Sats' Q1 net profit falls 10.6%

The Sats e-Commerce AirHub facility. The growth in air travel and e-commerce and demand for high quality, safe food remain strong, says Sats.
The Sats e-Commerce AirHub facility. The growth in air travel and e-commerce and demand for high quality, safe food remain strong, says Sats.ST PHOTO: NG SOR LUAN

Ground-handling firm hit by flat revenue and higher spending

Flat revenue and higher spending that included charges payable to Changi Airport have hit first-quarter earnings at Sats.

Net profit at the ground-handling firm dropped 10.6 per cent to $57.3 million in the three months to June 30, compared with the same period last year.

The fall was also due in part to the absence of a one-off gain reported last year from the sale of an asset, the firm said yesterday.

Operating profit for the quarter was $53.5 million, a decline of $1 million or 1.8 per cent year on year.

The weaker performance came as revenue increased slightly by 0.5 per cent to $426.5 million.

Licence fees paid to airports rose from $17.3 million to $21.6 million, mainly due to the cessation of rebates extended by Changi Airport in the last few years, to help partners deal with challenging times.

Sats' president and chief executive officer Alex Hungate, who spoke during a media teleconference last evening, did not wish to comment on whether a fresh round of incentives was being considered.

  • AT A GLANCE

  • REVENUE:
    $426.5 million (+0.5%)

  • NET PROFIT:
    ​$57.3 million (-10.6%)

  • DIVIDEND: Nil

He did say though that the firm is planning some new investments to improve service levels at Changi, which the airport could be interested to support.

Sats has been making technology and other investments in the last few years to improve pro- ductivity and efficiency amid a manpower shortage across the industry which has added to operating challenges.

The efforts and transformation will continue, Mr Hungate said.

With no indication that low yields across the airline industry will improve in the near future, pricing pressure on Sats is expected to continue, he added. However, the growth in air travel and e-commerce and demand for high quality, safe food remain strong.

Sats, therefore, intends to make further investments in capital and new business opportunities in additional locations in the coming year to prepare for the future, Mr Hungate added.

The firm controls about 80 per cent of Changi Airport's ground-handling market while rival Dnata has the other 20 per cent.

Including its Singapore operations, Sats has a presence at 47 airports in 14 countries across Asia and the Middle East.

Earnings per share fell from 5.8 cents last year to 5.1 cents in the first quarter, while net asset value per share inched up to $1.49 from $1.44 as at March 31.

A version of this article appeared in the print edition of The Straits Times on July 22, 2017, with the headline 'Sats' Q1 net profit falls 10.6%'. Print Edition | Subscribe