Singapore Technologies Engineering (ST Engineering) has reported a 9 per cent dip in revenue for full-year 2020, to S$7.2 billion.
The decline was primarily attributed to the impact of Covid-19 and specifically the reduction in customer demand, supply chain challenges and workforce disruption. The company’s aerospace sector was impacted the most “due to a weak aviation sector as passenger air travel was curtailed”.
Profit before tax dropped 23 per cent year-on-year to S$534.4 million. This 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, the company said. Savings from productivity, cost reduction initiatives and government support helped soften the decline to some extent.
Net profit was down 10 per cent to S$521.8 million, alleviated somewhat by the non-taxability of the Singapore government ‘Job Support Scheme’, ST Engineering said.
Aerospace revenue was 21 per cent lower year-on-year, at S$2.7 billion. Net Profit fell 28 per cent, to S$192.9 million. The results were mainly due to lower volume of MRO activities, asset impairments and absence of favourable impact of end-of-programme reviews, ST Engineering said. There was some offset from cost reduction measures and government support. Excluding government support, FY2020 aerospace net profit “would still have been positive”, the company said.
In the second half of 2020, aerospace revenue fell 38 per cent to S$1.2 billion. Net profit was down 38 per cent at S$87.9 million.
“In a year when Covid-19 posed challenges for many industries, we have been able to keep a balanced keel because of the underlying strengths of the group and various mitigating factors including our cost reduction initiatives and government support,” commented ST Engineering’s group president & CEO Vincent Chong.
“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.”
Chong noted that the aviation industry “remains subdued and is unlikely to recover to pre-pandemic levels in 2021”. He said: “Nevertheless, we are focusing on delivering our order book, seizing new opportunities in areas like freighter conversions and cybersecurity. With partial revenue recovery, when combined with savings from our cost reduction initiatives, we [aim] to offset the effects of lower government support in 2021.
“With our new organisation structure, we are well positioned to better serve our customers, respond nimbly to macro-economic changes and achieve long-term sustainable growth.”
In the fourth quarter, ST Engineering’s aerospace sector clinched about S$821 million worth of contracts across its aviation manufacturing and MRO businesses. These included 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 777 fleet.