ST Engineering Ltd (STE), South-East Asias largest defence group, has reported an 11.9% drop in first-quarter net profit but expects 2003 pre-tax profit to be comparable with last years.
For the three months to March 31, the group's net profit fell to S$73.48mil due to lower interest income and start-up losses at its marine unit. But STE, which depends on the Singapore military for about half its profit, reported a 1.9% rise in revenue to S$645.36mil for the quarter.
Going forward, the company, with a steady order book of S$5bil, said pre-tax profit for the second quarter would be higher than the first, barring further deterioration in Singapore's economy.
A lot of our revenue is order bookdriven...The guidance in itself is telling you our ability to deliver according to the predictability of the order book, STE president and chief executive officer Tan Pheng Hock told a news conference.
STE, which made a net profit of S$330.71mil in 2002, has seldom diverged much from its guidance.
The groups aerospace unit, which generates half its pre-tax earnings, provides support for both commercial and military aircraft. It is one of the largest aviation maintenance and engineering companies in the Asia-Pacific region.
Tan said flight cuts in the airline industry due to the Iraq war and rapid spread of the Severe Acute Respiratory Syndrome (SARS) virus had not affected STEs business.
Heavy maintenance is done every few years and that is more planned and more structured. Short-term issues do not really affect long-term heavy maintenance support, he said.
On its dividend policy, the company did not specify what it planned to pay out for 2003 but said it would reward shareholders if it could not find better use for its funds. Reuters
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