ST Engineering (SJX) Q2 2026 Earnings Report

The call emphasizes a strong, broad-based operational recovery and high-quality earnings growth: record half-year profit, double-digit segment gains (notably Commercial Aerospace and DPS digital), robust operating cash flow and a very healthy order book support a positive outlook. Management candidly acknowledged timing lumpiness in contract awards, currency/divestment impacts on reported numbers, and an ongoing Satcom turnaround that is near completion. On balance the achievements and forward-looking visibility materially outweigh the challenges.

Management guided they expect to finish 2026 “strongly,” with all segments contributing — DPS targeting a similar growth momentum to H1‑25, CA expecting continued strong earnings growth, and USS a stronger H2 after H1 revenue of $1.1bn and EBIT improving to $46m; Satcom (iDirect) is targeted to be EBIT‑positive in Q4‑26 and in 2027 after completing $63m of annualized cost savings (iDirect H1 revenue up 18% to $138m). Order‑book and wins guidance: order book stood at $35.7bn (≈ nearly three years of 2025 revenue) with H1 contract wins of $7.6bn (DPS $3.6bn, CA $2.9bn, USS $1.2bn) and management expects full‑year 2026 contract wins to be “as robust as” FY2025 (~$18.7bn) with potential upside (international defense wins were $1.2bn in H1 vs >$600m in FY2025). Financial guidance drivers include continued margin and productivity improvement (unit OpEx fell to 9.1% in H1 from 10.2% in FY25; group productivity target $200m/yr with >$150m captured in H1), strong cash generation (operating cash flow +26% to $960m), and expanded scale (group H1 revenue +11% y/y — 14% excl. LeeBoy, ~15.5% excl. LeeBoy & USD weakening — EBIT +23% to $738m, net profit +27% to $512m). Capital and shareholder returns: interim dividend raised to $0.05/share for Q2 (Q3 planned $0.05) with total 2026 ordinary dividend to use a $0.18 base plus one‑third of incremental net profit above the $851m BOP; balance sheet flexibility remains (total debt ≈ $4.7bn, WAC ~3.4–3.5%, FY26 capex guide ~S$500–600m).