Sats posts 31% growth in Q4 profit

Sats' operating profit for the quarter fell 7.8 per cent to $45.8 million, due to increases in most expense categories. These were mainly driven by higher staffing costs, offset in part by the fall in the cost of raw materials and improved productivi
Sats' operating profit for the quarter fell 7.8 per cent to $45.8 million, due to increases in most expense categories. These were mainly driven by higher staffing costs, offset in part by the fall in the cost of raw materials and improved productivity arising from the use of technology and automation.ST PHOTO: KEVIN LIM

Ground-handler and inflight caterer expects rougher ride for aviation industry this year

Ground-handling and inflight catering provider Sats logged robust fourth-quarter growth but could face a more challenging year amid headwinds in the aviation industry.

Net profit for the three months to March 31 climbed 31.4 per cent to $66.6 million, up from $50.7 million in the same period a year earlier, it said yesterday.

The surge was fuelled by an 2 per cent increase in revenue to $425.8 million. The contribution from the food solutions business segment rose by 0.7 per cent to $233.9 million, while turnover from its gateway services arm increased 3.6 per cent to $190.4 million.

The share of after-tax profits from associates and joint ventures jumped 146.2 per cent in the quarter to $28.8 million.

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This was mainly due to the recognition of $15 million negative goodwill arising from the increased stake in inflight caterer Evergreen Sky Catering Corporation from 15 per cent to 25 per cent.

But operating profit for the quarter fell 7.8 per cent to $45.8 million, due to increases in most expense categories. These increases were mainly driven by higher staffing costs, offset in part by the fall in the cost of raw materials and improved productivity arising from the use of technology and automation.

Fourth-quarter earnings per share came in at six cents, compared with 4.6 cents previously. Net asset value per share was $1.439 as at March 31 this year, up from $1.344 a year earlier.

Net profit jumped 16.9 per cent to $257.9 million for the full year, while revenue was up 1.8 per cent to $1.7 billion. The group has recommended a final dividend of 11 cents per share, bringing the total dividend to 17 cents per share, up from 15 cents last year.

  • AT A GLANCE

  • REVENUE: 
    $425.8 million (+2%)

    NET PROFIT: 
    $66.6 million (+31.4%)

    FINAL DIVIDEND PER SHARE: 
    11 cents (+10%)

President and chief executive Alex Hungate said: "The (past) financial year was a difficult year with fierce competition across the aviation industry, a muted regional climate and an uncertain global outlook. We are adapting quickly... to enhance productivity and improve the quality of our offerings."

Although uncertainties in global trade and intense competition could lower margins, Mr Hungate said Sats intends to make further investments in capital and new business opportunities in the coming year.

"We will continue to grow into new geographies and complementary businesses while investing in people-led technological innovation across the company."

Sats shares closed five cents or 0.95 per cent up at $5.29 yesterday.

 

A version of this article appeared in the print edition of The Straits Times on May 20, 2017, with the headline 'Sats posts 31% growth in Q4 profit'. Print Edition | Subscribe