Sats shares fall despite $7.2m in 2nd-half earnings
Results were lower than expected; shares close at $4.38, down nearly 4%
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Shares of food solutions and gateway services provider Sats fell yesterday after the company reported lower-than-expected results for the second half of FY2021-22 ended March.
Its shares closed at $4.38 apiece, down almost 4 per cent.
The mainboard-listed company on Monday reported earnings of $7.2 million for the second half, compared with a net loss of $2 million in the corresponding period a year ago.
This came on the back of revenue totalling $607.3 million, which was up 14.7 per cent from a year ago, as travel continued to recover with the easing of border restrictions.
Food solutions revenue increased by 10.8 per cent to $330.6 million, while gateway services revenue grew 19.5 per cent to $275.2 million.
However, expenditure soared 29.8 per cent to $653.9 million as the group ramped up operations to support the travel recovery.
The rise in expenses was largely driven by increased headcount, higher contract services and tapering government grants. Staff costs jumped 56.5 per cent or $110.9 million in the period.
As a result, Sats recorded an operating loss of $46.6 million in the second half.
This brought Sats' full-year earnings to $20.4 million compared with a loss of $78.9 million a year ago, with revenue rising 21.3 per cent to $1.2 billion over the same period.
Sats did not recommend a final dividend for FY2021-22.
"This will allow the company to preserve cash as we ramp up operations to support our customers as aviation volumes resume, and to pursue new opportunities outside of aviation," it said in a bourse filing.
"Sats will continue to grow new revenue streams and to strengthen capabilities to ensure the growth and sustainability of our businesses across the value chain," said Sats president and chief executive Kerry Mok.
Brokerage DBS said in a report yesterday that it believes recovery in the travel segment will gain traction over the coming quarters.
Still, the research team warned that costs could continue to rise, which could dampen earnings recovery over the short term.
It added that other aviation counters such as Singapore Airlines and ST Engineering are better positioned to deal with rising inflation.
THE BUSINESS TIMES