SATS profits surge 23% to $47m

But market was still disappointed.

According to OCBC, SATS’s 3Q13 results – whilst showing YoY improvements – fell short of the firm's expectations following weaker top and bottom-line growth.

Revenue increased 6.4% YoY (+2.0% QoQ) to S$470.6m to reflect the impact of peak season travel months but higher operating expenses (mainly related to staff expenses
and raw material costs) saw operating margin stay at 9.9% (-1.4 ppt from 2Q13).

As a result, the seasonal peak in quarterly performance failed to materialise, and PATMI came in at 23.0% YoY higher (-6.6% QoQ) to S$47.0m.

Here's more from OCBC:

In terms of geographical locations, Singapore led revenue growth for the quarter with a 7.7% YoY increase to S$353.9m. This was due to SATS’s dominant market share of the local market, which allowed it to participate substantially in the increase in passenger and aircraft movements at Changi Airport.

Although SATS’s gateway services and foods solutions saw revenue improvements, cost cutting measures by airlines and lower costs of raw materials resulted in a stagnation of its operating margin.

In our view, this occurrence is indicative of the need for prudence amongst airlines – given their increasingly competitive landscape – rather than operational inefficiency on the part of SATS.