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SATS reports net loss of $6.3 mil in 4Q20 as Covid-19 halts air travel

Felicia Tan
Felicia Tan • 4 min read
SATS reports net loss of $6.3 mil in 4Q20 as Covid-19 halts air travel
SATS, the gateway services and food solutions provider, reported a net loss of $6.3 million in 4Q20, compared to the earnings of $49.9 million reported in 4Q19.
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SINGAPORE (July 9): SATS, the gateway services and food solutions provider, reported a net loss of $6.3 million in 4Q20, compared to the earnings of $49.9 million reported in 4Q19.

The loss was mainly attributable to provisions by the group and impairments of $51 million.

This brings SATS’s total earnings for FY20 to $168.4 million, a 32.2% drop y-o-y from last year.

The quarter reported a loss per share of 0.6 cent, compared to the 4.5 cents in 4Q19.

Earnings per share (EPS) for FY20 came in at 15.1 cents, compared to the 22.3 cents reported in the previous year.

Group revenue fell 8.1% y-o-y to $38.4 million for the quarter, due to lower revenue reported for Gateway Services and higher revenue for Food Solutions.

For FY20, group revenue grew 6.2% y-o-y to $1.94 billion. Food Solutions’ revenue rose 8.3% y-o-y to $1.07 billion, with contributions from CFPL and NWA of $121.2 million. Gateway Services’ revenue increased 3.7% y-o-y to $868.8 million, mainly due to the consolidation of Ground Team Red Holdings and Ground Team Red, and strong performance in ground handling before the Covid-19 outbreak.

In a Thursday statement, SATS says its performance for the quarter was impacted by the Covid-19 pandemic across the region. The outbreak led to a significant drop in air travel demand, and created a “substantial adverse impact” on revenue and profitability.

Revenue for Gateway Services declined 17.8% y-o-y to $185.3 million while Food Solutions revenue edged up 0.8% y-o-y to $247.3 million.

The consolidation of Country Foods (formerly known as SATS BRF Food Pte. Ltd.) and Nanjing Weizhou Airline Food Corp (NWA) contributed $46.4 million and $3.6 million respectively to Food Solutions’ revenue.

Group expenditure for the quarter fell 6.9% q-o-q to $391.6 million.

In the same quarter, staff costs declined by $59.8 million mainly due to government reliefs, a a decrease in contract services, overtime, and other variable staff costs attributable to lower aviation volumes.

Group expenditure for the year rose 8.5% y-o-y to $1.72 billion on the consolidation of the newly-acquired subsidiaries.

New projects and assets also contributed towards the increase in depreciation costs.

Operating profit for the group fell 18.3% y-o-y to $41.5 million primarily due to the sharp decline in the group’s aviation revenue.

For FY20, operating profit fell 8.4% y-o-y to $226.2 million.

Share of results from associates/joint ventures registered a loss of $31.2 million, compared to a $8.9 million profit in 4Q19. This was affected by reduced business volumes as well as credit loss and asset impairments made in view of the Covid-19 outbreak.

Share of result from associates/joint ventures fell 80% y-o-y to $11.8 million.

The total credit losses and impairment charges attributable to SATS for 4Q20 came up to $51 million.

The group’s underlying net profit plunged 88.5% y-o-y to $5.6 million, compared to $43.1 million last year.

Group net profit attributable to owners of the company declined 32.2% y-o-y to $168.4 million. The underlying net profit was $180.3 million, a 25.3% decrease y-o-y.

SATS has decided not to pay a final dividend for FY20. This brings the full year dividend to 6 cents.

“This will allow the company to preserve more jobs and capabilities to support our customers as aviation volumes resume, and to pursue opportunities outside of aviation,” it says.

Looking ahead, SATS says it is working to ensure operational continuity and are developing new offerings that include incorporating digital solutions, new food technology, and sustainable packaging.

“The operating environment in the next financial year will be challenging for our aviation related businesses. I would like to recognise our people for the flexibility and resilience that they have shown throughout,” says Alex Hungate, president and CEO of SATS

“We are also grateful for the support that we have received from governments in Singapore and other markets that has helped SATS to retain our deep domain capabilities so that we can ramp up aviation operations with confidence as demand returns,” he adds.

Shares in SATS closed 1 cent lower, or 0.3% down, at $2.88 on Thursday.

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