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ST Engineering H1 earnings up 19.7% at S$402.8 million, cites defence demand in Europe, Middle East
[SINGAPORE] Singapore Technologies Engineering (ST Engineering) on Thursday (Aug 14) posted a 19.7 per cent increase in net profit to S$402.8 million for the first half-year ended June, up from S$336.5 million in the year-ago period.
This was driven by revenue growth primarily from its commercial aerospace and defence and public security business segments, despite negative impact from foreign currency exchange and US tariffs.
Earnings per share rose in tandem to S$0.1293 for H1, up from S$0.108 previously.
H1 revenue increased 7.2 per cent to S$5.9 billion, up from S$5.5 billion in the first half the year before.
ST Engineering said H1 revenue would have grown 8 per cent if not for the forex translation impact of a weaker US dollar against the Singapore dollar, while the forex translation impact on net profit was negligible.
Revenue from the commercial aerospace segment rose 5 per cent to S$2.4 billion from S$2.2 billion. The group said overall tariff impact on its first-half results was immaterial after mitigation measures were implemented.
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Defence and public security revenue grew 12 per cent to S$2.7 billion from S$2.4 billion, while urban solutions and satellite communications revenue was flat at S$921 million.
The group secured S$9.1 billion of new contracts for H1, bringing its total order book to S$31.2 billion as at end-June. It expects to deliver about S$5 billion from the order book in the remainder of 2025.
ST Engineering group president and chief executive Vincent Chong said: 'Our strong order book continues to provide revenue visibility for the group.
'Our recent divestments are in line with our portfolio rationalisation strategy to exit non-core businesses and recycle capital. We remain steadfast in strengthening our core businesses.'
ST Engineering has declared an interim dividend of S$0.04 per share for Q2, to be paid on Sep 5, unchanged from the previous year's payout.
Growing defence revenue
Mervyn Tan, group chief operating officer for technology and innovation and president of defence and public security, noted that ST Engineering's international defence business had contributed to the strong results.
This, he said, is due to the local and international partnerships the group has built.
Tan added that because of Singapore's small size, there is a need to scale the products beyond the Republic, so that the non-recurring engineering and fixed cost can be shared.
'The local customers will ... enjoy a reduction in terms of the cost per unit,' he said.
Tan said that they have several platform opportunities in Europe and the Middle East. He shared that they are the 8x8 Terrex and Bronco All Terrain Tracked Carrier.
He said that they are confident the sales of ammunition, namely the 40 mm and 155 mm, will continue into the second half as well.
'There's simply a demand for such products in the market, especially in the Middle East and Europe,' he said.
Beyond ammunition and platforms, ST Engineering is also seeking to expand on their maintenance, repair and overhaul (MRO) services on what they have established previously.
Tan singled out the Middle Eastern and North African market as an area to watch for, but added that doing MRO at these regions is not new to the company.
Beyond aircraft, ST Engineering is looking for MRO opportunities for land vehicles in the Middle East.
'I think we have built a strong foundation in terms of our technical competencies,' he said.
Shares of ST Engineering closed 6.25 per cent or S$0.56 lower at S$8.40 on Thursday.
