The Motley Fool

SATS Ltd Just Reported Earnings — Here’s What You Should Know

On Wednesday, SATS Ltd (SGX: S58) released its third-quarter earnings update for FY18-19. SATS provides food solutions and gateway services solutions. The food solutions segment covers airline catering, food distribution, and industrial catering, and the gateway solutions segment includes ground handling services of passengers, flights, and cargo.

Here are ten things investors should know about SATS’s latest results:

  1. Revenue for the quarter was up by 5.5% year on year to S$464.0 million.
  2. Operating profit was down marginally by 0.6% to S$65.3 million, mainly due to higher expenditures.
  3. The conglomerate’s operating margin fell from 14.9% last year to 14.1% in this quarter.
  4. Associates and joint venture’s profit after tax contribution jumped by 51.1% to S$20.7 million, mainly due to stronger performance in gateway services, offset partially by weaker performance in food solutions.
  5. As a result, net profit attributable to shareholders for the quarter grew by 3.5% to S$68.9 million.
  6. Year to date, free cash flow came in at S$119.2 million, up from S$74.8 million in the same period last year, driven mainly by higher operating cash flow.
  7. As of 31 December 2018, SATS’s cash and short-term deposits stood at S$270.7 million while its debt stood at S$96.8 million.
  8. Food solutions grew its revenue 5.0% year on year to S$252.4 million, while gateway services grew its revenue by 6.2% year on year to S$211.3 million.
  9. SATS did not declare any dividend at the end of this quarter.
  10. This is what the company had to say about its outlook for the future:

“Despite the slowdown in the global economy, increasing volumes in the aviation industry and strong demand for convenient food in Asian cities are creating growth opportunities for SATS. We are well-positioned to extend our market leadership in Asia Pacific, especially in the large, dynamic markets.

China is a key market for us for scale and connectivity, and we have invested in ground and cargo handling, and catering operations at the new Daxing International Airport in Beijing. Furthermore, we are building new central kitchens in China to supply fast casual restaurant chains in key cities.

At the same time, our new ground and cargo handling ventures in India and Malaysia are already growing profitably.

We continue to enhance the sustainability of our business by digitalising our operations, developing our people, and building new capabilities while seeking acquisitions that can help us accelerate the implementation of our strategy to feed and connect Asia.”

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.  

The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook to keep up-to-date with our latest news and articles.

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 for SATS Ltd.