ST Engineering H1 net profit rises 27.1% to S$512.1 million on strong segment growth

[SINGAPORE] ST Engineering on Thursday (Aug 13) posted a 27.1 per cent rise in net profit to S$512.1 million for its first half ended Jun 30, from S$402.8 million for the previous corresponding period.

The results were driven by underlying performance and cost savings across all its three business segments, the group said. CEO Vincent Chong said this was not a one-off, but a reflection of the high-quality and durable earnings that ST Engineering is building.

“This is the strongest first-half results we have experienced on record,” he noted.

ST Engineering’s unit opex margin, defined as the total operating expense over total revenue, stood at 10.2 per cent for 2025, a record low for the company then.

In H1 FY2026, unit opex margin fell further to 9.1 per cent, driven by productivity gains and procurement savings, as well as efficiency enabled by artificial intelligence.

Procurement and productivity savings were more than S$150 million in H1 FY2026, with the group well on its way to reach the targeted S$200 million in savings for the full year, said Chong.

“Year after year we continue to outperform that target,” he added.

Earnings per share stood at S$0.1643 for the half-year period, up from S$0.1293 in the previous year.

Revenue for H1 FY2026 rose 11.1 per cent to S$6.57 billion, from S$5.92 billion in the year-ago period.

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On a rebased basis, excluding the prior-year divestments of LeeBoy and CityCab, revenue grew 14 per cent.

An interim dividend of S$0.05 per share was declared for the second quarter, up from S$0.04 the year before, and will be paid on Sep 4. The board has also planned for a third-quarter interim dividend of S$0.05 per share.

Supported by structural demand

The demand for ST Engineering’s business is structural in nature, noted Chong, highlighting that growing air travel and the low supply of new aircraft were driving the need for airframe and engine services from the aerospace business segment.

This demand also extends to the nacelle and composite floor panel business.

The digital business which spans cloud, AI analytics and cybersecurity is growing faster than expected, and is about a year ahead of reaching its 2029 revenue target of S$1.3 billion, added Chong.

The urban solutions and satcom business is riding the tailwinds of the investments into smart mobility and critical infrastructure, as well as growth in the rail and road mobility business.

ST Engineering builds AI solutions for customers and also uses them internally, which has boosted efficiency and lowered costs in operations. AI is core to how the company competes and grows, said the CEO.

ST Engineering ended H1 with an order book of S$35.7 billion. The company said that it expects to deliver about S$5.7 billion from this order book in the remaining months of 2026.

The amount secured in contract wins in Q2 2026 was lower than the previous quarter. Chong said this was mostly due to the lumpy nature of contract awards. This is determined by the customers’ funding and procurement timing, making variability between quarters normal.

“We don’t get too focused on any quarter. We look at long-term trends, which remain intact,” he added.

The deal pipeline of US$11 billion for international defence over the next 18 to 24 months, which the company announced in the first quarter of 2026, remains on track to come through. Contract wins for this year is expected to be similar to that in 2025, which stood at S$18.7 billion.

ST Engineering’s counter-drone capability has seen a boost from the fighting in the Middle East and Ukraine, and this could lead to new demand, based on observations of the conflicts’ progress.

As air-defence capabilities now include flexible counter-drone solutions, ST Engineering is working with startups on a full suite of offerings for its counter-drone package. This has seen success, noted Mervyn Tan, group chief operating officer (technology and innovation) and president (defence and public security).

The company is tracking the targets of its five-year plan to grow revenue to S$17 billion, for the compounded annual growth rate (CAGR) of net profit to exceed revenue CAGR by five percentage points, and for dividends to grow in tandem with profit.

The plan, unveiled in 2025, also sets revenue targets for each business segment.

“Commercial aerospace revenue and group net profit are more than one year ahead of plan, with the rest tracking well, including the digital business. We also expect in the next few years for net profit to outpace revenue, (with earnings CAGR) up to five percentage points higher than revenue CAGR,” said Chong.

The company is not front-loading the net profit growth, he added.

Shares of ST Engineering closed S$0.08 or 0.78 per cent higher at S$10.28 on Wednesday.