Sats Q1 net profit up 6% at S$75.1 million on cargo growth
Increase in net profit is partially supported by lower interest expense
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[SINGAPORE] Sats on Wednesday (Aug 19) posted a S$75.1 million net profit for the first quarter, up 6 per cent from S$70.9 million in the year-ago period.
The increase in net profit is partially supported by lower interest expense, said the provider of gateway services and food solutions.
Earnings per share rose to S$0.051, from S$0.048 in the same period of the previous year.
Revenue for the group rose 11.3 per cent to S$1.7 billion, from S$1.5 billion in the year-ago period. Driving the increase in revenue is a 8.6 per cent cargo volume growth.
“Strong cargo volume growth in all regions amid ongoing geopolitical instability reflects our agility in capturing shifting trade flows,” noted Sats in its bourse filling.
Cargo processed in Asia-Pacific increased by 8.5 per cent, while that in Europe, Middle East and Africa grew 8.2 per cent. The Americas region grew 9.5 per cent.
“The Middle East conflict has disrupted activities at certain stations, affecting cargo and flight flows, but rerouting through alternative corridors also created opportunities in parts of our network, reflected in our strong year-on-year volume growth as a group,” it noted.
Additionally, the increase in revenue was also attributed to a 4 per cent increase in flights handled.
The Europe, Middle East and Africa region had a 11.3 per cent growth, while the Americas region grew 15.5 per cent. The increase in the Americas region is due to a new contract win which commenced in January this year.
However, flights handled in the Asia-Pacific region dipped 5.1 per cent. The group attributed the fall to volume reductions due to high fuel costs.
“Sats’ first-quarter revenue performance increased despite ongoing geopolitical developments, reflecting the resilience of our diversified global network and business portfolio amid an uncertain operating environment,” said Kerry Mok, Sats’ president and CEO.
Operating cash flow after lease payments nearly halved to S$23.2 million.
Cost impact could deepen in coming quarters
However, the group noted that geopolitical tensions and supply chain disruptions have resulted in increased fuel, transportation and other operating costs across the supply chain.
“As these costs typically flow through with a lag, their financial impact could be more pronounced in the coming quarters should the current situation persist,” said the group.
Mok added: “While geopolitical uncertainties and rising cost pressures persist, a strong pipeline of opportunities and continued investments in strategic capabilities position us well to deliver long-term value for shareholders.”
The group recently secured new contracts with Air France-KLM at New York’s John F Kennedy International Airport and another with Singapore Airlines at Malaysia’s Kuala Lumpur International Airport.
“Sats remains well positioned through its diversified global network, enabling us to adapt to shifting trade flows and support customers with resilient end-to-end solutions,” the group noted.
Shares of Sats closed 0.2 per cent or S$0.01 higher at S$4.77 on Wednesday, before the results were announced.
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