SATS first quarter profit edges up 9.7%

Singapore Airport Terminal Services (SATS) lifted its first quarter net profit by 9.7 per cent to US$31.44 million as all businesses and divisions delivered growth, reported Business Times Singapore.

The rise in earnings came as topline revenue climbed 8.6 per cent to $271.24 million, from $249.66 million, during the April-June 2010 quarter, thanks to higher aviation revenue, improved UK food sales and higher sales from Singapore non-aviation food.

Share of profits from associated companies – primarily from joint ventures in Hong Kong and Indonesia – jumped 62 per cent to a record $10.43 million.

This helped particularly when group operating profit was weighed down six per cent to $29.24 million as raw material costs and staff costs rose. The rise in costs did result in a slight margin squeeze, with operating margin down to 10.8 per cent, versus 12.4 per cent a year earlier. But net margin remained stable at 11.6 per cent.

The company was sitting on a strong balance sheet, with cash balance of some $159 million as at June 30.

In terms of business spread, food solutions accounted for 43.5 per cent of revenue, while gateway services accounted for 34.5 per cent, and UK food business 21.3 per cent.

Aviation still accounted for close to 60 per cent of revenue by segment, while food accounted for 40 per cent.

The company handled 8.65 million passengers (up 13.8 per cent year-on-year) and 368,000 tonnes of cargo (up 12.8 per cent) during the quarter.

Singapore has the lion's share going by geographical contribution, at 76.3 per cent, while the UK business, led by Daniels, was 21.3 per cent.

Chief executive Clement Woon attributed the good showing to proper implementation of its multi-pronged growth strategy and the recovery in the aviation operating environment.

“The group's aviation business is expected to improve further with the continued economic recovery in Asia,’’ said Woon.

“Increased passenger traffic is anticipated in the coming quarters as full-service carriers continue to fill up seats, improve their yields and add more flights.

“Cargo volumes are expected to align with the projected slower economic growth during the second half of 2010.’’

The Singapore and UK food markets are expected to remain stable this year despite rising costs.
(Source:www.cargonewsasia.com)