Sats may reward shareholders with special dividend if there’s spare cash

[SINGAPORE] Air freight handler and in-flight caterer Sats may pay out a special dividend or buy back shares when it has the spare cash.

Kerry Mok, CEO of Sats, said that if the company has spare cash after ordinary dividend payment and capital expenditure, it could issue special dividends or conduct a share buyback.

He was speaking at Sats’ FY2026 earnings briefing on Tuesday (May 26).

The company pays out 30 to 40 per cent of its net profit as dividends to balance rewarding shareholders with capturing investment opportunities.

Mok said that this is important because Sats has “a lot of growth opportunities”, including investments in artificial intelligence and new geographies, as well as refreshing its assets.

“(When) you are the market leader, the opportunities knock on your door; and we need to be nimble enough to look at those opportunities to grab them when they are there,” he added. “So we do need to make sure we have a balanced approach (to) how we actually manage our capital allocation.”

Sats has proposed a final dividend of S$0.05 a share, up from S$0.035 a year earlier. The full-year dividend will be S$0.07 a share – 40 per cent more than in the preceding year – if the interim dividend of S$0.02 is included.

Sats reported a net profit of S$50.7 million for the three months ended Mar 31, up 31 per cent from S$38.7 million in the corresponding year-ago period.

Revenue rose 9.8 per cent year on year to S$1.6 billion, from S$1.5 billion previously. Earnings for the full year stood at S$285.2 million, up 17 per cent. The top line grew by 9 per cent to about S$6.3 billion.

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Mok said that one of Sats’ focuses is its specialised services. “For the same tonnage that we put on board the plane, we want to touch it earlier, so we’re going to help our customers build the pallets, handle their product earlier,” he explained.

“And then we have them shipped... into the aircraft itself, and then when they land at the destination – where it’s a node of ours – again, we’re going to help them with the clearance, we’ll have them in the last-mile transportation.”

The company is eyeing India, where the market may need such a multi-modal approach.

Meanwhile, it is watching input costs in an inflationary environment. It will mitigate the pressure with measures including increasing efficiency and productivity as well as passing through some costs to customers – especially those whose contracts are up for renewal.

The takeover of freight handler Worldwide Flight Services in 2023 has expanded Sats’ network, allowing it to capture more business from the same customer. It has 225 stations across 27 countries, spanning cargo, ground handling and specialised services.

“When you are not present in those airports, then when the flow goes (there), you have no revenue flow,” Mok noted.

He pointed out the importance of having more stations and the largest network, especially if they are key nodes. If a customer reroutes, they will consider key nodes.

Looking ahead, the CEO said that he is confident of achieving the FY2029 targets, including S$8 billion in revenue and an over 20 per cent margin for earnings before interest, tax, depreciation and amortisation (Ebitda).

For FY2026, it achieved an 18.1 per cent margin for Ebitda.

Shares of Sats rose 5.6 per cent or S$0.19 to close at S$3.56 on Tuesday.