SATS Q4 net profit up 31.4% to S$66.6m

Singapore

NET profit at SATS rose 31.4 per cent to S$66.6 million, or six Singapore cents per share, in the final quarter of the financial year to March 31, 2017. This comes as the food solutions and gateway services provider said that it will plan on expanding into new locations for the coming year.

Shareholders responded to the results, released before Friday's market opening, by pushing its share price higher. SATS's shares were up by 0.95 per cent to close at S$5.29 on Friday.

Underlying net profit was up by a smaller 1.8 per cent to S$51.6 million, the food solutions and gateway services provider said in its earnings report. This sum strips away one-off items such as a S$15 million negative goodwill from Evergreen Sky Catering Corp. Revenue grew 2 per cent to reach S$425.8 million, mainly driven a 3.6 per cent rise to S$190.4 million in revenue from its gateway services. Revenue from food solutions rose 0.7 per cent to S$233.9 million.

Expenses increased by 3.3 per cent to S$380 million. This was largely due to a 22.5 per cent, or S$5.2 million, jump in company premise and utilities expenses, which were attributed to higher maintenance costs, utilities and the absence of rental rate adjustments made in the same quarter last year.

For the full year, net profit was up by 16.9 per cent to S$257.9 million. Underlying profit rose 7.4 per cent to S$234.3 million. This gives an earnings per share of 23.2 cents for the full year. Revenue for the year was up by 1.8 per cent to S$1.73 billion. Expenditure increased by one per cent to S$1.5 billion.

Looking ahead, SATS said that the pressure on airline yields could lead to lower margins. This comes as uncertainties in world trade flows and intense competition continue to batter the aviation industry. SATS said that with its strategy of "connecting and feeding Asia", it can ride on the growth in air travel, e-commerce and high demand for high-quality, safe food. SATS also said that it will make further investments in capital and new business opportunities in additional locations in the coming year.

A final dividend of 11 Singapore cents per share was proposed. Including the interim dividend of six cents per share, total dividend will be at 17 cents per share, up from 15 cents last year. An AGM will be convened on July 21, and book closure date is on July 28. The proposed final dividend will be paid on Aug 11.

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