More passengers at Changi Airport, lower staff costs, cheaper materials and higher takings from associated companies boosted second-quarter profits at ground-handling firm Sats.
Net profit rose 26.8 per cent to $59.7 million for the three months to Sept 30 even as revenue dipped by 4.4 per cent from a year earlier, to $422.7 million.
The sales decline was due in part to a loss of contribution from the divestment of its Australian subsidiary Urangan Fisheries and the weakening of the Japanese yen.
This was mitigated by a 9.1 per cent decline in operating expenditure to $363.5 million.
Staff costs, for example, were reduced through various manpower initiatives targeted at improving productivity while cost of raw materials fell 19.2 per cent.
The end result was an almost 40 per cent jump in operating profit to $59.2 million.
Half-year profits rose by 20.9 per cent to $109.3 million.
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AT A GLANCE
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Net profit: $59.7 million (+26.8%)
Revenue : $422.7 million (-4.4%)
Dividend (interim): 5 cents per share
Revenue for the six months fell, down 4.3 per cent to $839.6 million.
Earnings per share was 5.4 cents for the second quarter, up from 4.2 cents a year earlier. Net asset value per share was 130.5 cents, higher than the 130.4 cents as at March 31.
Sats' president and chief executive Alex Hungate said the operating environment continues to be challenging with slower regional economic growth, competitive pressures in aviation and increasing manpower costs.
"We also don't expect any relaxation on manpower pressures in Singapore and Hong Kong, for example, with the tight labour market," he said during a media teleconference last evening following the release of the results.
On a more positive note, Mr Hungate said: "However, we remain confident that the long-term growth prospects for our core businesses are robust."
During the quarter, Sats handled 11.3 million passengers at Changi Airport, up from 10.8 million in the same three months a year ago.
He said: "There has been good growth in all categories except cargo."
Sats will remain focused on raising productivity and growing into adjacent businesses and geographies, as demonstrated by its offer to buy a 49 per cent equity stake in Brahim's Airline Catering Holdings of Malaysia.
Sats declared an interim dividend of five cents per share.
The counter shed two cents to close at $3.80 yesterday.
