SINGAPORE (May 16): SIA Group reported full-year earnings of $683 million, down 47.5% from $1.3 billion a year ago, primarily due to the lower operating profit and higher non-operating costs.
For 4Q ended March, the group saw a 27.8% drop in earnings to $203 million, driven by the weaker operating performance and an increase in non-operating items mainly due to SilkAir’s re-fleeting and restructuring.
Correspondingly, 4Q earnings per share fell from 109.7 cents to 57.4 cents.
The group’s operating profit for 4Q declined 24% to $253 million. Revenue improvement of $58 million was offset by higher net fuel cost of $81 million and non-fuel costs on capacity injection. Non-fuel costs increased $57 million, below the group’s passenger capacity growth of 8%.
Segmentally, the Parent Airline Company saw a 28% fall in operating profit to $204 million, led by higher fuel costs and growth in operations.
SIA Engineering’s operating profit fell 9.5% to $19 million while Scoot reversed into losses of $6 million as increase in expenditure led by capacity injection outpaced revenue growth.
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Only Silkair saw a more than trebling of profit to $11 million, partly on lower costs.
SIA’s board of directors has recommended a final dividend of 22 cents per share, bringing total dividend for the 2018/19 fiscal year to 30 cents per share.
In its outlook statement, SIA says technical issues related to the Boeing 737 MAX 8 fleet, which have led to its suspension from service until further notice, as well as issues with Rolls-Royce Trent 1000 TEN engines powering Boeing 787s, has affected the group’s passenger capacity growth, which now is expected to be 6% in the year ahead.
Meanwhile, the group says growth in forward passenger bookings in the months ahead is tracking positively against capacity injection, with robust premium cabin demand.
Most key markets, including those that have seen significant capacity growth such as the US, Japan, Indonesia and New Zealand, continue to grow at a healthy pace. However, China’s international traffic growth rates have softened, at a time of increased supply in the market.
Notwithstanding the current demand picture, ongoing trade disputes and slowing economic growth in key markets pose uncertainty to the operating environment. Fuel cost headwinds may also persist on supply risks in the oil market.
The group’s net asset value increased to $11.22 as at end March from $10.88 as at last March.
Shares in SIA closed 4 cents lower at $9.40 on Thursday before the results announcement.
