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SATS Ltd’s Mixed Track Record In Growing Its Business

SATS Ltd (SGX: S58) is a company with two business segments: Food Solutions and Gateway Services. The Food Solutions segment covers airline catering, food distribution, and industrial catering whereas the Gateway Solutions segment is involved in ground handling services of passengers, flights, and cargo.

One of the things that I like to do when analysing a company is to study its track record. The past is no guarantee of the future. But historical information is the most reliable thing that we can use as our basis to forecast what lies ahead.

And this brings me to the main purpose of this article, which is to have a quick overview of SATS’s historical business growth. The table below is a snapshot of the company’s important financial metrics from FY2013-14 (the financial year ended 31 March 2014) to FY2017-18:


Source: SATS FY2017-18 Annual Report

Here are a few notable points:

1. Revenue had declined by 3.5% from S$1.787 billion to S$1.725 billion over the entire period under observation.

2. Operating profit grew by 7.3% annually – or 32.4% in total – from S$171.0 million in FY2013-14 to S$226.4 million in FY2017-18. Profit after tax climbed at an even stronger pace of 9.8% per year, while diluted earnings per share (EPS) stepped up at a similar pace of 45%.

3. SATS’s dividend per share has increased by 38.5% in all from S$0.13 per share in FY2013-14 to S$0.18 per share in FY 2017-18.

In sum, SATS has delivered a mixed track record of growth in the last five years. On one hand, its revenue had declined marginally. On the other hand, its profit and diluted EPS grew faster, mainly due to improvements in SATS’s efficiency, and growth in the company’s share of results from associates and joint ventures. The respectable bottom-line performance from SATS has also helped the company in increasing its dividend payments during the period.

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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. The Motley Fool Singapore has a recommendation on SATS Ltd.