SATS’ net profit jumps by 17.6% to $55.4m

On back of its soaring Japan subsidiaries.

The growth of its gateway services business paved the way for the airline solutions firm to post better than expected results in 1Q17, with revenue growing by 1.8% to $424.2m.

According to a report by OCBC, this was partially offset by a 0.5% decline from Food Solutions (FS) due to transfer of food distribution revenue to JV.

“Excluding the transfer of business to JV, 1QFY17 revenue would have increased 8.6% YoY while FS revenue would have grown 11.4%. 1QFY17 operating expenses fell by 0.9% YoY to S$369.7m mainly due to decline in cost of raw materials with the transfer of food distribution business to JV and lower energy costs,” the report said.

Meanwhile, as a result of continuous productivity drive through investments in technology to increase operating leverage, SATS’ 1QFY17 margins continued to improve, as EBIT and EBITDA margins increased 2.2ppt and 2.4ppt YoY to 12.8% and 17.3%, respectively.

“In addition, SATS’ subsidiary in Japan, TFK, also saw a turnaround in 1QFY17 as revenue grew 36.2% YoY mainly due to restructuring efforts bearing fruits and ramp up of contributions from its catering contract with Delta Air Lines in both Narita and Haneda airports in Tokyo,” the report added.