Sats Q4 profit rises 31.4% on higher revenue, one-off goodwill recognition

Sats cautioned that looking forward, uncertainties in global trade and intense competition in the industry are putting pressure on airline yields, which could lead to lower margins.
Sats cautioned that looking forward, uncertainties in global trade and intense competition in the industry are putting pressure on airline yields, which could lead to lower margins.PHOTO: ST FILE

SINGAPORE - Sats reported on Friday (May 19) a 31.4 per cent rise to S$66.6 million in fourth-quarter net profit compared to a year ago, on higher revenue and boosted by a big one-off goodwill recognition.

For the three months to end-March 2017, revenue grew 8.2 per cent year-on-year to S$425.8 million for chief ground-handling and in-flight catering service provider at Singapore Changi Airport.

For the quarter, share of after-tax profits from associates and joint ventures jumped 146.2 per cent to S$28.8 million, mainly due to the recognition of $15 million negative goodwill arising from the increased stake in a long-term investment Evergreen Sky Catering Corporation to 25 per cent from 15 per cent.

Excluding one-off gains, underlying net profit for the quarter was up 1.8 per cent to S$51.6 million, while group operating profit declined 7.8 per cent to S$45.8 million.

For the full year, net profit rose 16.9 per cent to S$257.9 million.

Looking ahead, Sats cautioned that uncertainties in global trade and intense competition in the industry are putting pressure on airline yields, which could lead to lower margins.

On the other hand, growth in air travel, eCommerce and demand for high quality, safe food remain high, said SATS.

The company said it intends to make further investments in capital and new business opportunities in additional locations in the coming year.

The board has recommended a final dividend of 11 Singapore cents per share. Including the interim dividend of 6 cents per share, this brings total dividend to 17 cents per share, up from 15 cents last year.