ST Engineering FY2025 Financial Results: Sustained Growth Amid Portfolio Streamlining

Date: 27 February 2026

Key Financial Metrics and Performance Overview

ST Engineering reported robust underlying operational performance for the financial year ended 31 December 2025, driven by strong revenue growth across core segments, disciplined cost management, and active portfolio rebalancing. Despite significant one-off impairment losses, the Group delivered strong growth in Base Operating Performance (BOP), managed to reduce debt levels, and announced special returns to shareholders.

Historical Performance Trends

Revenue grew at a compound annual growth rate supported by all three major business segments. Notably, rebased revenue (excluding divested entities) grew 11% year-on-year, indicating broad-based organic growth. Base Operating Performance (BOP) net profit and EBIT also saw double-digit growth, with BOP EBIT up 16% and BOP net profit up 21% YoY.

Exceptional Earnings and Expenses

The reported net profit was significantly affected by one-off impairment losses of \$689 million, partially offset by divestment gains of \$301 million. These non-recurring items depressed the reported profit metrics, but the underlying business remained strong as reflected in the BOP figures.

Divestments and Portfolio Management

• Major divestments included LeeBoy, STARCO, SPTel, and CityCab, generating net cash proceeds of approximately \$705 million and after-tax divestment gains of \$301 million.
• The group plans to use the proceeds primarily to reduce debt, resulting in a significant improvement in the debt profile.
• 2026 EBIT is expected to be reduced due to the absence of earnings from these divested businesses, but savings in interest and tax are expected to offset the decline.

Debt and Liquidity

• Total borrowings reduced to \$4.8 billion as at 31 December 2025, down from \$5.8 billion the previous year.
• Gross Debt/EBITDA (BOP) ratio improved to 2.7x, down from 3.6x a year earlier, reflecting strengthened balance sheet.
• Strong credit ratings: Moody’s Aaa/stable and S&P AA+/stable.

Dividends

• Total FY2025 dividend: 23 cents per share (12 cents interim, 6 cents final, 5 cents special) compared to 18 cents base last year. The special dividend reflects management’s capital return policy following divestments and strong cash generation.
• Next year’s dividend policy is to distribute 18 cents per share plus one-third of incremental BOP net profit, excluding one-off items.

Order Book and Contract Wins

• Order book reached a record \$33.2 billion, with \$9.9 billion scheduled for delivery in 2026.
• FY2025 contract wins totaled \$18.7 billion, up 49% year-on-year, signaling robust demand across all segments.

Segment Performance Highlights

• Commercial Aerospace: Revenue rose 14% to \$5.0 billion, with BOP EBIT up 22% due to strong MRO and nacelle performance.
• Defence & Public Security: Revenue up 8% to \$5.3 billion, with BOP EBIT up 14% (rebased EBIT up 18%), driven by both local and international contract wins, especially in defence.
• Urban Solutions & Satcom: Revenue up 4% to \$2.0 billion. Segment BOP EBIT declined due to higher Satcom losses, with Satcom currently undergoing a strategic turnaround.

Chairman’s Statement and Tone

“In 2025, the Group delivered excellent underlying performance, reflecting the strength and resilience of our businesses. We continued to streamline our portfolio through several divestments, recycling our capital and enhancing our focus on our core businesses. Looking ahead, supported by strong growth momentum and a robust order book, the Group is well positioned to deliver on our strategic objectives and 2029 targets.”
— Vincent Chong, Group President & CEO

The tone is positive and forward-looking, focusing on resilience, growth, and strategic clarity.

Forecasts and Outlook

• Management expects continued strong revenue growth in 2026, underpinned by the record order book and ongoing contract deliveries.
• Cost savings initiatives are expected to yield \$20 million in annualized savings by 2Q26.
• Satcom turnaround remains a focus, with cost actions already implemented and further strategic options being evaluated.

Conclusion and Investment Recommendations

Overall, ST Engineering’s 2025 financial performance is strong at the operational level, despite headline net profit volatility from one-off items. The group’s balance sheet is healthier, the order book is at a record high, and management remains confident about future prospects.

• If you are currently holding the stock: Hold. The underlying business is performing well, the balance sheet is improving, and management continues to reward shareholders with increased and special dividends. The large order book and cost efficiency efforts signal continued growth potential.
• If you are not currently holding the stock: Consider accumulating on price weakness. The robust operational performance, improving capital structure, and clear growth drivers suggest attractive long-term potential, especially if one-off volatility causes short-term share price dips.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investors should perform their own due diligence and consider their risk tolerance before making investment decisions. Past performance is not indicative of future results.

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