Singapore’s ST Engineering has warned of likely revenue ”deferral” for its commercial aerospace division amid uncertainty surrounding the US government’s tariff policies, even as it stresses that there is likely to be “immaterial financial impact”.
In a market update for the January-March quarter, the group outlines the likely impact of the tariff policies, both as a primary supplier and manufacturer, as well as a second supplier.
It notes that its commercial aerospace division could see deferrals of up to S$40 million ($30.7 million) a month, but that there was “limited” impact across its other portfolios, which include defence and urban mobility.
The group has operations in the USA, where it manufactures engine nacelles and composite panels, in addition to providing commercial MRO services.
As a secondary supplier, ST Engineering states that it has “no plan” to absorb tariff costs from its suppliers “unless pass-through is possible”.
The Trump administration’s decision to impose sweeping tariffs – then subsequently pause some of them – has left the global economy under a cloud, with airlines and the wider aviation sector bracing for likely impact.
ST Engineering has also flagged the likelihood of a global recession and inflationary pressures among key risks in the near term.
To this end, it is looking to renegotiate its contracts and diversify its supplier network. ST Engineering stresses that its “diverse” group portfolio will provide some financial buffer.
Its comments come as its commercial aerospace business saw flat growth in revenue for the January-March quarter. While it saw strong demand for engine MRO services, ST Engineering notes a drop in revenue for its passenger-to-freighter conversion work.
The division also secured around S$1.3 billion in new contracts during the quarter, including long-term engine MRO work for CFM International’s Leap-1A and CFM56-7B engines.
