There was impairment losses on an associate. The CEO mentioned there is some restructuring of operations at Europe, and so I assume the impairment comes from Europe.
Looking at the segment results, it is not difficult to pinpoint the problem.
It is the component/ engine repair and overhual segment that saw the plunge in profits, the actual same segment that overlapped with SIA engineering.
Personally, I think we cannot use one quarter of results to assume worse to come for SIA engineering, but I think it is a bit of stretch to lump ST with SIA engineering together.
This segment forms only 30% of ST aerospace revenue, the rest of the segment show more nuance fall in profitability. In terms of geography, Europe form less than 10% of revenue. Further dilute this with the Electronics, Marine, and Land System segment, you get to sleep soundly. I believe "restructured" means scaling down operations in Europe.
The other regions are still doing well, especially US, I think the third wing of growth, after US, might not be Europe, as the management has hoped. Lets hope China pick up the slack, with the new Guangzhou facility contributing.
India's Andhra Pradesh, INDIA (1,320 MW) power plant, of the 1320 MW capacity, "first 660 MW unit commenced commissioning, on-track for completion by end-2014" and "Secured power purchase agreements (PPAs) totalling 900 MW to-date". This should start to contribute at Q4.
The pipeline of projects also provide visible growth as long as power rate do not collapse.
With the high expansion capex, Sembcorp is now a 0.2 net gearing company.