Singapore Technologies Aerospace (ST Aero) has announced a larger than anticipated 66% jump in half year profits, helped by the strength of the US dollar. The aerospace arm of Singapore Technologies Engineering turned in a net profit of S$46 million ($27 million) for the first six months of the year, while sales grew by 38%.
The weaker exchange rates added some S$20 million to the bottom line of ST Aero's commercial business, with US subsidiary ST Mobile Aerospace Engineering improving its performance and recently acquired Dalfort Aerospace hitting break-even.
With the Asian market in decline and maintenance work rates falling, the company's home-based airframe overhaul business, ST Aviation Service, is facing tougher times ahead. "Airline profits are coming down in Asia, maintenance budgets are being scaled back and new capacity is coming on line, putting pressure on rates," says BNP analyst Khek Heng.
ST Aero's historically more sluggish military business group almost doubled profits, to S$48.4 million, largely thanks to the market for Northrop Grumman F-5 upgrade and modification work, with sizeable contracts from the Singapore and Taiwanese air forces. Further work is in prospect from Turkey. The Asian Aerospace joint venture contributed another S$4.7 million in pre-tax profits.
Source: Flight International
