ST Engineering profits fall but defence sales grow

Singapore Technologies Engineering (ST Engineering) has posted declines in group revenues and profits for 2020, although the company’s defence sales have stayed strong despite the impact of Covid-19.

ST Engineering said on 19 February that total revenue for the year was SGD7.16 billion (USD5.39 billion), a year-on-year decline of 9%. Profit from operations fell by 17% to SGD560.9 million, while profit attributable to shareholders (or net profit) declined by 10% to SGD521.8 million.

Commercial and defence sales in 2020 constituted SGD4.6 billion (64%) and SGD2.6 billion (36%) respectively. Financial information released by the group showed its defence sales in 2020 registered a 13% increase over defence sales in 2019, which were recorded at SGD2.3 billion. In 2018 defence sales were SGD2.1 billion.

ST Engineering said declines in group revenues were due primarily to the impact of Covid-19. The pandemic, it said, resulted in supply-chain challenges, workforce disruption, and declines in customer demand.

Profit declines were offset by support provided by the government of Singapore, and the group’s cost-reduction initiatives. The latter, it said, included efforts to “right size” staff strength, introduce salary cuts, and reduce outsourced and contract manpower and over-time costs.

ST Engineering’s Aerospace business sector saw 2020 revenues decline year-on-year by 21% to SGD2.7 billion, and net profit fall by 28% to SGD192.9 million. Its Electronics unit posted a 2% decline in revenue at SGD2.3 billion, although profit climbed by 11% to SGD203.9 million.

Land systems and Marine business sectors saw revenues comparable with last year and an increase of 10% to SGD710 million respectively. Land systems saw its profits climb by 31% to SGD101.4 million, while Marine’s profits fell by 45% to SGD28.3 million due mainly to weaker US shipbuilding performance and disruption caused by Covid-19.