Singapore Technologies Engineering (S63) H2 2022 earnings summary

Executive summary

• FY2022 revenue rose 17.4% YoY to $9.035b and EBIT increased 9.1% to $735.1m, despite a $203m reduction in COVID-19 government support.

• Adjusted BOP EBIT, excluding government support, energy inflation, TransCore transaction and integration costs, and pension cost savings, rose 55% to $727m; adjusted BOP net profit rose 39% to $549m.

• Net profit declined 6.2% to $535m; the decline reflected lower government support, energy inflation, TransCore costs and the tax-exempt effect of the Jobs Support Scheme.

• FY2022 contract wins reached $13.1b; year-end order book was $23b, 50% above the 2019 pre-COVID level.

Financial highlights

• FY revenue was $9.035b, up 17.4% YoY; EBIT was $735.1m, up 9.1%; PBT was $597.5m, down 6.3%.

• FY net profit was $535m, down 6.2%; net finance costs rose to $137.6m from $36.0m.

• 2H2022 revenue rose 17.9% YoY to $4.765b and EBIT rose 10.0% to $350.5m; net profit fell 7.1% to $255m.

Outlook and guidance

• About $7.2b of the year-end order book is expected to be delivered in 2023.

• Commercial Aerospace is expected to improve further, particularly in Asia Pacific and with China’s reopening.

• TransCore is cash flow positive; earnings accretion is expected from its second year after acquisition, with further synergies anticipated.

• Digital Systems & Cyber revenue was $385m in 2022 and is on track to exceed the $500m target by 2026.