SIA Engineering Company (SIAEC) has reported earnings of $32.5 million for the 1HFY2022/2023 ended Sept 30, up 30% from $25 million in the year before.
The higher earnings was mainly attributable to the higher revenue and higher share of profits of associated and joint venture companies, and offset by the higher group expenditure.
Earnings per share for the six-month period came in at 2.88 cents on a fully diluted basis. This is up 29.7% y-o-y from the previous period of 2.22 cents.
The group recorded revenue of $362.2 million for the 1HFY2022/2023, up 37.5% y-o-y by $98.7 million, largely driven by the increase in flight activities with all segments recording higher revenue.
Group expenditure increased at a higher rate of 38.0% to $373.0 million y-o-y mainly due to the stepping down of government wage support.
Expenditure increase was 21.2% excluding wage support, with manpower costs and material costs rising in tandem with higher business activities.
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As revenue growth was not sufficient to offset the increase in expenditure, SIA Engineering incurred a higher operating loss of $10.8 million as compared to the operating loss of $6.7 million in the same period last year.
During the six-month period, SIAEC saw its share of profits of associated and joint venture companies increase by 54.5% y-o-y to $41.4 million, which was attributable to the higher contribution from the group’s engine and component segment and its airframe and line maintenance segment.
Excluding wage support, the group’s profit was $21.4 million,
Cash and cash equivalents were at $606 million at the end of 1HFY2022/2023, down from $686 million in the previous year.
No interim dividend was declared due to the group’s operating losses and uncertainties in macroeconomic conditions.
In its business update, the group says the number of flights handled by its Line Maintenance unit in Singapore doubled y-o-y during the 1HFY2022/2023, representing around 55% of its pre-pandemic volume.
The increase in flight activities also led to an increase in demand for maintenance, repair and overhaul (MRO) services with operators looking to return grounded aircraft back to service.
During the 1HFY2022/2023, SIAEC’s base maintenance also secured new customers and a long-term contract.
In May, the group acquired a 75% stake in SR Technics Malaysia, with the acquisition expanding their component repair and overhaul capabilities.
In a Nov 1 release, the outlook for the group is revealed to be uncertain due to an elevated risk of a global recession and geopolitical tensions, though recovery of the aviation industry continues to gain traction in recent times. In addition, high inflation, wage pressure and cessation of wage support will pose challenges.
Looking ahead, the group says the outlook is uncertain in spite of the recovery of the aviation industry. This due to the heightened risk of a global recession and geopolitical tensions. The high inflationary environment, wage pressure and the lack of wage support will also pose challenges. That said, the group says it will remain vigilant and nimble in managing its costs.
Shares in SIAEC closed at 6 cents up or 2.78% higher at $2.22 on Nov 1.
