SATS has reported a loss of $7.8 million for the 1HFY2024 ended Sept 30 after taking into account higher interest expense, marking a $24.7 million or 76% improvement y-o-y from 1HFY2023’s loss of $32.5 million.
Loss per share stood at 0.5 cents for 1HFY2024, up from the previous loss per share of 2.2 cents on a diluted basis.
Driven primarily by Worldwide Flight Services (WFS) consolidation after its acquisition by SATS on April 3, the group’s 1HFY2024 group revenue increased by 208.3% to $2.5 billion over the same period last year, with contribution by WFS amounting to $1.4 billion.
Excluding WFS, SATS’ standalone revenue increased by 30.3% to $1.0 billion from $804.5 million y-o-y, bolstered by the recovery in the aviation sector.
Meanwhile, the group’s food solutions revenue increased by 28.2% to $516.1 million in 1HFY2024, while its gateway services revenue grew by 32.4% y-o-y to $532.2 million in the same period.
Group expenditure increased by $1.6 billion, or 184.0%, y-o-y, to $2.4 billion. Excluding WFS, SATS’ standalone expenditure also increased by $199.8 million, which is in line with increased business activities attributed to the recovery of global travel and inflationary cost pressures.
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The group recorded an operating profit of $75.7 million for 1HFY2024, notwithstanding the discontinuation of government reliefs in the current period, which were recorded over the same period last year at $22.8 million.
Meanwhile, the share of earnings of associates and joint ventures increased by 152.3% to $44.4 million, with improved performance from most aviation associates and joint ventures on the back of the recovery in aviation.
SATS’ current assets decreased by $900.9 million to $1.8 billion due to the transfer of deposits placed with the notary to the seller of WFS upon completion of WFS’s acquisition in April. This was partially offset by higher trade and other receivables from the recovery of aviation and the consolidation of WFS, as well as WFS’s net cash acquired.
The group has declared no dividends for the period until SATS is able to return to profitability. This will enable the company to conserve cash to fund its operational and working capital requirements as well as to reduce leverage as soon as possible.
As at Sept 30, cash and cash equivalents stood at $515.9 million.
On the group’s outlook, SATS sees that passenger traffic and cargo volumes will continue to grow. Although the group remains cautious of the ongoing geopolitical dynamics, it will leverage on its global networks and leading position in the market to win new contracts, which will bring a steady stream of incremental revenue in the next few quarters.
As volumes continue to ramp up, Singapore remains strategic to SATS’ business, and its investments in Singapore operations will continue to bear fruit.
“We are working actively to improve operational excellence and accelerate commercial synergies. The integration of WFS and SATS is progressing well, and we are realising internal and commercial synergies reflected in our 1H FY24 financial performance. We remain laser-focused on supporting the ramp-up of our operations in Singapore and will continue to bring best-in-class practices to enhance service quality and safety performance for all customers and drive for shareholder value,” says Kerry Mok, president and chief executive officer (CEO) of SATS.
Shares in SATS closed flat at $2.56 on Nov 10.
