Sats posts profit for Q4, but is in the red for full year

Singapore

GROUND-HANDLER and in-flight caterer Sats has marked "another milestone" in its recovery from the pandemic as it reported its first net profit in five quarters, due to year-on-year (y-o-y) revenue growth from non-travel-related businesses and a smaller cost base.

The mainboard-listed group saw the bottom line for the fourth quarter ended March 31 swing into net earnings of S$800,000 from a net loss of S$6.3 million a year ago.

Excluding the one-off impairment and write-back as well as S$51.2 million of government reliefs, the group would have posted a loss of S$33 million.

As with other players in the industry, the most resilient aviation-related segment for Sats was freight as tonnage was down only by 12.4 per cent year on year.

Freight associates in Hong Kong, Mumbai, and Ho Chi Minh City were all profitable in Q4.

Alex Hungate, Sats CEO, said at an earnings call on Thursday evening that the group was experiencing a steeper rate of recovery in "probably the worst year that Sats has ever had to contend with".

The core loss without one-off items and government reliefs had shrunk from S$106.5 million in the first quarter to S$73.5 million in the second quarter and then to S$52.8 million in the third quarter.

Mr Hungate attributed the improvement to significant cuts to Sats' cost base and the growth of 32 per cent y-o-y in revenue from non-travel-related businesses for Q4. The segment revenue was 38 per cent higher for FY2021.

Sats has found traction in non-travel-related business, which includes offering security services beyond the aviation sector, Mr Hungate said.

It also has garnered more non-aviation food orders including those from the government agencies such as the Ministry of Home Affairs.

Mr Hungate said Sats' growing non-travel-related business is not subject to the same uncertainty arising from the pandemic. "We believe that we can continue to generate fast-paced, organic, and acquisitive growth in this space."

Earnings per share for the quarter were 0.1 Singapore cent, compared with a loss per share of 0.6 cent the previous year.

The dynamic pandemic has led its top line for the quarter to decline 35.7 per cent year on year to S$278.5 million, dragged by its gateway services and food-solutions segments as low aviation volumes persisted due to heightened travel restrictions.

Gateway services revenue declined 32.4 per cent to S$125.2 million; food solutions revenue dipped 37.4 per cent to S$154.7 million for the quarter.

For the full year, the group swung into a net loss of S$78.9 million from a net profit of S$168.4 million the previous year.

Full-year loss per share stood at 7.1 cents versus earnings per share of 15.1 cents last year.

Without government relief, the group would have posted a loss of S$320.8 million for FY2021.

Given the group required reliefs from the government to remain profitable as well as to generate positive cash flows, Sats would not be paying a final dividend.

Full-year top line was halved to S$970 million, compared with S$1.94 billion the previous year.

Net asset value per share as at March 31 was S$1.38, marginally lower than the S$1.45 a year ago.

Sats shares ended 2.93 per cent higher at S$3.86.