SIA Engineering net profit up by 4% in 4Q

Operating margins however were subdued at 10.3%.

According to DBS Vickers, SIE's 4QFYMar12 results were in line with their estimates, as SIE reported S$269m in net profit for FY12, up 4% y-o-y, on the back of 6% rise in revenues.

While 4Q was another record quarter for revenues, operating margins howeverwere subdued at 10.3%, due to the higher proportion of revenue from fleet management programme and cabin interior reconfiguration projects, which involve higher overheads and subcontract costs.

Positive data however counter the decline causing DBS Vickers to tag SIE stable oyutlook.

Here's from DBS Vickers analyst Suvro Sarkar:

Despite the weak US$, contribution from associates and JVs continued to recover– up almost 9% y-o-y to S$157m – and represented 52% of SIE’s PBT.

The company ended the year with close to S$500m net cash and declared a final DPS of 15Scts for FY12, in addition to the interim DPS of 6Scts paid earlier. This is higher than the final DPS of 14Scts declared in FY11 (though there was a special payout of 10Scts in FY11), and represents a healthy payout ratio of about 85%.

The risks of slower global economic growth and high fuel costs continue to weigh on the airline industry in 2012. However, we do not see any alarming signs yet and most carriers in the Asia-Pacific region continue to add capacity. Passenger and aircraft movements at Singapore’s Changi Airport continue to hit new records (13% y-o-y growth during1Q-CY12) and SIE’s management believes demand for its core businesses will remain stable in the near term. We expect SIE to record steady 5-6% growth in FY13/14F.

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