ST Engineering posts 8% rise in Q1 revenue to S$2.9 billion

[SINGAPORE] ST Engineering’s revenue rose 8 per cent to S$2.9 billion for the first quarter ended March, from S$2.7 billion in the corresponding year-ago period, on the back of broad-based growth across all segments.

In a business update on Friday (May 9), the group said this was led by “very strong growth” in its defence and public security segment, of which revenue jumped 18 per cent year on year to S$1.3 billion, from S$1.1 billion.

Revenue from its commercial aerospace division edged up 0.1 per cent to S$1.153 billion from S$1.152 billion, while revenue from its urban solutions and satellite communications (satcom) business rose 4 per cent to S$446 million from S$429 million.

The group reported contract wins amounting to S$4.4 billion for Q1, bringing its order book to S$29.8 billion as at Mar 31. Some S$7.3 billion of these contracts are expected to be delivered this year.

Its defence and public security unit secured S$2.7 billion of contracts in the quarter. These included high-performance graphics processing unit data centre infrastructure, artificial intelligence-enabled command and control systems, training and simulation solutions, and a public camera system for Home Team Science and Technology Agency.

Under this segment, there were also international orders for 40 mm and 155 mm ammunition and defence platform electronics, as well as maintenance, repair and overhaul (MRO) contracts for commercial and naval ships.

Its commercial aerospace unit won S$1.3 billion of contracts, including 15-year Leap-1A MRO contracts with a Middle Eastern and an Asian airline, as well as a three-year Boeing 787 component service agreement with an Asian airline.

Its urban solutions and satcom segment picked up contracts worth S$500 million in the quarter, including rail electronics solutions for the upcoming Cross Island Line, mobile network upgrades for the Downtown Line, and managed services for car parks in Singapore.

The unit also secured satcom ground infrastructure contracts for aviation, maritime, government and defence segments in various regions.

Meanwhile, ST Engineering said it is seeing “strong order momentum” as well as demand for “higher-value solutions” for smart mobility.

It said that it is “moving up the value chain” as a tier one prime rail contractor in Taiwan. This enables the group to define the work scope and set contractual terms, and translates into higher margins for these projects.

The group added that the order book for TransCore, which provides electronic tolling solutions and back-office services in the US, doubled to S$3 billion since its acquisition.

On the ongoing tariff war, ST Engineering said it sees “immaterial financial impact” for the group, but continues to monitor the “evolving situation”.

It added that it does not plan to absorb suppliers’ tariff costs unless a passthrough of these costs is possible.

Noting potential recession and inflation risks, the group said its diverse business portfolio provides resilience to cushion the impact.

Shares of ST Engineering closed 1 per cent or S$0.08 lower at S$7.51 on Thursday.