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Sats posts 14% fall in Q3 net profit of S$59.3m
MAINBOARD-LISTED aviation services provider Sats has warned that its short-term financial performance could take a hit from the Covid-19 outbreak, while turning in a fall in third-quarter earnings on the back of higher staff, raw material and other costs.
Net profit was down 13.9 per cent year-on-year to S$59.3 million for the three months to Dec 31, 2019, even as revenue grew by 17.6 per cent to S$545.6 million.
The higher turnover came on growth in both the food solutions and gateway services segments, Sats said in financial statements released on Thursday, as it consolidated new units such as Country Foods Pte Ltd and Nanjing Weizhou Airline Food Corp.
Contributions from the newly added Ground Team Red Holdings Sdn Bhd and Ground Team Red Sdn Bhd in gateway services also helped to stem the bloodshed from decreases in cargo volume and ship calls.
But the new subsidiaries also raised staff and raw material costs, while fuel, digitalisation projects, and higher maintenance and hiring expenses for ground support equipment pushed up costs, Sats said.
Earnings per share shrank to 5.3 Singapore cents from 6.2 cents, while net asset value was 144.8 Singapore cents a share against 148 cents as at June 30, 2019.
The group noted in its outlook that it has enhanced its revenue base with recent investments in overseas kitchens in Japan and China, and ground handling investments in India, Malaysia and Saudi Arabia.
As for the effect of the Covid-19 epidemic that began in Wuhan in end-2019, there has already been a marked decline in Chinese air traffic and passenger and cargo volumes across Asia.
"Depending on the duration of this epidemic, there will be consequential impact on the short-term financial performance," the company warned, even as it added that it "is in a strong position to weather the disruption to our business with resilience".
For the nine months, net profit fell by 12 per cent to S$174.7 million, despite the 11.2 per cent increase in revenue to S$1.51 billion.
No dividend was recommended for the period as Sats makes payouts on a half-yearly basis.
Sats shares fell S$0.03 or 0.66 per cent to S$4.54 on Thursday before the results were released.