Singapore Technologies Engineering Ltd, South-East Asias largest defence contractor, posted yesterday its first drop in annual profit since 1997 on weakness in its aerospace and marine divisions, and warned of similar earnings next year.
For the year ended Dec 31, 2002, the company's net profit fell 3.4% from a year earlier to S$330.71mil, hit by a S$21.43mil restructuring charge, a 13% plunge in earnings at its aerospace division and a 22% drop in earnings at its marine services unit. The overall profit figure was largely in line with forecasts of industry analysts.
Group revenue rose 6% to S$2.62bil.
ST Engineering, which counts the Singapore military as a major customer and is a unit of the government-owned Singapore Technologies group, said the S$21.43mil charge was related to the restructuring of its land systems division.
Its net profit for the fourth quarter was S$83.7mil, within market expectations and but down from S$95.1mil for the corresponding period in 2001, a company official said. The drop was mainly due to tax write-backs.
Six analysts polled by Reuters had forecast on average a net profit of S$83.7mil for the three months to end-2002. For the full year the analysts had expected a net profit ranging from S$320mil to S$340mil.
ST Engineering said its distribution and selling expenses for the full year surged nearly 98% to S$70.99mil due to a higher provision for doubtful debts in the aerospace sector, as well as higher market expenses in its electronics business. It said the low interest rate environment in 2002 contributed to a sharp 39.7% decline in other operating income to S$59.85mil.
While revenues should be higher in 2003, pre-tax profit would be comparable to last year's due to low investment and interest income, it added. Reuters