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SINGAPORE (THE BUSINESS TIMES) – ST Engineering, listed on Mainboard, will be reorganized into two main groups starting in the new year: commercial and defense and public safety, which replace the structure of the aerospace, electronics, land and marine systems sector.
The change in structure was announced in a regulatory filing on Tuesday (November 17), which ST Engineering says will position the group for its next phase of growth and propel it to become a global technology, defense and engineering powerhouse.
On Wednesday, ST Engineering announced that it expects full-year revenue to be around 10% lower for fiscal 2020 than it was for fiscal 2019, in a third-quarter business update.
ST Engineering had previously provided revenue guidance in August that FY2020 revenue was expected to be 5% to 15% lower than FY2019. He said Wednesday that the group’s revenue performance to date remained within guidance, and the expectation now was for revenue to be near the midpoint of its previous guidance.
For its aerospace segment, ST Engineering said a faster recovery domestic travel sector bodes well for its narrow-body maintenance overhaul (MRO) repair work.
It also said it is looking for passenger-to-freighter conversion opportunities, as there is a demand in the market for dedicated cargo aircraft, given limited passenger flights with front-loading capacity. ST Engineering also noted that the recalls of the passenger jet fleet have added to the availability of raw material.
It secured about $ 600 million in aerospace orders for the quarter, bringing the total for the first nine months of 2020 to approximately $ 2 billion.
ST Engineering also secured about $ 1.1 billion in new orders for its electronics segment in the third quarter, bringing its nine-month total to $ 2.3 billion. The orders include railway electronics projects, smart digital building solutions, and defense and public safety projects.
The company said its entire workforce is back at its Singapore shipyards for the marine sector, and has completed numerous ship repair projects, rig repair and related manufacturing jobs.
It added that its defense land platform business remains stable. However, he noted that bids for the construction of roads and special vehicles are on hold.
In September 2020, its order book stood at $ 15.8 billion, slightly down from $ 15.9 billion in June.
ST Engineering said it will focus on opportunities to capitalize on new demand emerging from Covid-19, such as cybersecurity and sensors. It also has efficiency and productivity initiatives across the group on track to meet its goal to offset the effect of a lower level of government support in 2021.
On its reorganization, the company said that the commercial cluster will drive the group’s international growth in commercial aerospace, urban solutions and satellite communications. This cluster combines the group’s smart city technologies and capabilities, which now reside in all four sectors, into one comprehensive unit.
The commercial aerospace team will continue to drive the long-term growth of the aerospace businesses in aerospace structures and systems, maintenance, repair and overhaul (MRO) and aviation asset management. The satellite communications and urban solutions teams will drive the group’s smart city business growth, ST Engineering said.
The defense and public group will integrate capabilities in digital and cyber systems, defense terrestrial, marine and aerospace systems. This cluster will focus on meeting the changing needs of its clients in defense and public security, and in critical infrastructure segments. It will also continue to seek growth in international defense and public safety and security businesses.
Vincent Chong, CEO of ST Engineering, said: “Today’s environment is one in which technological advancements and changing customer demands are catalyzing disruptive business models and rapidly transforming the competitive landscape. Now is the right time for us to believe a sharper and more agile organization that will be very in tune and respond to the needs of our customers in the new world. “
The change of organization will be reflected in its financial results for the first semester until June 2021, and the financial information will be based on the new operating segments.
However, it is not expected to have any material impact on ST Engineering’s consolidated net tangible assets per share and earnings per share for the current financial year, the company said.
Shares of ST Engineering were up 3 cents, or 0.8 percent, at $ 3.83 as of 11:23 am Wednesday.
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