Singapore Technologies Engineering (ST Engineering) reported its full-year financial results Friday (19 February) for the year ended 31 December 2020 and said its net profit fell 10 percent to S$534.4 million (US$403 million) compared to S$577.9 million the year before. Group revenue came in 9 percent lower at S$7.2 billion, compared to S$7.9 billion a year ago in the same period, which is in line with the revenue guidance provided in its Q3 market update. Profit before tax (PBT) dropped 23 percent year-on-year (y-o-y) to S$534.4 million from S$695.2 million.
The revenue decline was primarily due to the impact of COVID-19 on the group, namely reduction in customer demand, supply chain challenges, and workforce disruption. Its Aerospace sector was impacted the most due to a weak aviation sector as passenger air travel was curtailed.
The Group PBT was impacted negatively by impairment of intangible assets and fair value changes of associates in line with the poorer business outlook for some lines of business due to COVID-19. Further, its US shipbuilding business registered losses in the execution of several projects that were contracted and priced at the trough of the marine industry. The PBT drop was also impacted by lower group revenue, buffered by savings from productivity and cost reduction initiatives, and government support.
Aerospace revenue was 21 percent lower y-o-y at S$2.7 billion from S$3.5 billion and its net profit was 28 percent lower y-o-y at S$192.9 million from S$268.9 million. The results were mainly due to lower volume of MRO activities, asset impairments, and absence of favourable impact of end-of-programme reviews, offset by savings from cost reduction measures and government support. Excluding government support, FY2020 net profit for Aerospace would still have been positive.
“Our 2020 financial results were in line with our guidance provided during our 3Q market update,” said Vincent Chong, group president and CEO. “In a year when COVID-19 posed challenges for many industries, we had been able to keep balanced keel because of the underlying strengths of the group and various mitigating factors including our cost reduction initiatives and government support. Our results underscore the resilience of our businesses and the dedication of our people. We would also like to express our appreciation to our customers and partners for their continued support. Going into 2021, we expect recovery to be uneven across the industries we participate in. The aviation industry remains subdued and is unlikely to recover to pre-pandemic levels in 2021.”
The group’s Aerospace and Electronics sectors announced new contracts of about S$5.7 billion in FY2020, of which over S$1.3 billion was secured in the last quarter of 2020. In that quarter, the Aerospace sector signed about S$821 million worth of contracts for a spectrum of its aviation manufacturing and MRO businesses, including passenger-to-freighter (P2F) conversion orders for A330P2F units from freight operators and lessors, a five-year airframe heavy maintenance contract to support an international air cargo carrier’s multiple fleet types and a four-year airframe heavy maintenance contract to support a North American airline’s Boeing 777 fleet.
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