SATS fiscal 3Q net profit rises nearly 4 percent, beating forecast from Daiwa

Singapore Changi Airport Terminal 4 departure boardSingapore Changi Airport Terminal 4 departure board

SATS reported on Wednesday its fiscal third quarter net profit increased 3.5 percent on-year to S$68.9 million on volume growth in its Food Solutions and Gateway Services segments. The results beat a forecast from Daiwa.

Revenue for the quarter ended 31 December increased 5.5 percent on-year to S$464.0 million, it said in a filing to SGX after the market close on Wednesday.

For the fiscal third quarter, Daiwa forecast adjusted net profit of S$67.6 million on revenue of S$457.4 million.

Food Solutions’ revenue increased 5 percent on-year in the quarter to S$252.4 million, as all the core catering subsidiaries in Singapore, China and Japan saw growth, SATS said.

Gateway Services’ revenue rose 6.2 percent on-year to S$211.3 million, on increased contributions from SATS ground services at Singapore Changi Airport terminal 4 and at the cruise terminal operatioins at Marina Bay Cruise Centre Singapore, it said.

The share of after-tax profit from associates and joint ventures rose 51.1 percent on-year in the quarter to S$20.7 million, on higher contributions from Gateway Services’ associates and joint ventures, it said. There was also a gain of S$5.8 million in DFASS SATS for disposing of the business to KrisShop, which is a joint venture between Singapore Airlines, SATS and DFASS (Singapore) for travel retail business, the filing said.

For the nine-month period, SATS reported net profit increased 1.2 percent on-year to S$198.5 million on revenue of S$1.36 billion, up 4.3 percent on-year.

That was broadly in line with full-year forecasts from analysts. Maybank KimEng had forecast full-year net profit S$270.6 million on revenue of S$1.77 billion, while OCBC had forecast full-year net profit of S$253.8 million on revenue of S$1.83 billion.

In its outlook, SATS was upbeat.

“Despite the slowdown in the global economy, increasing volumes in the aviation industry and strong demand for convenient food in Asian cities are creating growth opportunities for SATS,” the company said.

“China is a key market for us for scale and connectivity, and we have invested in ground and cargo handling, and catering operations at the new Daxing International Airport in Beijing,” it said. “Furthermore, we are building new central kitchens in China to supply fast casual restaurant chains in key cities.”

SATS offers gateway services, including airfreight handling, passenger services, baggage handling, aviation security services and aircraft cleaning. Its Food Solutions segment includes catering for airlines and institutions.

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