SATS posts 14.5% rise in Q1 earnings to S$49.6m

Singapore

GROUNDHANDLER and food solutions provider SATS reported a 14.5 per cent year-on-year rise in net profit to S$49.6 million for the first quarter ended June 30, boosted by lower expenses, higher contributions from associates/joint ventures as well as a net gain from the transfer of business to a joint venture.

This was despite revenue falling 4.2 per cent to S$416.9 million, resulting from an 8.2 per cent reduction in its food solutions revenue, which was partially offset by a 2 per cent increase in gateway services revenue.

The drop in revenue for its food solutions business came on the back of lower contributions from Japan-based catering unit TFK due to the weaker yen, the divestment of Urangan Fisheries last year as well as the transfer of the food distribution business to a new joint venture company, SATS BRF Food (SBRF).

Earnings per share rose to 4.5 Singapore cents, versus 3.9 cents a year earlier.

Underlying net profit - which strips out the net gain of S$2.5 million from the transfer of business and an impairment loss - came to S$47.1 million, up from S$43.4 million.

During the quarter, expenditure eased from S$395.5 million to S$372.9 million due in part to lower staff costs and the decreased cost of raw materials. This contributed to an operating profit of S$44 million, up from the previous corresponding quarter's S$39.7 million.

Share of results of associates/joint ventures rose to S$12.8 million, up 23.1 per cent, boosted by higher profit contributions from both food and gateway associates/JVs.

"Competition between airlines in Asia continues to be intense amid relatively low growth in air traffic in the near term," said SATS. "Despite slower economic growth and rising manpower costs, the structural growth prospects of Asia remain strong with rapid urbanisation and growth of the middle class."

It added that it is making good strides with its efforts to boost productivity through scale and connectivity, as well as by launching new ventures to support future growth.

Shares in SATS closed unchanged at S$3.68 on Thursday.