SATS’ net profit jumps by 26.8% to $59.7m

Its stable cost control saved the day.

The airline gateway and food solutions company rode on its operational improvements to offset a 4.2% decline in its earnings.

According to OCBC, SATS took huge hits to its earnings this quarter, headlined by a 9.1% decline in food solutions mainly due to the transfer of its food distribution business to the new JV with BRF S.A. and the weakening of the Yen.

However, OCBC says this was offset by a 2.9% growth in gateway services.

SATS also saw an improved operating margin due to cost management, which also led to a 9.1% decline in operating expenses across all expense categories excluding depreciation and amortisation.

“2QFY16 net margin rose 3.4ppt YoY to 14.1%, helped by a 10.2% increase in contribution from overseas associates and JVs to S$11.9m,” OCBC said.

OCBC also says SATS should experience clear skies going forward, driven by its effective cost control, growth in its cargo business, and growth in overseas associates and JVs.

“Going forward, we believe SATS will continue to record stable growth on full quarter contribution from 3QFY16 onwards having re-acquired Jetstar Group as its client for GS segment (up to 40 flights/day), improving performance from its Japanese subsidiary, TFK – contribution from the recent contract win to support Delta’s flight operations in Tokyo to commence from 3QFY16 but likely toned down by weakening Yen; and lastly strong pipeline of overseas investment opportunities,” OCBC said.