SATS’ Q2 profit down 3.3% as cost pressures mount

Headwinds will persist in the near term.

Regional overcapacity and slowing demand dragged SATS’ Q3 profit down by 3.3% in the second quarter. Singapore’s ground-handling and in-flight catering service provider reported a net profit of $47.1m in Q3, down from $48.7m in the same period last financial year.

SATS’s Q2 revenue also slipped 2.2% year-on-year to $442.1m. According to OCBC, rising manpower costs also presented a challenge for SATS, and the overcapacity of airline caterers at Narita Airport in Japan also did no favors to its bottomline.

“We believe the aviation industry will continue to be challenging, as airlines continue to rationalize capacity to match the slowing demand. This resulted in YoY decrease for passengers, flights and unit services handled in 2QFY15. We continue to think SATS will be able to maintain a decent level of dividend pay-out given its healthy balance sheet,” noted OCBC.