and tax (EBIT) ($m)||570.3||542.8||5|
|Other income, net ($m)||35.0||38.7||(10)|
|Finance costs, net ($m)||(33.6)||(19.0)||(76)|
|Profit before tax (PBT) ($m)||620.7||611.8||1|
|Profit attributable to shareholders (Net Profit) ($m)||494.2||502.6||(2)|
|Earnings per share (cents)||15.85||16.13||(2)|
|Economic value added (EVA) ($m)||306.0||303.8||1|
|Return on equity (%)||22.0||22.7||NM|
|Dividend per share (cents)
NM: Not Meaningful
* Comparative figures were restated on the adoption of Singapore Financial Reporting Standards (International) (SFRS(I)) with effect from 1 January 2018
- Order book of $13.2b at end December 2018, of which about $4.9b is expected to be delivered in 2019
- Commercial sales and defence sales constituted 69% or $4.6b and 31% or $2.1b respectively
- Cash and cash equivalents of $0.4b
N.B.: All currencies are in Singapore dollars
Singapore, 21 February 2019 – Singapore Technologies Engineering Ltd (ST Engineering) today reported its full year financial results for the year ended 31 December 2018 (FY2018), with a 3% year-on-year (y-o-y) increase in revenue to $6.70b. Profit before tax (PBT) grew 1% to $620.7m compared to the prior year, and Profit Attributable to Shareholders (Net Profit) dropped 2% y-o-y to $494.2m. Excluding one-off charges1 of $37m before tax, PBT would have been 7% higher y-o-y at $657.3m, and Net Profit would have been 9% up y-o-y at $526.8m if prior year’s one-off favourable U.S. tax adjustment of $20m was excluded as well.
At the business sector level, revenue for the Aerospace sector increased 4% to $2.65b from a year ago and Net Profit was flat y-o-y at $244.6m due to the transaction cost of its proposed MRAS acquisition partially offset by net divestment gains. Revenue for the Electronics sector was 7% higher y-o-y at $2.14b, and its Net Profit was up 10% y-o-y at $186.5m. The Land Systems sector’s revenue increased 3% y-o-y to $1.28b but its Net Profit dropped 39% y-o-y to $52.9m due to the absence of prior year’s favourable U.S. tax adjustments, the divestment impact of its road construction business in India and full impairment charges for its road construction business and automotive MRO business in Brazil. At the Marine sector, while revenue dropped 10% y-o-y to $574m mainly due to lower revenue recognition from its U.S. business, its Net Profit grew 67% to $45.2m mainly due to better performance of its Singapore operations. Revenue for “Others” was down by $42m and Net Loss increased by $9.6m from a year ago to $52m and $35m respectively mainly impacted by lower sales and losses in Miltope, its ruggedised computer business, and one-time costs incurred for early redemption of MTN.
“The Group delivered a resilient set of results and maintained the momentum for new contracts. Excluding one-off charges mainly incurred to rationalise our portfolio, the underlying operating performance of our business sectors remained strong.
We continue to invest in growth initiatives and capabilities including data analytics and cybersecurity to drive long-term sustainable growth, backed by a healthy level of order book that provides revenue visibility for the next few years.”
Vincent Chong, President & CEO, ST Engineering
In 2018, commercial sales accounted for 69% or $4.6b of Group revenue while defence sales attributed the remaining 31% or $2.1b to the Group’s revenue.
As at 31 December 2018, the Group held $0.4b worth of cash and cash equivalents.
4Q2018 versus 4Q2017
In the fourth quarter ended 31 December 2018 (4Q2018), the Group’s revenue was 5% higher y-o-y at $1.77b, PBT dropped 7% y-o-y to $160.5m and Net Profit was down 26% to $124.5m from a year ago. Excluding one-off charges2 of $25m before tax, PBT would have been 7% higher y-o-y at $185.6m, and Net Profit would have been 1% up y-o-y at $149.1m if prior year’s one-off favourable U.S. tax adjustment of $20m was excluded as well.
Compared to the same period last year, revenue for the Aerospace sector was down 13% at $647m mainly due to lower project milestone completion for existing Airbus passenger-to-freighter conversions. Net Profit was 27% lower y-o-y at $63.5m due to loss from disposal of business entities and MRAS acquisition-related expenses. Revenue for the Electronics sector was $536m, up 16% from $461m a year ago and its Net Profit was $44.1m, down 20% versus same period last year due to less favourable sales mix. The Land Systems sector’s revenue increased 29% y-o-y to $435m due to higher project deliveries and it turned in a Net Loss of $0.7m from Net Profit of $42.6m a year ago due to one-off charges of about $20m related to portfolio rationalisation and the absence of favourable U.S. tax adjustments. Revenue for the Marine sector was 6% higher at $139m, and its Net Profit improved from $0.7m a year ago to $14.5m.
Dividend payout and dividend yield
The Board of Directors proposes a Final Dividend of 10.0 cents per share. Together with the Interim Dividend of 5.0 cents per share distributed in August 2018, shareholders will receive a total dividend of 15.0 cents per share for FY2018. This translates to a dividend yield of 4.4%, computed using the average closing share price of the last trading day of 2018 and 2017.
2018 order wins and order book
The Group ended the year with an order book of $13.2b, of which $4.9b is expected to be delivered in 2019.
For 2018, new contracts announced amounted to about $5.24b, comprising $2.06b for the Aerospace sector, $2.19b for the Electronics sector and $991m for the Marine sector (including options for five newbuilds). Its Land Systems sector also secured new contracts for its weapons and munitions as well as the supply of 20 electric buses and 111 two-door double-deck Euro 6 diesel buses to Singapore’s Land Transport Authority.
ST Engineering is a global technology, defence and engineering group specialising in the aerospace, electronics, land systems and marine sectors. The Group employs about 22,000 people across offices in Asia, the Americas, Europe and the Middle East, serving customers in the defence, government and commercial segments in more than 100 countries. With more than 500 smart city projects across 70 cities in its track record, the Group continues to help transform cities through its suite of Smart Mobility, Smart Security and Smart Environment solutions. Headquartered in Singapore, ST Engineering reported revenue of $6.7b in FY2018 and it ranks among the largest companies listed on the Singapore Exchange. It is a component stock of the FTSE Straits Times Index, MSCI Singapore, SGX ESG Transparency Index and SGX ESG Leaders Index.
 FY2018 one-off charges related to portfolio rationalisation, transaction cost of the proposed MRA Systems (MRAS) acquisition and the redemption of US$500,000,000 4.80% Notes (MTN).
 4Q2018 one-off charges related to portfolio rationalisation and the transaction cost of the MRAS acquisition.