SATS announced that its earnings for the 3QFY2024 ended Dec 31, 2023, period has increased by 41.9% q-o-q to $31.5 million from $22.2 million, impacted positively by improvements in the performance of the group’s business units as well as strong seasonality in Cargo.
This came on the back of revenue increasing by 6.5% q-o-q to $1.37 billion from $1.28 billion, primarily due to volume improvements boosted by strong seasonal demand, particularly in cargo for Worldwide Flight Services (WFS). Revenue contribution from Food Solutions and Gateway Services also improved during the quarter.
As at Dec 31, 2023 (excluding WFS), aviation food and flight volumes reached 97% and 86% respectively, while cargo volume recovered to 99% of pre-Covid-19 levels in 3QFY2024, primarily due to increased travel demand and seasonality factor.
For the 9MFY2024 period, earnings came in at $23.7 million, reversing from a loss of $32.0 million the previous year, while revenue saw a significant 200.4% gain to $3.85 billion from $1.28 billion previously.
This was driven primarily by the consolidation of WFS after its acquisition by SATS on Apr 3, 2023.
In January 2024, SATS issued US$500 million bonds to refinance existing debt and lower borrowing costs. The bonds, combined with a concurrent cross-currency swap to Euros, helped reduce interest rate to approximately 3.5% per annum and matched the currency of the existing bridge loans to hedge the group’s foreign currency exposure.
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The proceeds from the bond issuance was applied entirely to refinance part of SATS’ existing €1 billion bridge loan, maturing in May 2024. Combined with the refinancing of WFS senior secured notes in June 2023, this would result in total annual financial savings in excess of $50 million.
On its outlook, the group says: “We are committed to achieving commercial and operational synergies with the expanded network. We will continue to focus on our operations in Singapore while expanding scalable and profitable solutions globally.”
While Asia’s travel recovery still lags behind, the group is upbeat on a recovery in 2H2024. Despite prevailing headwinds, the group remains focused on managing costs, leveraging operational synergies, winning new contracts and strengthening our financial position. “We believe this will lead to continuing improvement in financial results, delivering sustainable long-term growth and performance,” it says.
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Kerry Mok, president and CEO of SATS says: “During the quarter, our business operations continued to show improvement in profitability, driven by travel recovery and strong seasonal demand. The group continues to benefit from operational synergies and new commercial wins from the expanded network and our strengthened global position.”
“Singapore remains a key pillar of our business. We are committed to support the continued growth of Changi Airport and have ramped up our operations accordingly. Our refinancing efforts are also bearing fruit with significant financial savings realised to date. We continue to be focused on driving profitable growth and increasing shareholder value.”
Shares in SATS last traded at $2.60 on Feb 28.
