SATS’ net profit plunges 25% to $38.2m in 3Q12

The group suffered a $5.5 million loss from the disposal of Daniels in the UK.

According to a financial statement, the group’s revenue from continuing operations increased 32.3% year-on-year to $442.3 million. Gateway services revenue was $155.6 million, up 10.5% from a year ago due to growth in flights handled in Singapore and Hong Kong. Food solutions revenue rose 49.4% to $285.3 million, due mainly to the consolidation of TFK which contributed $82 million to Group revenue. Excluding TFK, food solutions revenue improved 6.5%, led by more airline meals served during the quarter.

Group operating profit rose marginally by 1.4% to $43.8 million as a result of higher expenditure of $398.5 million, up 36.9% year-on-year. Excluding TFK’s expenditure of $80.5 million, group expenditure rose at a lower rate of 9.2% to $318 million, attributed to higher staff, raw material and utilities costs.

During the quarter, the Group recognised a loss of $5.5 million on the disposal of Daniels, after deducting goodwill and other intangibles of $221.5 million which were allocated to Daniels when the Singapore Food Industries group was acquired. Coupled with the weaker cargo volumes recorded by gateway services associates which saw SATS’ share of profits of associates and JVs fell 15.7% to $12.9 million, profit attributable to equity holders fell 25.4% to $38.2 million.

However, after adjusting for Daniels’ results and one-off M&A expenses for TFK acquisition incurred in 3Q FY11, SATS’ underlying net profit from continuing operations was $43.7 million, down at a lower rate of 8.6%.

Group revenue from continuing operations grew 31% to $1,252.1 million for the nine months ended 31 December 2011. Benefiting from the growth in flights and cargo handled at Changi Airport as well as higher revenue contribution from SATS HK, gateway services revenue rose 10% to $449.2 million. Food solutions revenue increased 48.1% to $798.6 million. Excluding TFK’s revenue of $221.1 million, food solutions revenue improved 7.1% to $577.5 million.

Higher expenditure saw group operating profit drop 3.5% or $4.4 million to $120.7 million. Of this decline, $3.1 million was attributed to TFK’s operating loss. Lower share of profits of associates and JVs and Daniels’ loss resulted in a 14.1% fall in net profit to $120.8 million. Underlying net profit from continuing operations, however, dropped at a lower rate of 5.6% to $129.9 million.