SATS S58 has reported a loss of $26.5 million for FY2023 ended March 31, compared to the earnings of $20.4 million in the preceding FY2022.
The loss was attributable to the one-off expenses of $44.9 million from the merger and acquisition (M&A) of Worldwide Flight Services (WFS). The acquisition of WFS was completed on April 3 where it became a subsidiary of SATS. WFS’s financial information will be consolidated into SATS’s financial results with effect from 1QFY2024.
Loss per share stood at 2.2 cents for the year, down from the earnings per share (EPS) of 1.7 cents on a diluted basis.
However, group revenue grew by 49.4% y-o-y to $1.76 billion as revenues for both food solutions and gateway services rose on the back of travel recovery and higher cargo revenue contribution from Asia Airfreight Terminal (AAT).
The consolidation of AAT, which was a subsidiary of the group from March 2022, contributed $57.1 million to gateway services’ revenue.
Group expenditure also increased by 46.7% y-o-y to $959.9 million from staff costs, as well as higher raw material costs, licence fees, company premises and utilities expenses from the higher business volumes. Depreciation and amortisation increased $32.9 million mainly due to the consolidation of AAT for the period. Other costs also increased $30.1 million due to higher fuel costs and maintenance expenses as well as lower government grants.
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Operating loss stood at $48.0 million for the year, deeper than the $42.6 million operating loss in the year before.
Share of results of associates/joint ventures, net of tax surged by 2.65 times to $45.4 million from $17.1 million the year before due to the recovery of the aviation industry.
As at March 31, cash and cash equivalents stood at $374.4 million, more than half of the $786.0 million in cash and cash equivalents as at March 31, 2022.
Total assets during the period stood at $4.67 billion, 42.0% higher y-o-y due to the amount raised via the group’s rights issue and term loan drawdown for WFS.
The group has declared no dividends for the period and said that it will continue to do so until it turns profitable without government relief.
Looking ahead, SATS remains upbeat on the growth of its aviation business amid the recovery of travel. That said, it is also cautious as the uncertain macroeconomic outlook means that monetary tightening is expected to further impact consumer and business spending while the ongoing geopolitical and trade tensions continue to disrupt global supply chains.
The group says it will focus on its strategy of strengthening its core business in Singapore while expanding abroad.
"In support of Changi Airport's preeminent air hub status, SATS ramped up its operations in Singapore quickly ahead of travel recovery to ensure minimal disruptions to operations. During the year, we managed the sharp increase of flights in Singapore from 43% to 84% of pre-pandemic levels,” says Kerry Mok, president and CEO of SATS.
“While air travel recovery momentum is expected to continue, we are mindful that air cargo volume has softened due to macroeconomic factors.
"Fuelled by our twin-engine growth strategy, we continue to drive productivity through operational excellence and enhanced scale to achieve the desired network synergies and combined benefits for the group. We will deliver improved connectivity to our clients and customers particularly through our enlarged reach with WFS,” he adds.
Shares in SATS closed 8 cents lower or 2.83% down at $2.75 on May 29.
