5 Negative Points From Singapore Airlines Ltd’s Latest Earnings Investors Should Know

Singapore Airlines Ltd (SGX: C6L) runs the flagship carrier of Singapore. But beyond that, it also has other airline businesses such as SilkAir and the budget carrier Scoot. Singapore Airlines also has a subsidiary, namely, SIA Engineering Company Ltd (SGX: S59) that specialises in providing aircraft maintenance, repair, and overhaul services.

Two weeks ago, Singapore Airlines reported its fourth quarter and full year results for its fiscal year ended 31 March 2017 (FY16/17). Here are five negative takeaways from the latest earnings announcement investors may want to know:

1. A fall in revenue and profit

In FY16/17, Singapore Airlines experienced a 2.4% fall in revenue to S$14.87 billion. The bottom-line fared worse though, as profit attributable to shareholders sunk 55% to S$360.4 million.

2. Weaker operating metrics

The Singapore Airlines company’s namesake airline reported weaker operating metrics in FY16/17. Here’s a snapshot:

Source: Singapore Airlines FY16/17 full year earnings presentation

The company’s lower revenue for the fiscal year was largely due to declines in its main airline’s passenger yield and load factor.

3. Higher operating costs

Although Singapore Airlines’ total operating cost declined by S$311.8 million in FY16/17, this was driven mainly by lower fuel costs (this expense fell by S$779.5 million).

Excluding fuel costs, the company’s operating costs would have increased by $467.7 million instead, when comparing FY16/17 to FY15/16.

4. A weakening balance sheet

As of 31 March 2017, Singapore Airlines had S$3.38 billion in cash and equivalents and borrowings of S$1.57 billion. This is a strong balance sheet. But, it represents a step backward from a year ago when there was S$3.97 billion in cash and equivalents and S$1.35 billion in borrowings.

5. A lower dividend

Singapore Airlines declared a final dividend of S$0.11 per share for FY16/17, over 70% lower compared to the previous fiscal year’s final dividend of S$0.35 per share. As a result, the full year dividend for FY16/17 is S$0.20 per share, down sharply from FY15/16’s dividend of S$0.45 per share.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.