SINGAPORE (May 17): SATS continues its revenue growth with its FY18 ending Mar 31 results, with a 6% increase y-o-y to $1.8 billion, on the back of another strong 4Q2018 ending Mar 31 results which saw revenue grow 11.3% y-o-y to $471.5 million.
Earnings however fell 5% y-o-y for FY18 to $248.4 million, while 4Q2018 saw earnings drop 23.7% to $49.9 million. This drop came on the back of a one-off disposal of assets and the finalisation of a valuation for an acquisition. In the absence of these one-offs, SATS earnings for FY18 should be up 2.2% and its 4Q18 would be 5.4% lower.
Both the Food Solutions and Gateway Services business units drove revenue growth for 4Q18. Food solutions saw increases across its core catering subsidiaries while Gateway services’ increase was driven by improving contributions from cruise terminal operations at Marina Bay Cruise Centre consolidation of Ground Team Red. This was offset by the lower shares of results from associates and joint ventures, which plunged 62.9% to $8.9 million due to lower contributions.
Revenue growth for FY18 was driven by volume growth in both the Food Solutions and Gateway services business units. Food Solutions’ growth was driven by a 3.6% growth in its Japan business and 140% increase in its non-aviation business in China. Gateway services growth was mainly attributed to volume growth in flights handles, improved performance in cruise terminal operations as well as consolidation of Ground Team Red. This was offset by lower contribution by associates and joint ventures, which dropped 17.3% y-o-y to $58.9 million.
SATS also announced a final dividend of 13 cents per share for FY18, an increase of 1 cent per share. This brings SATS total dividends to 19 cents per share for FY18.
“Our investments in regional expansion and new capabilities are bearing fruit. Revenue growth accelerated throughout this year to reach 11.3% in the most recent quarter. Net profit declined due to the absence of one-off gains from our overseas operations, but operating profit continued to improve year on year, both for the quarter and the full year,” says Alex Hungate, president and chief executive officer, SATS in a statement.
In its outlook statement, SATS says it aims to ride the continuing growth of passenger traffic, securing a long-term contract with SIA to support their transformation plans, as well as investing in opportunities in hubs and cities.
Meanwhile, SATS also announced a share purchase agreement to acquire 45% of Nanjing Weizhou Airline Food for $25.5 million and subscribe for additional 5% stake for $5.7 million.
Nanjing Weizhou Airline Food is located in Jiangsu Province in China and is a major producer of frozen food, ambient meals and food components to aviation companies. The company has a domestic network and distribution channel that serves 80 domestic airports across China. This acquisition is in line with SATS’ strategy to feed and connect Asia, giving SATS immediate market access, product innovation and sales capability in China outside of its existing locations in Beijng, Daxing, Tianjin and Shenyang airports.
“Nanjing Weizhou Airline Food Company is a good fit for SATS’ growth strategy in China. They have strong relationships with major airlines and count all four big airlines in China as their key customers,” says Hungate.
“This partnership will allow both parties to unlock synergies to strengthen 2 our core business and expand our customer base to deliver greater efficiencies in distribution, supply chain and procurement in China,” he adds.
Shares in SATS closed at $5.22 on Thursday before the announcements.
