Sats' Q1 net profit up 11.5% on higher revenue

First-quarter net profit for in-flight catering service provider Sats rose 11.5 per cent to $63.9 million, on the back of continued growth in aviation volumes, and higher revenues from Japan and its cruise terminal in Singapore.

This translated to earnings per share of 5.7 cents, up from 5.1 cents in the same period last year. No dividend has been declared for the current financial period, unchanged from the preceding year.

For the three months ended June 30, revenue came in at $439.4 million, up 3 per cent from last year. In particular, revenue from its Food Solutions segment rose 2.7 per cent to $239.5 million, while revenue from its Gateway Services grew 3.4 per cent to $199.6 million.

Excluding the deconsolidation of Sats HK, in which the group divested its 51 per cent stake to Voltaire Capital Investment in July last year, Sats' underlying group revenue grew by 5.9 per cent, or $24.5 million, the company said.

Meanwhile, group expenditure rose 0.4 per cent to $374.5 million, led by higher cost of raw materials and licence fees, as well as depreciation and amortisation charges.

The increased cost of raw materials and licence fees was in line with the higher revenue, Sats said. Conversely, staff costs fell $2.9 million, while office premises and utility expenses were down $400,000 largely due to the divestment of Sats HK.

Looking ahead, the group expects passenger volumes in Asia to grow, despite the threat of global trade uncertainties potentially affecting cargo volumes.

Separately, the group also announced yesterday that its subsidiary, Sats Investments, has terminated a memorandum of agreement with Turkish Airlines to provide in-flight catering services.

Looking ahead, the group expects passenger volumes in Asia to grow, despite the threat of global trade uncertainties potentially affecting cargo volumes.

While pricing pressures remain, "rapid urbanisation in the region will drive demand for safe, high-quality food, and more cruise ships will be deployed in South-east Asia to keep pace with burgeoning consumer interest", Sats said.

The counter closed at $5.10 yesterday, up 0.6 per cent, or three Singapore cents before the release of its first-quarter results.

  • AT A GLANCE

  • Revenue

    $439.4 million (+3%)

  • Net profit

    $63.9 million (+11.5%)

A version of this article appeared in the print edition of The Straits Times on July 20, 2018, with the headline 'Sats' Q1 net profit up 11.5% on higher revenue'. Print Edition | Subscribe