ST Engineering Delivers Record First Half: Operating Leverage and Defense Tails Propel Growth
Singapore Technologies Engineering (ST Engineering) reported its strongest first-half ever on August 12, 2026, with net profit of $512 million and revenue up 11% year-over-year. The results were characterized by exceptional operating leverage: EBIT grew 23%, PBT 30%, and net profit 27%, all outpacing revenue growth. CFO Cedric Foo opened the call with a confident note: “I'm very pleased to report a very robust set of first half 2026 results.” — Cedric Foo, Group CFO · 2026-08-12 The quality of growth is supported by aggressive productivity initiatives, with unit OpEx falling to 9.1% of revenue.
So that's what gives us confidence in the quality and not just quantity of our growth. We are confident of finishing the year strongly.
Operating Leverage in Action
The group's profitability is improving faster than its top line. “more of our revenue growth flows through to the bottom line,” — Sy Feng Chong, Group President and CEO · 2026-08-12 CEO Vincent Chong said, pointing to scale effects and AI-enabled efficiencies. The company has already captured well over $150 million in productivity and procurement savings in the first half, against an annual target of $200 million. This discipline is reflected in the Order book, which stands at a robust $35.7 billion, equivalent to nearly three years of revenue.
Defense: A Geopolitical Tailwind
The standout driver is the international defense business. Order wins reached $1.2 billion in the first half, more than twice the full-year 2025 total. Mervyn Tan, President of Defense & Public Security, highlighted the counter drone market as a key growth area, citing lessons from the Iran conflict. He said: “counter drone capability... seeing strong demand, especially given recent conflicts.” — Wei Ming Tan, Group Chief Operating Officer, Technology and Innovation and President of Defense & Public Security · 2026-08-12 The company is also riding the broader trend of rising International Defense budgets, with a pipeline of $11 billion over the next 15-20 months.
Satcom Rebound and Shareholder Returns
After years of losses, the satellite communication business is turning the corner. Annualized cost savings of $63 million were completed at the half, positioning iDirect for EBIT positivity in Q4 2026. The USS segment's EBIT swung from $12 million to $46 million, a sign of execution. The board also raised the interim dividend to $0.05 per share, with CFO Cedric Foo explaining: “The final dividend will be based on $0.18 as a base, plus one-third of the year-on-year incremental net profit per share.” — Cedric Foo, Group CFO · 2026-08-12 This marks a shift from the company's previous cautious payout strategy. In early 2025, Vincent had said: “we are a yield come growth stock. So we'll make sure that we return value through dividend, but at the same time reserve capital for growth.” — Vincent Chong, Group President and CEO · 2025-02-28 Now, with cash flow strong, the company is able to do both.
The turnaround is also evident in Satcom. Lee Chew had admitted in 2024: “we are making losses in Satcom...” — Lee Chew, Group President, Defense and Public Security (inferred) · 2024-08-14 Today, the path to profitability is clear, supported by both cost actions and new product momentum like the Intuition platform.
Looking ahead, the company is confident of a strong second half, buoyed by a record order book and a pipeline that continues to convert. With digital business growing 27% and running a year ahead of its 2029 target, ST Engineering appears well positioned to keep outpacing its own plan.