SATS reports fiscal 2Q swung to net profit despite decline in passenger flights

SATS Gateway Services bus at Changi AirportSATS Gateway Services bus at Changi Airport
  • SATS swung to fiscal second quarter net profit
  • Without government assistance, SATS would have posted a loss
  • Increased cargo tonnage boosted revenue

SATS reported Friday its fiscal second quarter swung to a net profit of S$6.8 million from a year-ago loss of S$33.2 million, on government relief and on growth in cargo, non-travel food and security services.

However, the company noted that without government assistance, it would have posted a net loss of S$30.1 million for the quarter, compared with a year-ago net loss of S$105.1 million.

Revenue for the three months ended 30 September grew 27.2 percent on-year to S$293.9 million, the food and gateway services provider said in a filing to SGX.

“Air travel declined further this quarter due to the spread of the Delta variant,” SATS said, pointing to IATA data showing industry-wide revenue passenger-kilometers in September dropped 53 percent on-year.

The IATA data showed global cargo tonne kilometers in September were 9.1 percent above pre-Covid September levels, SATS said.

“SATS continued to benefit from the stable increase in cargo volumes and its successful expansion into non-travel food segments,” the filing said.

For the second quarter:

  • SATS Food Solutions offset lower aviation volume with growth in non-travel food; its revenue increased 16.8% on-year, or by S$23.4 million, to S$163 million.
  • SATS Gateway Services posted revenue jumped 48.4 percent on-year to S$130.3 million on increased cargo tonnage, the resumption of cruise ship calls, and the growth in security services.
  • Non-travel related businesses posted a 27 percent growth in revenue on-year to represent 47 percent of total revenue.

SATS said it would not be prudent to declare a dividend due to “persistent and significant uncertainties” in the operating environment.

“This will allow the company to preserve more jobs and capabilities to support our customers as aviation volumes resume, and to pursue opportunities outside of aviation,” the company said.

Outlook

SATS pointed to Singapore’s launch of vaccinated travel lanes (VTLs) and the easing of border restrictions regionally as starting to boost aviation volumes.

“While SATS reshaped operations at the start of the pandemic to grow non-travel related revenues, we made sure that we retained deep domain capabilities to support this rebound in travel,” the company said.

Read more details on SATS’ earnings announcement.