SATS Posts Improvement in Net Profit

SATS logo SATS Limited (SGX: S58) released its First Quarter of Financial Year 2014 (1Q 2014) results yesterday.

Overall revenue for 1Q 2014 fell 0.8% year-on-year to $434.5 million. The revenue from gateway services, which includes cover passenger services, apron services and air cargo handling, reported revenue growth of 7.9% while revenue from food solutions, which includes in-flight catering, commercial catering, food production and food distribution, among others, was lower by 5.6%, due mainly to decline in TFK’s business volume.

Operating profit rose 3.6% from a year ago to $40.7 million. This was attributed to the cost saving initiatives undertaken by the Group.

SATS made a one-off impairment provision of $1.7 million for assets held for sale.

Profit attributable to owners of the Company was at $46.2 million, an increase of 11.9% year-on-year. Excluding the $1.7 million impairment provision for assets held for sale, underlying net profit would be at $47.9 million, an improvement of 16%.

The cash flow from operating activities was at $71.8 million for 1Q 2014. This was a 12% improvement over the previous year. Free cash flow generated amounted to $59 million.

No dividends were declared for 1Q 2014.

A Foray into the Operations

In 1Q 2014, both flights handled and unit services rose 9% year-on-year as a result of increased flights from full-service and budget carriers. Cargo throughput grew for the second consecutive quarter by 3.2% mostly due to new contract wins. The number of passengers handled increased 5.9% to 10.61 million.

A Foray into the Future

SATS sees recent a moderation in passenger traffic growth and continued downward trend for airfreight. These trends are expected to persist in the near term for the aviation industry, in view of the sluggishness in the global economy.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.