Revenue Dips for SATS

SATS logo SATS Limited (SGX: S58), the leading provider of gateway services and food solutions for the airline industry in the region, saw a revenue dip of 2.0% for its second quarter of 2013 (2Q 2013).  SATS serves airlines companies such as Singapore Airlines (SGX: C6L) and Tigerair (SGX: J7X).

The revenue went down to S$452.1 million in 2Q 2013 from S$461.5 million in the previous year. The revenue from gateway services rose 5.1% to $169.8 million while food solutions revenue declined 5.9% to $281 million, mainly due to lower revenue reported by TFK Corporation, arising from the weaker Japanese Yen. SATS Ltd acquired Japan Airlines International’s entire stake of 50.7% in TFK back in December 2010. The net profit was $48.7 million, 3.2% lower than that seen last year.

For the quarter, the company generated S$15.6 million in cash flow from operations versus that of S$35.6 million generated in the previous year. The dip in cash flow was mainly due to working capital changes.

As of 30th September 2013, SATS sits on a cash balance of $394.5 million. It has a total loan of $122.2 million and the debt-to-equity ratio is at a healthy 0.09 times.

For the half year ended 30 September 2013, Group revenue declined 1.4% year-on-year to $886.6 million while the net profit increased 3.6% to $94.9 million.

The company deems the operating environment to remain challenging due to “uncertain global economic climate and pressure on aviation industry profitability.”  The company went on to say that, “Changi Airport’s air traffic statistics continue to suggest moderate passenger traffic growth and weak demand for air freight for the full year.”

SATS declared an interim dividend of 5.0 Singapore cents per share. The shares of the company exchanged hands at S$3.40 on Tuesday. The company is trading at a historical PE of around 20 and sports a dividend yield of 3.2%.

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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.