02/19/2021 | Press release | Distributed by Public on 02/18/2021 18:47
|Financial Highlights for the year ended 31 December 2020||
|Profit from operations ($m)||560.9||673.1||(17%)|
|Other income, net ($m)||5.1||17.8||(71%)|
|Finance costs, net ($m)||(61.9)||(34.6)||79%|
|Profit before tax (PBT) ($m)||534.4||695.2||(23%)|
|Profit attributable to shareholders (Net Profit) ($m)||521.8||577.9||(10%)|
|Earnings per share (cents)||16.74||18.53||(10%)|
|Economic value added (EVA) ($m)||286.4||317.0||(10%)|
|Return on equity (%)||22.8||26.0||(3pp)|
Dividend per share (cents)
1) All currencies are in Singapore dollars
2) Government grants in the prior year were reclassified from other income to underlying expenses in cost of sales and operating expenses in conformance with current year classification.
3) Fair value changes of investment in associates in the prior year were reclassified from finance costs to other expenses in conformance with current year classification.
Singapore, 19 February 2021 - Singapore Technologies Engineering Ltd (ST Engineering) today reported its full-year financial results for the year ended 31 December 2020 (FY2020).
Group revenue came in 9% lower at $7.2b, compared to $7.9b a year ago in the same period, which is in line with the revenue guidance provided in its 3Q market update. Profit before tax (PBT) dropped 23% year-on-year (y-o-y) to $534.4m from $695.2m, and its Profit attributable to shareholders (Net Profit) was $521.8m, down 10% y-o-y from $577.9m.
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 U.S. 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.
The Group Net Profit similarly saw a reduction, but alleviated by the non-taxability of the Singapore government Job Support Scheme.
Cost Reduction Initiatives and Government Support Schemes
The Group implemented a series of productivity and cost reduction initiatives in 2020, including right-sizing staff strength, salary cuts as well as reduction of outsourced and contract manpower and over-time costs. The Group also reduced discretionary capital expenditures and tightened operating expenditures. The savings from these actions, coupled with the receipt of government support grants enabled the Group to maintain even-keel bottom line in a challenging year.
Business Sector: Revenue and Profits
'Our 2020 financial results were in line with our guidance provided during our 3Q market update. 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. 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 target 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.'
-Vincent Chong, Group President & CEO
Commercial sales and defence sales accounted for $4.6b and $2.6b respectively of Group revenue. As at 31 December 2020, the Group held $729m in cash and cash equivalents compared to $452m at the end of 2019.
2H2020 versus 2H2019
For its second half financial results ended 31 December 2020 (2H2020), the Group posted revenue of $3.6b, down 18% from $4.4b a year ago. PBT was 32% lower at $248.0m from $365.6m the year before and Net Profit was down 14% at $264.4m from $308.6m.
Revenue for the Aerospace sector was 38% lower y-o-y at $1.2b from $2.0b and its Net Profit was 38% lower at $87.9m from $141.9m a year ago. Revenue for the Electronics sector was 2% lower at $1.2b and its Net Profit was 14% higher at $116.3m from $101.7m the year before. The Land Systems sector posted revenue of $767m, up 2% from $755m and its Net Profit was 43% higher y-o-y at $59.6m from $41.7m. Revenue for the Marine sector was down 9% at $325m and its Net Profit was 73% lower at $6.9m from $25.2m a year ago.
New Contract Wins and Order Book
The Group's Aerospace and Electronics sectors announced new contracts of about $5.7b in FY2020, of which over $1.3b was secured in the last quarter of 2020. In that quarter, the Aerospace sector clinched about $821m 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.
In 4Q2020, the Electronics sector won about $516m worth of contracts from global customers for products and solutions in smart mobility, Internet of Things (IoT), defence, public safety and security. These include contracts to deploy an Enterprise Asset Management System for the Singapore MRT North-East Line, and Passenger Information Systems for the Singapore MRT Circle Line and North-East Line. Its IoT business also extended its streetlight control solution to cities in New Zealand, the U.S. and Sweden, and its Water Advanced Metering Infrastructure solution to help cities in the U.S. and around the world optimise water consumption and operational efficiency. Various contracts were also secured for the sector's defence and public safety and security businesses, including the deployment of its first Perimeter Intrusion Detection System for a global pharmaceutical facility based in Singapore, a port surveillance and tracking system, and a digital platform with integrated AI capabilities for a healthcare institution.
These new contracts, together with other contracts won but not disclosed, and after adjustments of revenue delivery and project cancellations of about $1b, bring the Group's order book to $15.4b as at 31 December 2020. This is slightly higher than the order book at year-end 2019, despite the challenges brought about by COVID-19. The Group expects to deliver about $5.3b from the order book in 2021.
Dividend Payout and Dividend Yield
The Board of Directors proposes a Final Dividend of 10.0 cents per share. Together with the Interim Dividend of 5.0 cents per share distributed in September 2020, shareholders will receive a total dividend of 15.0 cents per share for FY2020. This translates to a dividend yield of 4%, computed using the average closing share price of the last trading day of 2020 and 2019.
ST Engineering is a global technology, defence and engineering group with offices across Asia, Europe, the Middle East and the U.S., serving customers in more than 100 countries. The Group uses technology and innovation to solve real-world problems and improve lives through its diverse portfolio of businesses across the aerospace, smart city, defence and public security segments. Headquartered in Singapore, ST Engineering reported revenue of $7.2b in FY2020 and it ranks among the largest companies listed on the Singapore Exchange. It is a component stock of the FTSE Straits Times Index, MSCI Singapore, iEdge SG ESG Transparency Index and iEdge SG ESG Leaders Index.
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