Shares of Sats fell more than 10% on Thursday after the company reported its first-quarter results. The report showed a squeeze on profit margins. The stock opened at S$4.42, down 7.3% or S$0.35. It later reached a low of S$4.25, reflecting a drop of 10.9% by mid-morning.
Key Details
The company reported a net profit of S$75.1 million for the quarter. This is a 6% increase from S$70.9 million in the same period last year. However, this growth rate is lower than the 9.1% increase reported in the previous year. Sats said the margin squeeze was due to disruptions in cargo trade flows related to the Middle East. Ongoing inflationary pressures also affected operational efficiencies. The operating profit margin for the quarter was recorded at 8%.
Background
Sats also saw an 18.9% decline in earnings from associates and joint ventures, totaling S$26.8 million. This decline was linked to reduced business volumes caused by inflationary pressures on certain carriers. Nonrecurring provisions also contributed to this decline, according to a company statement.
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The drop in Sats' shares could affect investor sentiment in the aviation and food services sectors. This is especially true as inflation continues to pressure margins. Investors may reassess their positions in related stocks, particularly those tied to cargo and flight activity.
Watch for Sats' upcoming earnings report. It will provide further insights into its performance amid these challenges.
Based on reporting by: businesstimes.com.sg