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Singapore Airlines Ltd’s Latest Earnings: Smooth Take-Off For The Year

Singapore Airlines Ltd  (SGX: C6L), the flag carrier of Singapore and one of the most reputable airlines companies in the world, recently released its earnings update for the financial year ended on 31 March 2018. Let’s take a quick look at 10 important highlights from its earnings update:

1. Over the fourth quarter of the financial year, the group received a total of S$4.0 billion in revenue. This was a 8.2% increase from a year ago. Expenditure increased by 3.2% to S$3.8 billion from S$3.7 billion the same period last year. Operating profit surged 677% to S$214.5 million from S$27.6 million last year.

2. For the full financial year, the group’s revenue increased S$938 million or 6.3% to S$15.8 billion. Expenditure increased 3.5% to S$14.7 billion. Full-year operating profit came in at a new record of S$1.1 billion, a 69.7% jump from the previous year. Full-year earnings per share was 75.3 Singapore cents.

3. Management said that the increase in revenue was driven by improvements in all business segments. Passenger flown revenue increased S$428 million or 3.6%, while cargo revenue grew S$266 million. Revenue from engineering services, likewise, grew S$52 million or 12%.

4. Here is a table of the breakdown of the group’s operating profit:

Source: Singapore Airlines FY17/18 Press Release

5. As shown from the table above, the group reported broad-based growth except for its regional carrier, SilkAir. This was because higher expenditures outpaced revenue gains. However, besides this, both Scoot and its parent airline company, Singapore Airlines, reported strong growth in both revenue and operating profit.

6. As of 31 March 2018, Singapore Airlines parent company had a total of 107 airlines. Scoot ended the financial year with 40 aircraft, while SilkAir had 32 aircraft in operation.

7. Overall, the SIA group plans to increase its capacity by 8% in financial year 2018/19. This will include a capacity growth of 5% for Singapore Airlines parent company, 9% capacity growth for SilkAir and 17% capacity growth for Scoot.

8. As of 31 March 2018, the group had shareholder equity of S$14.6 billion, higher by 8.6% from a year ago. The group had a net asset value of S$12.05 per share.

9. On the outlook for the year ahead, Singapore Airlines’ management said:

“Despite stronger advance passenger bookings for the coming months and a continued stabilisation in yields, intense competition in key operating markets and cost pressures remain. Fuel prices have been trending higher and volatility is expected to persist in the months ahead. The overall demand outlook for cargo remains moderately positive, but is subject to geopolitical uncertainties, which may have implications on global trade. The first year of the SIA Group’s three-year transformation program has shown good progress. The next two years of the program will further build on initiatives around enhancements to the customer experience, revenue growth and improvements in operational efficiency. The recent Digital Innovation Blueprint launch will complement the transformation effort, aiming to establish the Group as a digital innovation leader in aviation and travel experience through greater value creation for customers and businesses.”

10. At the time of writing, shares of Singapore Airlines exchanged hands at S$11.65. This translates to a price-to-earnings ratio of 15.5, a trailing dividend yield of 3.4% and a price-to-book ratio of 0.96.

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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 Jeremy Chia doesn’t own shares in any companies mentioned.