ST Engineering 2010 profit up 11% to $491mn

Order Book reaches $11.5b, of which about $3.7b is expected to be delivered in 2011.

Singapore Technologies Engineering Ltd (ST Engineering) announced on Tuesday double digit profits growth for full year 2010. Compared to full year 2009, Group turnover grew 8% to $5.98b. All four sectors delivered double digit profits growth, contributing to the Group's 15% increase in profit before tax (PBT) and 11% increase in net profit.

The Land Systems and Marine sectors registered strong turnover increases of 29% and 10% respectively. The Land Systems sector's higher turnover was mainly attributable to higher project deliveries and the sale of specialty vehicles. The Marine sector did well with higher shipbuilding, ship repair and engineering activities such as engine repairs and naval logistics management. Notably, the Marine sector crossed the billion dollar mark for its turnover for the first time, as mentioned in a ST Engineering report.

Earnings per share grew by 10% to 16.21 cents and economic value added increased by 21% to $369.7m. The Group achieved a respectable 30.3% return on equity (ROE). For the full year, commercial sales constituted 59% or $3.5b of the Group's turnover. Cash and cash equivalents and short term investments totalled $1.79b, including customer advance payments of $1.53b.

"The Group registered good growth in turnover and profits in FY2010 over FY2009. Turnover increased by 8% to almost $6b while PBT and Net Profit improved by 15% and 11% to $627.5m and $491.0m respectively.

In 2010, the Group invested more than $300m of capital expenditures in new capabilities and capacity to tap the growth opportunities across the four sectors. We ended the year with a strong order book of $11.5b, which provides good visibility of the Group's future revenue stream and will further add to our resilie nce.

Barring unforeseen circumstances, the Group expects to achieve higher turnover and PBT in FY2011 compared to FY2010," said Tan Pheng Hock, President and CEO, ST Engineering.

Dividend
The ST Engineering Board of Directors is proposing a final dividend of 11.55 cents per share, consisting of an Ordinary Dividend of 4.00 cents per share and a Special Dividend of 7.55 cents per share. Together with the interim Ordinary Dividend of 3.00 cents per share paid in September 2010, the total dividend of 14.55 cents translates to a yield of 4.36%, computed using the average closing share price of the last trading day of 2010 and 2009.

Order book
ST Engineering ended 2010 with a strong order book of $11.5b, compared to $10.3b as at end 2009, of which about $3.7b is expected to be delivered in 2011.

In the fourth quarter of 2010, the Group secured several key defence, government and commercial contracts. The Aerospace sector si gned on inaugural commercial customers, Guggenheim Aviation Partners and North American Airlines, for passenger-to-passenger/cargo (combi) (PTC) conversion on a Boeing 757-200 aircraft. It also clinched about $320m worth of new airframe, engine and components maintenance contracts during the quarter.

The Electronics sector bagged an Automatic Fare Collection System contract for the Bangkok Mass Transit System. It was also selected by Singapore's Energy Market Authority to design and implement Phase 1 of its Intelligent Energy System pilot project.

The Land Systems sector sealed two four-year contracts with the Singapore Armed Forces (SAF), worth a total of $160m, for the maintenance of SAF's vehicles and preservation of SAF's fleet of equipment; as well as a contract to supply 40mm ammunition to the UK Ministry of Defence.

The Marine sector scored its first contract with the Royal Australian Navy to convert its 157.2m long combat logistics vessel, HMAS Success, to be double hulled to meet the International Maritime Organisation standards for environmental protection against oil spills. It also won repair and conversion jobs from Saipem (Portugal) Comercio Maritimo and Coastline Group of Companies.

Prospects
Barring unforeseen circumstances, the Group expects to achieve higher turnover and PBT in FY2011 compared to that of FY2010.