Sats Q2 net profit rises 2.8% to S$81.1 million on higher cargo and meal volumes

[SINGAPORE] Air cargo handler and airline caterer Sats posted a 2.8 per cent rise in net profit to S$81.1 million for its second quarter ended Sep 30, from S$78.9 million in the previous corresponding period.

This came on higher cargo and meal volumes and lower tax expenses, even as the Middle East conflict raised input costs and disrupted operations, the mainboard-listed group said in a regulatory filing on Wednesday.

Earnings per share stood at 5.4 Singapore cents for the quarter, up from 5.3 Singapore cents the year before.

The board declared an interim dividend of 2 Singapore cents per share for the first half, unchanged from the year before. It will be paid on Dec 10, with books closing on Nov 20.

Revenue for the quarter rose 9 per cent to S$1.71 billion, from S$1.57 billion. Operating profit fell 7.6 per cent year on year to S$145.4 million, as higher input costs from the Middle East conflict were set against a high base.

The prior-year period benefited from tariff-related front-loading and a temporary efficiency gain on higher volumes.

THE BUSINESS TIMES INSIGHTS

Powering Asean's Future 2026

Find out how enterprises are navigating power constraints and sustainability targets

ACCESS THE INSIGHTS

The share of earnings from associates and joint ventures fell 6.4 per cent to S$25.8 million on lower business volumes.

Compared with the first quarter, operating profit rose 8.7 per cent, with margin improving to 8.5 per cent from 8 per cent on focused cost management.

Segment performance

Gateway services revenue rose 10 per cent to S$1.3 billion, with cargo revenue up 10.9 per cent to S$900.4 million and ground handling revenue up 8 per cent to S$436.2 million.

SEE ALSO

UOBKH ‘Alpha Picks’ beats STI in August due to large-caps; Sats in for September

Food solutions revenue rose 5.6 per cent to S$376.5 million on stronger aviation and non-aviation meal demand.

Cargo volumes processed rose 8 per cent to 2.6 million tonnes, led by a 19.4 per cent increase in the Americas.

Sats said its cargo volumes have outpaced industry growth for the 12th consecutive quarter.

For the half year, net profit rose 4.3 per cent to S$156.2 million, from S$149.8 million.

Basic earnings per share was 10.5 Singapore cents, up from 10.1 Singapore cents.

Revenue for the half year rose 10.1 per cent to S$3.39 billion, from S$3.08 billion.

Operating profit fell 1.2 per cent to S$279.2 million, with margin at 8.2 per cent against 9.2 per cent.

The share of earnings from associates and joint ventures fell 13.2 per cent to S$52.6 million on lower business volumes and non-recurring provisions in the first quarter.

Revenue from the gateway services segment rose 11.4 per cent to S$2.67 billion, from S$2.39 billion. Its operating profit fell 1.5 per cent to S$230.5 million, from S$234.1 million.

Revenue from the food solutions segment rose 5.5 per cent to S$722.5 million, from S$684.8 million, while its operating profit rose 12.3 per cent to S$74.9 million, from S$66.7 million.

Outlook

Sats expects demand across its network to remain resilient, with volumes supported by new customer wins and network expansion. The pace will depend on how the Middle East conflict and trade conditions evolve.

It said operating costs remain under pressure industry-wide from higher energy prices, but it views these as transient rather than structural.

In the food solutions segment, input costs are likely to stay elevated in the near term, though the margin impact should moderate as contractual repricing cycles take effect.

President and chief executive Kerry Mok said the group is confident of navigating near-term headwinds, with a focus on disciplined cost management and prudent investment.

Shares of Sats closed S$0.10 or 2.6 per cent higher at S$4 on Wednesday before the announcement.