ST Engineering plans to write off $667 million in its long-struggling satellite business iDirect, after efforts to turn it around made limited gains, as shifting dynamics of the industry means that customer adoption is taking longer than expected given the delayed and limited launches. With this impairment, the value in use of iDirect is reduced to just $170 million.
In its 9MFY2025 ended Sept, iDirect group’s year-on-year revenue and EBITDA declined by 9% and 22% respectively. Earlier, the company reported an EBIT loss of $89 million for FY2024.
"This financial performance fell below the group’s expectations," says ST Engineering.
ST Engineering says it boosted the management team at iDirect, right-sized the organisation, and made new investments.
"However, these efforts have not been sufficient to turn around the business in the near-term as headwinds intensify and the business outlook continues to deteriorate," the company says.
While ST Engineering claims that it remains positive on the long-term prospects of the satcom industry, near-term operating environment and iDirect group’s continued losses mean that the turnaround will take longer than expected.
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As such, it is in "evaluating strategic options" and in "active discussions" so as to mitigate risks and financial exposures to itself. No definitive agreement has been reached with any party for now, the company says.
News of this $667 million impairment was announced on the same day as the company's 9MFY2025 business update, where revenue for the quarter to Sept was up 13% y-o-y to $3.14 billion, with "strong growth" across its various key operating segments.
The company had earlier announced it won contracts worth $4.9 billion in its 3QFY2025, which brings its total order book to $32.6 billion.
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ST Engineering, which has a policy of paying 4 cents per share per quarter, will be sticking to this amount of dividend payout for the 3QFY2025.
However, for the final quarter, it plans to pay 6 cents per share. In addition, the company wants to pay a special dividend of another 5 cents, which will be partly drawn from cash proceeds of some $594 million in divestments made earlier this year.
This will bring its full-year FY2025 payout to 23 cents.
ST Engineering shares closed at $8.29 on Nov 12, up 0.61%, extending a year-to-date gain of 78.28%.
