5 Negative Points From Singapore Airlines Ltd’s Latest Earnings Investors Should Know
Singapore Airlines Ltd (SGX: C6L) runs the flagship carrier of Singapore. But beyond that, it also has other airline businesses such as SilkAir and the budget carrier Scoot. Singapore Airlines also has a subsidiary, namely, SIA Engineering Company Ltd (SGX: S59) that specialises in providing aircraft maintenance, repair, and overhaul services.
Two weeks ago, Singapore Airlines reported its fourth quarter and full year results for its fiscal year ended 31 March 2017 (FY16/17). Here are five negative takeaways from the latest earnings announcement investors may want to know:
1. A fall in revenue and profit
In FY16/17, Singapore Airlines experienced a 2.4% fall in revenue to S$14.87 billion. The bottom-line fared worse though, as profit attributable to shareholders sunk 55% to S$360.4 million.
2. Weaker operating metrics
The Singapore Airlines company’s namesake airline reported weaker operating metrics in FY16/17. Here’s a snapshot:
Source: Singapore Airlines FY16/17 full year earnings presentation
The company’s lower revenue for the fiscal year was largely due to declines in its main airline’s passenger yield and load factor.
3. Higher operating costs
Although Singapore Airlines’ total operating cost declined by S$311.8 million in FY16/17, this was driven mainly by lower fuel costs (this expense fell by S$779.5 million).
Excluding fuel costs, the company’s operating costs would have increased by $467.7 million instead, when comparing FY16/17 to FY15/16.
4. A weakening balance sheet
As of 31 March 2017, Singapore Airlines had S$3.38 billion in cash and equivalents and borrowings of S$1.57 billion. This is a strong balance sheet. But, it represents a step backward from a year ago when there was S$3.97 billion in cash and equivalents and S$1.35 billion in borrowings.
5. A lower dividend
Singapore Airlines declared a final dividend of S$0.11 per share for FY16/17, over 70% lower compared to the previous fiscal year’s final dividend of S$0.35 per share. As a result, the full year dividend for FY16/17 is S$0.20 per share, down sharply from FY15/16’s dividend of S$0.45 per share.