SATS' Q2 net profit up 4.9% to $62.3m

Thanks to healthy food solutions earnings.

SATS ended its second quarter with sound earnings growth, registering a 4.9% increase in net profit to $62.3m from $59.4m last year.

This was mainly due to the improved group revenue, which rose 3.7% to $438.5m. What propelled overall headline was the healthy food solutions revenue, which has seen an uptick of 4% to $252.7m. Its gateway services also posted revenue growth, increasing 3.4% to $184.5m.

However, revenue wold have increased 7.7% if not for the transfer of the food distribution business to its joint venture company SATS BRF Food. Fool solutions would have also spiked 10.8% if not for the transfer. Meanwhile, SATS expenditures rose slightly by 3.1% to $374.9 million.

"Higher expenditures were recorded in most expense categories except for cost of raw materials and company premise and utilities expenses. Cost of raw materials fell $3.6 million mainly due to the transfer of food distribution business while the reduction in premise and utilities expenses was attributed to lower maintenance, utilities usage and rates," the group explained.

Staff costs also rose 4.9%, mainly due to service increment, increased subcontract costs to support the business, and the strengthening of the Japanese Yen.

Looking forward, SATS said the will continue harnessing technology to improve productivity as it seeks new opportunities in the aviation business beyond Singapore.

"SATS Inflight Catering Centre 2 is being expanded to handle larger batch sizes for the increased volume from Changi’s Terminal 4 when it opens in 2017. Our cargo projects in Dammam and Oman will increase our presence in the Middle East. SATS eCommerce AirHub, scheduled to be completed early 2017, will enable us to serve our customers better," the group stated.