SINGAPORE (Nov 8): SATS Ltd, the provider of gateway and food solutions, has announced 2Q19 earnings of $65.7 million, down 9% from $72.2 million a year ago in the absence of a one-off gain on disposal of assets held for sale, as well as lower contributions from associates/joint ventures (JVs).

Notwithstanding the one-off gain of $7 million in 2Q18 – which was related to the deconsolidation of SHK and restructuring of Jilin Zhong Xin Cheng Food and SG IPF – underlying profit would have grown 0.8% y-o-y, says SATS.

Revenue for 2Q grew 4.2% to $453.1 million from $434.8 million a year ago as volume in Food Solutions and Gateway Services registered revenue growth of 2.5% and 6.3% to $250.9 million and $201.6 million, respectively.

Excluding the deconsolidation impact of SATS HK Limited, the group’s underlying revenue would have improved 5.2% with revenue from Gateway Services growing a higher 8.5% instead, says SATS.

Expenditure for 2Q rose 3.6% to $387.1 million due increased costs across all categories except for other costs, which remained relatively unchanged despite higher IT expenses, fuel costs and professional fees as the impact of these were cushioned by foreign exchange (forex) gains and grants received.

Key contributors for expenditures over the quarter included staff costs, higher company premises & utilities expenses, raw material costs and license fees, as well as depreciation and amortisation.

Meanwhile, share of after-tax profits from associates and JVs fell 22.2% to $14 million compared to $18 million a year ago, underscored by lower contributions from associates or JVs of both Gateway Solutions and Food Solutions business segments.

For 1H19, SATS reported earnings of $129.6 million, a marginal 0.1% increase from a year ago.

An interim dividend of 6 cents per share has been declared, and is to be paid out on 7 Dec.

In its outlook, SATS says it is anticipating continued pricing pressure due to higher oil prices and competition in the airline industry, amid near-term trade tensions and weakening global sentiment.

Nonetheless, the group intends to pursue organic and inorganic growth opportunities in an environment where aviation volumes and demand for safe, quality food is set to increase. It will also continue to invest in people and technology to digitise services, enhance culinary capabilities, and improve productivity.

Shares in SATS closed 12 cents higher at $5.11 on Thursday.

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