SATS – BT

Sats Q1 profit rises 9.7% to $44.3m

Revenue up 8.6% at $382.1 million as all businesses, divisions perform well

SINGAPORE Airport Terminal Services lifted its first quarter net profit by 9.7 per cent to $44.3 million as all businesses and divisions delivered growth.

The rise in earnings attributable to equity-holders came as topline revenue climbed 8.6 per cent to $382.1 million, from $351.7 million, during the April-June 2010 quarter, thanks to higher aviation revenue, improved UK food sales and higher sales from Singapore non-aviation food.

Share of profits from associated companies – primarily from joint ventures in Hong Kong and Indonesia – jumped 62 per cent to a record $14.7 million.

This helped particularly when group operating profit was weighed down 6 per cent to $41.2 million as raw material costs and staff costs rose (the latter partly due to the run-out of the Jobs Credit Scheme, which amounted to $6.1 million last year).

The rise in costs did result in a slight margin squeeze, with operating margin down to 10.8 per cent, versus 12.4 per cent a year earlier. But net margin remained stable at 11.6 per cent.

The company was sitting on a strong balance sheet, with cash balance of some $224.1 million as at June 30.

The results translated into earnings per share of 4 cents, compared with 3.7 cents a year earlier. Net asset value per share was $1.39 at end-June, versus about $1.36 three months earlier.

In terms of business spread, food solutions accounted for 43.5 per cent of revenue, while gateway services accounted for 34.5 per cent, and UK food business 21.3 per cent.

Aviation still accounted for close to 60 per cent of revenue by segment, while food accounted for 40 per cent.

The company handled 8.65 million passengers (up 13.8 per cent year-on-year) and 368,000 tonnes of cargo (up 12.8 per cent) during the quarter.

Singapore has the lion’s share going by geographical contribution, at 76.3 per cent, while the UK business, led by Daniels, was 21.3 per cent.

Chief executive Clement Woon attributed the good showing to proper implementation of its multi-pronged growth strategy and the recovery in the aviation operating environment.

‘The group’s aviation business is expected to improve further with the continued economic recovery in Asia,’ said Mr Woon.

‘Increased passenger traffic is anticipated in the coming quarters as full-service carriers continue to fill up seats, improve their yields and add more flights.

‘Cargo volumes are expected to align with the projected slower economic growth during the second half of 2010.’

The Singapore and UK food markets are expected to remain stable this year despite rising costs.

‘Come next month, Sats’ Food Solutions division will be participating in the Singapore Youth Olympics that will allow the group to showcase its competencies,’ he added.

Sats noted that the outlook for the Singapore tourism and hospitality sectors ‘remain vibrant’ with the 2010 F1 Singapore Grand Prix taking place in September and the progressive completion of the integrated resorts.

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