Singapore Technologies Engineering has posted a 6 per cent drop in full-year net profit to S$473.6 million.

ST Engineering said its profitability in 2008 was hit by a sudden depreciation of equity values in the fourth quarter, which affected its investments.

This was due to the global economic slowdown and came about despite a 6 per cent growth in revenues to S$5.3 billion for the year. Its aerospace arm was also hit by bad debt provisions of S$32 million.

Tan Pheng Hock, president and CEO, ST Engineering, elaborated: "Two airlines went into Chapter 7 or Chapter 11 bankruptcy, which took a hit of about S$16 million - unexpected, if only because of the scale. S$16 million is not a small sum. The other S$16 million ... are provisions."

The company's land systems arm was its best performer, with a 6 per cent growth in profit contribution on the back of higher sales to the UK.

Its marine unit was hit the worst in 2008, registering a 22 per cent slide in profit contribution. But ST Engineering said this will change in 2009, thanks to its US shipyard subsidiary, Halter Marine.

The shipyard's operations were disrupted by Hurricane Katrina in 2005, but it is now operating at full steam.

Mr Tan said: "We are executing better margin contracts for Halter Marine, and as that starts to trigger in, Halter Marine is going to perform better this year than last year."

The company will also benefit in 2009 from its highest-ever order book of S$10.6 billion.