Sats earnings up despite flat revenue growth

Flight service and food solutions firm Sats reported a net profit of $65.1 million for the three months to December.
Flight service and food solutions firm Sats reported a net profit of $65.1 million for the three months to December. ST PHOTO: KEVIN LIM

SINGAPORE - Sats reported improved earnings for the third quarter, when lower expenditure and higher profit share from associates helped give a fillip even though turnover growth was flat.

Net profit of the flight service and food solutions firm was S$65.1 million in the three months to Dec 31, up 7.4 per cent year on year. But the total revenue of S$440.9 million was largely level with S$441 million a year ago.

"Group expenditure decreased S$5 million or 1.3 per cent to S$374.2 million, due to reductions in most expense categories except staff costs and depreciation and amortisation charges," Sats said in its results announcement on Thursday (Feb 9).

Performance was mixed across the two main business lines, with food solutions revenue - 56 per cent of group's total - sliding 1.8 per cent to S$246.4 million, while gateway services revenue added 2.2 per cent to S$193 million.

Share of after-tax profits from associates and joint ventures however rose 9.5 per cent to S$12.7 million.

Sats expects a challenging operating environment ahead, as airline margins come under increasing pressure.

"In line with our strategy of feeding and connecting Asia, we are expanding our inflight catering facilities in Singapore to handle larger batch sizes for the expected increase in volume at Changi Airport.

"We are also extending our cargo network into the Middle East with projects both in Dammam, Saudi Arabia and Muscat, Oman," the company said.

Sats shares closed nine cents or 1.78 per cent down at S$4.98, ahead of the results announcement.