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Hey Jon, I am not so worried about other foreign companies. But wonder if the contract is awarded to SIA Engineering. That could create some competition for SATS?
I think SATS may still have advantage, since it bought over Singapore foods few years back. So they can provide a more complete package to customer.
Please share your views!
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There is that chance, I don't deny. SIAEC would be keen on the 3rd licence, no doubt about that. As it is, SIAEC already has quite a big portion of the transit checks passing through changi. Being able to secure the licence would allow them to package ground handling together with transit maintenance. That would be very attractive for airlines. However, I do suspect that SATs already anticipates this to happen, which explains why they have been buying non-aviation related business that complement their operations. The main threat to SATs locally, imho, if SIAEC were to secure that 3rd licence, would be losing out on SIA's patronage. That would deal a fairly large blow to SATs profit margin, since SIAEC is still part of the SIA Group. However, managing to secure the licence doesn't quite mean that SIAEC can immediately and reliably provide ground handling services on the same level as SATs. There will be hiccups along the way, and I seriously doubt SIAEC has the available technical equipment as well as a ready available pool of personnel to throw in to grab the big airlines's contracts. Having said that, it still remains to be seen if the authority is willing to issue the licence to another local player, as that would mean all 3 ground handlers would be local companies. Not much of competitive competition, I would think, since then, all 3 companies would be cannibilising each others Human Resources as well as work processes.
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SATS Ltd. (“SATSâ€) wishes to announce that Myanmar ST Food Industries Limited (In Member's Voluntary Liquidation), a subsidiary of SATS, was dissolved on 2 May 2011.
Myanmar ST Food Industries Limited ceased to be a subsidiary of SATS with effect from 2 May 2011.
The voluntary liquidation of Myanmar ST Food Industries Limited is not expected to have any material impact on the net tangible assets or earnings per share of the SATS Group for the financial year ending 31 March 2012.
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Business Times - 17 May 2011
SATS Q4 net profit rises 9% to $50.7m
Operating revenue jumps 29.3%; final dividend payout of 12 cents per share proposed
By VEN SREENIVASAN
(Singapore)
SATS Ltd announced strong operating numbers all round and unveiled a generous final dividend payout of 12 cents per share yesterday.
The January-March quarter saw attributable profits rise 9 per cent to $50.7 million, from $46.5 million a year earlier. Operating revenue for the quarter increased 29.3 per cent to $504.9 million on the back of higher level of activities and the consolidation of Japan-based TFK Corporation (TFK). TFK contributed revenue of $72.6 million.
However, the ground services operator, which counts Japan Airlines as its main customer accounting for 60 per cent of its revenue, took a hit from the March earthquake and tsunami.
For the full year to end-March, SATS' attributable profit rose 5.6 per cent to $191.4 million, from $181.2 million. Excluding jobs credit of $17.1 million received in the preceding year and the $6 million in M&A expenses, the underlying profit would have increased 20.3 per cent to $197.4 million.
Revenue rose 12.4 per cent to $1.73 billion, from $1.54 billion. The figure could have been higher if not for some exchange rate translation impact.
For example, SATS' topline would have been $37 million higher if not for a 9 per cent decline in the value of the UK pound versus the Sing dollar.
Associates and joint ventures contributed some $61.2 million for the year, a 46.1 per cent increase from the $41.9 million a year earlier. Gross dividends from associates/joint ventures peaked at $39.5 million for the year, up 58 per cent from the previous year.
The company is paying a total dividend of 12 cents per share, comprising final dividend of 6 cents plus a special dividend of another 6 cents. Together with interim dividend of 5 cents already paid, total dividend for the year is 17 cents per share. This raised the total payout ratio to 98 per cent.
One of the key challenges the company faced, especially during the final quarter, was material cost inflation, though CEO Clement Woon said the company managed to mitigate the full impact of this via a savvy purchasing strategy.
Cost of raw materials surged 41.1 per cent to $143.9 million during the January-March 2011 quarter. Staff costs rose 35.1 per cent to $193.7 million, mainly due to the absence of job credits.
Operating expenditure for the quarter rose 29.8 per cent to $454.7 million, which was higher than the quarterly revenue of $390.6 million SATS chalked up during the January-March 2010 period.
For the full year the rise was 14 per cent to $1.54 billion - a figure equal to the previous full year's revenue.
Operating margin for the final quarter shrank to 9.9 per cent, from 10.3 per cent, largely due to the absence of the 'job credits' effect. For the full year, operating margin narrowed to 10.7 per cent, compared to 12 per cent in FY2009/10.
The company had cash of some $296.1 million at end-March, compared to $195.8 million a year earlier. Its debt/equity ratio rose to 0.12 from 0.02 a year earlier.
Aviation continued to be its biggest business, contributing to 59.2 per cent of revenue. Food solutions accounted for 46.1 per cent of revenue, while gateway solutions was 31.8 per cent, and its UK foods business accounted for 21.5 per cent. Singapore accounted for over 60 per cent of its topline.
Flights handled rose 7.7 per cent during the year, while passengers handled rose 7.2 per cent. The company saw a significant increase in catering demand for the premium 'front cabins', which portends better margins and yields.
Going forward, SATS said it will focus on strengthening its Japan operations by leveraging on the combined competencies within its aviation network.
While it maintained that TFK will not have a material effect on its performance in FY2011-12, it added it would remain vigilant over the 'emerging situation in Japan' and take appropriate actions should the situation deteriorate.
'TFK and recent joint ventures, AISATS and Adel Abuljadayel Flight Catering (AAFC) in Saudi Arabia underscore SATS' continuous efforts to strengthen its international network to serve key airline customers in more locations,' the company said.
AISATS and AAFC are also expected to be earnings accretive in FY2011-12.
In Singapore, SATS said it would mitigate general cost inflation with more productivity enhancement projects.
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i am glad and yet surprised to hear about the generous 12cents consisting od 6 cents final dividend and 6 cents special dividend at a 98% payout rate for the whole year.
didn't know it counts Japan Airlines as its main customer accounting for 60 per cent of its revenue.
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Anyone has idea on how well SATS can pass rising cost to customer?
The catering segment may not be easy, as its very competitive.
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Not easy to pass on cost to customers, since their customers (airlines) are all quite big. However, SATS has said that they are not going to compete on price.
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It's official. Let's see how things turn out for SATS.
Changi Airport's third ground handling licence awarded to ASIG
By Linette Lim | Posted: 09 June 2011 1148 hrs
SINGAPORE: Singapore's Changi Airport Group (CAG) has awarded a third ground handling licence to US-based Aircraft Service International Group (ASIG).
ASIG beat three other firms to win the tender.
With the ten-year licence, ASIG will be able to provide passenger and cargo handling services to some 100 airlines operating at Changi Airport.
These services are currently provided by two agents - SATS and Changi International Airport Services (CIAS).
Changi Airport Group says a third ground handler will provide airlines with potential benefits in price and range of offerings.
The previous third ground handler at Changi Airport was Swissport, which pulled out in 2009 after four years of operations.
Although Swissport reportedly caused ground handling rates at Changi Airport to fall by 15 per cent, the Swiss company chalked up losses of S$50 million.
Siva Govindasamy, Flightglobal's Asia managing editor, said: "Some would argue that there really isn't a market for a third ground handler in Singapore, ASIG and Changi tend to disagree. Airlines would welcome competition. But it still remains to be seen whether this will drive down costs substantially."
Analysts say it is unlikely that ASIG will make a dent in the market share of the two existing ground handlers. This is because many of the carriers are tied to long term contracts, either with SATS or CIAS.
Siva Govindasamy said: "The key to it would be for ASIG to try to get a few of the airlines, whose contracts with the incumbents might be expiring, on board. But it will be imperative for them to get a big airline, with a reasonable amount of frequency into Changi, into its portfolio."
But analysts say one factor that might work in ASIG's favour is that the airline industry seems to be picking up, unlike Swissport whose stint at Changi Airport coincided with a slump in air travel brought on by the financial crisis in 2008.
- CNA/ir
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I'm a few days late in posting this but nonetheless for what it's worth...
From SGX:
SATS Ltd. wishes to announce that it will be releasing its financial results for the first quarter ended 30 June 2011 on Tuesday, 26 July 2011 after market trading hours.
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