It was hit by lower cargo revenue and the consolidation expenses of its GTR entities.
SATS started its FY2019-2020 on a dismal note as its Q1 profits slipped 14.4% YoY from $63.9m to $54.7m, an announcement revealed. However, its revenue edged up 5.8% YoY to $465.1m from $439.4m.
It attributed its revenue performance to income growth recorded in its food solutions and gateway services. Revenue from food solutions rose $1.9m or 0.8% to $241.4m as core aviation catering subsidiaries improved performance. Gateway services’ revenue increased $23.7m or 11.9% to $223.3m, of which $22.5m was attributable to the consolidation of GTR entities, Ground Team Red Holdings and Ground Team Red, which took effect from January.
Also read: SATS profits down 5% to $248.4m in FY1819
However, the growth was partially offset by the decrease in cargo revenue as a result of lower cargo volume. Group expenditure was higher by 9% YoY or $33.8m at $408.3m, largely driven by the consolidation of GTR entities which accounted for $20.6m of the increase, SATS explained. Staff costs also grew by $22m, largely due to the volume growth and consolidation of GTR entities.
As at 30 June, total equity of the group increased $59.6m QoQ to $1.88b, thanks to profits generated and the increase in share-based compensation reserve arising from the grant of share awards under the SATS Restricted Share Plan during the quarter.
“Non-current assets grew $208.5m due to investment in associates and long-term investments, and the recognition of $192.3m in right-of-use assets arising from the adoption of SFRS(I) 16, which resulted in $182.4m in non-current lease liabilities and $10.7m in current lease liabilities,” the firm added.
Meanwhile, the increase in investment in associates, three joint ventures and long-term investment were largely due to two joint ventures at Beijing Daxing International Airport, with $21.5m for 40% equity in Beijing CAH SATS Aviation Services Co. (BCS) to provide ground and cargo handling, and $6.1m for 10% equity in Beijing Daxing International Airport Inflight Catering (DAIC) to offer inflight catering and related services.
SATS said that it anticipates the cruise industry in Southeast Asia to develop and keep pace with burgeoning consumer interest, with cruise passengers to Singapore forecasted to increase.
Its earnings per share (EPS) declined 14% to $0.049.
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