Singapore Technologies Engineering (ST Engineering) S63 has reported earnings of $255.0 million for the 2HFY2022 ended Dec 31, 2022, 7.1% lower than earnings of $274.4 million in the corresponding period the year before.
The group’s earnings for the FY2022 came up to $535.0 million, 6.2% lower y-o-y.
The lower earnings for the 2HFY2022 and FY2022 were due to the lower government support grants, energy inflation, transaction and integration costs from the acquisition of TransCore and the tax-exempt effect of the jobs support scheme (JSS), but were mitigated by cost savings and growth in the business.
Earnings per share (EPS) for the FY2022 stood at 17.18 cents.
Revenue for the 2HFY2022 grew by 17.9% y-o-y to $4.77 billion as revenue across ST Engineering’s segments grew.
Ebit also grew by 10% y-o-y to $350.5 million.
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In the FY2022, revenue increased by 17.4% y-o-y to $9.04 billion as all segments registered y-o-y growths in revenue.
Ebit grew by 9% y-o-y to $735.1 million.
According to the group, group net profit would have been 39% y-o-y higher at $549 million on a like-for-like basis.
“Our group revenue grew strongly, and our underlying operating performance improved significantly by 55% y-o-y. Notwithstanding the dip in group net profit y-o-y, we made good progress in 2022 to deliver against our five-year plan (Investor Day targets for 2022-2026),” says Vincent Chong, group president & CEO of ST Engineering.
During the 2HFY2022, the group’s Commercial Aerospace segment saw revenue increase by 19% y-o-y to $1.59 billion due to strong business recovery, benefitting from the recovery in aviation. Ebit was up by 49% y-o-y to $118 million. The segment is said to see “further improvement, especially in the Asia Pacific region and with the re-opening of China,” says Chong.
The Urban Solutions & Satcom (USS) segment saw revenue improve by 53% y-o-y to $1.01 billion with contribution from TransCore. Ebit was up by 176% y-o-y to $41 million despite the expenses from the acquisition and a weaker Satcom performance. To Chong, the transitioning of TransCore was “smooth”. The move also “demonstrated good contract win momentum (including the New Jersey tolling contracts).”
“As planned, TransCore is now cash flow positive, and we expect it to be earnings accretive from the second year of acquisition. We see abundant opportunities to derive synergies from this strategic acquisition,” says Chong.
Defence & Public Security saw revenue grow by 5% y-o-y to $2.16 billion although ebit fell by 15% y-o-y to $191 million from the impact of energy inflation and lower government support. In this segment, the losses relating to the US Marine business have been eliminated after the divestment, says Chong. “This was a result of our continued focus to high-grade our business portfolio.”
In the 4QFY2022, the group secured new contracts of $2.8 billion, bringing its new contract value for FY2022 to $13.1 billion. As at Dec 31, 2022, the group’s order book stood at $23 billion, 50% higher than its pre-Covid levels. The group says it expects to deliver about $7.2 billion from the order book in 2023.
Noting the winning of sizeable new contracts culminating in its “robust” order book, Chong notes that this is a “leading indicator of future growth”.
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“All factors considered, we are well positioned and are optimistic about our future to deliver strong shareholder value,” he says.
For the period, the group has proposed a final dividend of 4.0 cents per ordinary share, bringing the total dividend for the FY2022 to 16.0 cents per share. The group announced that it will declare quarterly dividends on Feb 25, 2022.
The total dividend translates to a dividend yield of 4.5%.
As at Dec 31, 2022, cash and cash equivalents stood at $601.7 million.
Shares in ST Engineering closed 2 cents higher or 0.57% up at $3.55 on Feb 23.
