View Full Version : Singapore Lifts Earnings for 1st Half

26th Oct 2002, 00:54
SIA interim earnings soar 5 times to $774m

$278m tax write-back helped lift profit, but repeat performance in H2 ruled out
Conrad Raj
The Business Times(Singapore)
(SINGAPORE) Fuelled by a massive $278 million tax write-back, Singapore Airlines lifted net earnings almost five times to $774 million for the six months to Sept 30 - from just $135 million a year earlier.
'We have made full use of opportunities presented by a faster-than-expected recovery of the passenger and cargo markets post-Sept 11, 2001,' said group deputy chairman and chief executive Cheong Choong Kong.
Dr Cheong also told reporters that United Airlines, which is teetering near the edge of bankruptcy, has approached its air alliance partners, including SIA, about strengthening ties between the carriers.

'We haven't gone into specifics and, even if we had, I don't think it would be very good manners of me to speak out of turn,' Reuters quoted him as saying in a report filed from New York.
For the period just ended, SIA's pre-tax profit soared 128 per cent to $656 million - 25 per cent higher if exceptional items were excluded.
Aside from the tax write-back, SIA attributed the better results to:
A $32 million rise in the surplus on disposal of aircraft, engines and spares.

A $76-million improvement in the share of profits of associated companies, largely because the group no longer equity-accounts the results of Air New Zealand. There was increased contribution from 49 per cent-owned removed by Ed! Atlantic ($34 million) and Eagle Services Asia.
The absence of a previous $267 million provision for diminution in value of Air NZ.
Dr Cheong, who is retiring next year, warned: 'Unfortunately, in an environment teeming with threats of war, whether we can continue to perform at the same level for the rest of the financial year rests largely on developments beyond our control. If there is certainty it is that the SIA team will rise to the occasion.'
The performance of SIA's major components was also not as scintillating as that displayed at the bottom line. The passenger airline company's operating profit was 6 per cent lower at $256 million, that of Singapore Air Terminal Services was down 11 per cent to $122 million and that of SIA Engineering Company was down 16 per cent to $72.3 million.
Although it carried more passengers, poor yields because of fewer customers in business and first class affected the passenger airline.
First-half group insurance expenses, meanwhile, have rocketed from $24.2 million last year to $110.9 million this time.
This was offset to an extent by the performance of SIA Cargo, which was corporatised in July last year.
The cargo company posted an operating profit of $24.5 million on a 5.5 percentage point increase in load factor to 69.5 cent, and against a $113.1 million loss previously.
Silkair also performed better, with a 219 per cent jump in operating profit to $8.3 million from $2.6 million, despite a 2.2 per cent decline in yields.
Group revenue was up 10.5 per cent to $5.23 billion, but expenditure kept pace with a 10.3 per cent rise to $4.72 billion.
Although most analysts had taken the tax write-back into account, the results appear to have surprised some, with one research head of a foreign investment bank asking: 'Where did such a high recovery come from?' Another did not expect cargo to post such strong results - $135 million-plus turnaround from the previous year.
As for the second-half outlook, demand for air-travel suffered a setback with the recent Bali bombing and is further clouded by the threat of war in the Middle East. The cargo outlook is also less positive beyond Christmas because of poor economic prospects for major markets and an increase in freight capacity by other carriers.
Jet fuel prices - SIA hedges about half its needs - are expected to remain 'high and volatile'. SIA shares closed 10 down at $11.10 yesterday on volume more than a million units. Of the 24 analysts surveyed by Multex Global Estimates, six have a 'buy' on the stock, eight expect the counter to 'outperform' the market, seven say 'hold', one expects the stock to 'under-perform' and two say 'sell'.