Singapore Technologies Engineering ((SG:S63)) has held its Q4 earnings call. Read on for the main highlights of the call.
ST Engineering’s recent earnings call painted a picture of robust financial health and promising growth prospects. The company reported significant growth across key financial metrics for 2024, with a record order book and increased dividends, suggesting a positive outlook. However, challenges persist in the Urban Solutions & Satcom segment, though early signs of recovery offer hope.
Impressive Financial Performance
ST Engineering showcased an impressive financial performance for 2024, with revenue climbing 12% to $11.3 billion. The company also reported an 11% increase in EBITDA to $1.6 billion, an 18% rise in EBIT to $1.1 billion, and a 20% jump in net profit to $702 million. These figures underscore the company’s strong operational execution and strategic positioning.
Record Order Book
The company ended the year with a record order book valued at $28.5 billion, providing a solid foundation for future revenue. Of this, $8.8 billion is expected to be delivered in 2025, offering clear visibility into the company’s future financial performance.
Commercial Aerospace Growth
Commercial Aerospace was a standout segment, with revenue growing 12% to $4.4 billion and EBIT improving by 19% to $400 million. The segment secured $4.7 billion in new contracts, highlighting its strong market position and growth potential.
Defence & Public Security Expansion
The Defence & Public Security segment also saw substantial growth, with revenue increasing by 16% to $4.9 billion and EBIT rising 15% to $636 million. The segment secured $5.3 billion in new contracts, reinforcing its critical role in the company’s portfolio.
Debt Reduction
ST Engineering made strides in reducing its debt, with borrowings decreasing by 5% year-on-year from $6.1 billion to $5.8 billion. This reduction improved the gross debt to EBITDA leverage ratio from 4.2 times to 3.6 times, reflecting the company’s focus on financial health.
Increased Dividend Payout
The Board recommended a final tax-exempt cash dividend of $0.05 per ordinary share, raising the total dividend for the year to $0.17 per share. This move underscores the company’s commitment to returning value to shareholders.
Urban Solutions & Satcom Segment Challenges
The Urban Solutions & Satcom segment faced challenges, with revenue growing only 1% to nearly $2 billion. The Satcom sub-segment continues to undergo transformation, but early signs of recovery are encouraging for future performance.
PTF Business Volume Impact
The PTF business faced volume impacts due to OEM delays, leading to longer service periods for existing aircraft fleets. However, the company is optimizing capacity by increasing airframe MRO revenue, mitigating some of the impact.
Forward-Looking Guidance
Looking ahead, ST Engineering provided a comprehensive outlook for the second half and full year of 2024. The company expects continued robust financial performance, with significant growth across revenue, EBITDA, EBIT, and net profit. The execution of its $28.5 billion order book, with $8.8 billion scheduled for 2025 delivery, will be key to sustaining this growth. The company also highlighted its diversified revenue streams and significant contract wins totaling $12.6 billion for the year.
In summary, ST Engineering’s earnings call highlighted a strong financial performance and a positive outlook for 2024. Despite challenges in certain segments, the company’s strategic initiatives and robust order book position it well for future growth. Investors can take confidence in the company’s commitment to shareholder returns and its ability to navigate industry challenges.