Singapore Technologies Aerospace (ST Aero) has more than doubled its profits in 1997 as the strength of the US dollar helped push up margins in an already strong commercial and military overhaul business.
Net profits for the aerospace business, now part of the ST Engineering grouping, came in at S$62 million ($39 million) as sales soared by 29% to S$674 million. The growth was led by the commercial business group, which saw sales jump by close to 50% as a result of a heavy throughput of third party aircraft maintenance and overhaul work and improved labour rates of up to $50 per hour. Capacity at ST Aviation Services was expanded at the end of 1996 with the addition of a third bay.
Recent currency fluctuations have also worked in ST Aero's favour. Its US maintenance subsidiary, ST Mobile Aerospace Engineering, "really came into its own as the result of the stronger US dollar", says Goldman Sachs analyst Jean Louis Morisot.
Defence-related work accounted for some 47% of the ST Aero's $674 million turnover. The military business group saw order books boosted by two major Northrop F-5E/F upgrade and reconnaissance conversion contracts from the Singapore and Taiwan air forces, with a third contract with Turkey in prospect.
The increase from aerospace also showed through in figures from ST Engineering, a newly formed division. It posted a 25% profit rise, to S$121 million.
Source: Flight International
