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Sats Q2 earnings dip 9% to S$65.7 million due to one-time gain absence

SECOND-QUARTER earnings for ground handler and in-flight catering services provider Sats came in at S$65.7 million or 9 per cent lower from S$72.2 million a year ago. 

This was the result of the absence of a one-time S$7 million gain on disposal of assets as well as lower contribution from associates and joint ventures. Excluding the one-off item, Sats' net profit for the three months ended September would have been 0.8 per cent or S$500,000 higher than a year ago.

Weaker net profit for the second quarter translated to a lower earnings per share at 5.9 Singapore cents, down from 6.5 Singapore cents in the corresponding period a year ago.

Notwithstanding the lower net profit, the Straits Times Index constituent generated a higher revenue of S$453.1 million, up 4.2 per cent from S$434.8 million last year. This was achieved on the back of increased volume growth in food solutions and gateway services. Food solutions’ revenue rose S$6.1 million or 2.5 per cent to S$250.9 million, while gateway services’ revenue was higher by S$11.9 million or 6.3 per cent at S$201.6 million.

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Excluding the deconsolidation impact of Sats HK, the group's second-quarter revenue would have improved S$22.2 million or 5.2 per cent, with gateway services’ revenue reflecting a higher growth of S$15.8 million or 8.5 per cent.

For the half year, Sats' net profit inched up 0.1 per cent from S$129.5 million to S$129.6 million year-on-year. Earnings per share remained unchanged at 11.6 Singapore cents.

Revenue grew 3.6 per cent from S$861.3 million to S$892.5 million, underpinned by volume growth in both food solutions and gateway services. 

Revenue contribution from food solutions was higher by S$12.5 million or 2.6 per cent to S$490.4 million, while gateway services’ revenue improved S$18.4 million or 4.8 per cent to S$401.2 million. Excluding the impact of deconsolidation of Sats HK, the group’s underlying revenue would have increased S$46.8 million or 5.5 per cent.

Sats has declared an interim dividend of six Singapore cents per share, on a par with last year’s. The dividend is payable on Dec 7.

Sats' chief executive officer Alex Hungate said in an earnings conference call that in the near term, trade tensions and weakening sentiment are impacting emerging market currencies and trade volumes. At the same time, higher oil prices and competition in the airline industry will continue to result in pricing pressures on Sats. Despite these, with aviation volumes and demand for safe and quality food set to increase, the group intends to pursue organic and inorganic growth opportunities.

Shares of Sats closed at S$5.11 on Thursday, up 12 Singapore cents, before its financial results were announced.