The proposed deal involves Sats acquiring a loss-making asset

 

WORLDWIDE Flight Services Holland (WFS), an air cargo handler at Netherlands&rsquo main international airport, is proposing to acquire Menzies World Cargo (Amsterdam), which is the general cargo handler at that same airport.

 

Menzies World Cargo (Amsterdam) is currently the cargo handling arm of Menzies Aviation.

 

The proposed acquisition will increase the warehouse capacity and cargo handling capabilities for Worldwide Flight Services Holland in one of Europe&rsquo s busiest air cargo locations, according to a media release from ground handler and inflight caterer Sats : S58 -0.27%, which is the parent company of the air cargo handler.

 

The additional warehouse will provide more capacity for Worldwide Flight Services Holland, which will enable it to capitalise on its strong local customer relations and service levels, and position itself for growth over the long term, added Sats in the release on Friday (Aug 30).

 

Worldwide Flight Services Holland, which has been operating in Amsterdam&rsquo s Schiphol airport since 2000, is now operating close to maximum capacity, said John Batten, the company&rsquo s chief executive officer of Europe, Middle East, Africa, and Asia.

 

&ldquo Worldwide Flight Services Holland operates in Europe&rsquo s five largest airports by cargo volume and we are excited to see Worldwide Flight Services Holland enlarge its footprint at a time of strong demand for its services,&rdquo he said.

 

Batten added that the business pipeline will soon fill the newly acquired capacity and take the air cargo handler to the next stage of its growth.

 

WFS and Menzies Aviation have entered into a signing protocol and the proposed deal is pending a few conditions to be fulfilled before it is completed. Some of these include having the works council &ndash a body that represents employees at the companies &ndash provide advice on the proposed acquisition, and Menzies Aviation delivering the lease agreement of its warehouses to WFS.

 

The proposed deal involves Sats acquiring a loss-making asset.

 

Under the terms of the sales and purchase agreement, WFS shall acquire the sale shares for a nominal sum of one euro (S$1.46), which would be paid fully in cash.

 

The transaction price was arrived at on a negotiated arm&rsquo s length basis and determined after taking into account the pre-completion undertakings. These include a cash contribution of about 6.25 million euros paid by Menzies Aviation to Menzies World Cargo Amsterdam.

Singapore airport terminal services (Sats) wants a slice of the pie in Japan&rsquo s ready-to-eat meal market.

 

Back in July, the group announced a strategic partnership through its subsidiary, Sats TFK with Japanese conglomerate Mitsui, for the latter to acquire a 15% stake or $36.4 million investment in Sats&rsquo food solutions India, Sats food solutions Thailand, Sats Tianjin, and the group&rsquo s food distribution subsidiary, country foods.

 

Presently, Sats is the leading aviation caterer in Asia, providing meals for international airlines across different formats ranging from first class to economy. It is in this proven capability and track record that Sats chief executive officer (CEO) for food solutions, Stanley Goh, is confident in expanding the business to serve consumers beyond the aisle. 

 

&ldquo We will pivot into the non-aviation space with high-value ready-to-eat meals while ensuring we keep our culinary expertise and ability to create authentic meals,&rdquo says Goh at Sats TFK in-flight kitchen facility at Tokyo&rsquo s Narita Airport on Aug 26.

 

Able to produce up to 40,000 meals daily across a variety of cuisines including halal meals, the Narita facility is one of Sats TFK&rsquo s three within the greater Tokyo area.

 

He adds: &ldquo We have over 1,000 chefs (across the group) that are able to service about 130 international airlines, as well as dietitians and food technologies that can create culinary cuisines into scale production.&rdquo

 

While Sats brings its end-to-end capability along the food production value chain to the table, Mitsui&rsquo s retail business unit has an existing network throughout Japan, including joint-ventures with 7-11 Japan, China and the US through its parent company, Seven & i Holdings.

 

&ldquo With our now new partnership with Mitsui, we are able to leverage on some of these capabilities together to bring better value to our respective stakeholders.&rdquo

 

The spread

 

Presently, Sats has several brands under its ready-to-eat umbrella.

 

These include Farmpride, its frozen foods label, which can be found at NTUC Fairprice stalls in Singapore, and The Travelling Spoon, a halal-certified microwave food label produced in collaboration with local hawker brands distributed throughout the island&rsquo s 7-11 convenience stores.

 

The group&rsquo s foray into Japan comes in the form of its N&rsquo s Deli label, which premiered at a recent food fair held by Japanese supermarket chain, Meidi-Ya. These microwavable ready-to-eat meals include well-known Singapore dishes such as laksa, chicken rice and biryani. 

 

Goh explains that Japanese consumers have a liking for the robust flavour profile found in Singapore&rsquo s dishes. He tells The Edge Singapore: &ldquo We understood that for Meidi-Ya and their consumers, there was an actual demand for authentic Singaporean food, which they know of through travel. So when we priced and brought our products to the fair, they sold out very quickly.&rdquo

 

Together, Sats and Mitsui plan to supply similar frozen meals to Muji Japan by the first quarter of 2025.

 

Although Goh is bullish on the potential of growing the business in a nation where ready-to-eat meals are popular and highly consumed, he is also aware of the competitive nature of its market. 

 

On this, he says: &ldquo We have data that actually shows that the ready-to-eat market continues to grow, and our projection of growth over the next 10 years is one that we feel very optimistic about.&rdquo

 

The food solutions CEO points to increasing urbanisation and busier lifestyles as main consumer factors driving the demand for convenient meals.

 

&ldquo Today, when we look at the standards of ready-to-eat meals, some of them are quite basic, and we feel that with our expertise and the network that Mitsui can offer, we' re able to offer high-value, authentic, meals that would that would meet this demand and consumer preference,&rdquo adds Goh.

 

General manager for Mitsui&rsquo s retail business division and retail business unit, Mitsuhiro Goto, similarly sees a healthy outlook for the partnership. He says: &ldquo We think that the ready-to-eat market on a global scale will continue to grow, especially in Asia. By offering a higher value product, it will be more convenient, more healthy, and with these keywords, I think we can capture consumer preference here in Japan.&rdquo

 

While the meals by Sats certainly look and taste superior compared to other meals in the category, they are also priced at a premium. 

 

Sats group CEO Kerry Mok says that this, however, is part of the group&rsquo s strategy gathered from consumer insights, as a generic product would not be able to compete. 

 

&ldquo We make higher-end aviation meals, and we want to use that knowledge to create products that people like,&rdquo says Mok.

 

If Japanese consumers judge that the proof is indeed in the pudding, the aroma of chicken rice and laksa could soon be wafting out of Tokyo neighbourhoods.

 

 

SINGAPORE stocks registered a seven-day winning track on Wednesday (Aug 21).

 

The Straits Times Index (STI) gained 0.1 per cent or 3.45 points to 3,373.76. Across the broader market, gainers were almost even with losers at 266 to 267, with 848.9 million securities worth S$846.4 million having changed hands.

 

The market rally was led by Sats : S58 +11.49%, upon its first-quarter earnings lifting investor sentiment. Its counter closed Wednesday up 11.5 per cent, or S$0.37, at S$3.59.

 

After the market closed the day before, the STI constituent airport service company reported a net profit of S$65 million for the quarter ended Jun 30, a turnaround from a loss of S$29.9 million in the same period the year before.

 

CGS International analysts Tay Wee Kuang and Lim Siew Khee raised Sats&rsquo target price to S$4.10, with a maintained &ldquo buy&rdquo call they have raised their earnings forecasts by 88.1 per cent for FY2025 on the back of the company&rsquo s better operating leverage to drive recovery of profitability back to pre-Covid levels.

 

Meanwhile, Venture Corporation : V03 -0.85% was at the bottom of the list, closing the day down 0.8 per cent or S$0.12 at S$14.06 on a cum-dividend basis.

 

As investors took the cue from Wall Street, where the main indices slipped after an eight-day advance, market sentiment turned cautious ahead of Jerome Powell&rsquo s speech in Wyoming.

 

Regional markets closed Wednesday mixed. Japan&rsquo s Nikkei 225 Index lost 0.3 per cent, Hong Kong&rsquo s Hang Seng Index dropped 0.7 per cent, and South Korea&rsquo s Kospi Composite Index edged up 0.2 per cent.

 

On the STI, the trio of local banks all closed in the red. UOB : U11 -0.36% was down 0.4 per cent, or S$0.11, at S$30.68. OCBC : O39 -0.28% lost 0.3 per cent, or S$0.04, to S$14.34, and DBS : D05 -0.2% dropped 0.2 per cent, or S$0.07, to S$35.78.

It posts net profit of S$65 million as revenue rises to S$1.4 billion, up 15.5 per cent

 

Sats on Tuesday (Aug 20) posted a net profit of S$65 million for the first quarter ended Jun 30, 2024, from a loss of S$29.9 million over the same period a year earlier.

 

This came as revenue for the period rose to S$1.4 billion, up 15.5 per cent from the S$1.2 billion it posted a year earlier.

 

In its Q1 business update, the company attributed this to the growth in revenue from both its gateway services and food solutions businesses.

 

Revenue for its gateway services segment grew 12 per cent year-on-year to S$1.1 billion on an increase in air cargo volume from high-tech shipments, growth in e-commerce demand and the shift from ocean freight due to the crisis in the Red Sea.

 

Meanwhile, its food solutions segment&rsquo s revenue grew 29.3 per cent to S$310.8 million as inflight meal demand rose.

 

As revenue scaled up, the company also realised operational efficiencies, which led operating profit margin to improve from 0.7 per cent to 8.2 per cent. Operating profit for the quarter stood at S$112.9 million.

 

Sats to partner Japan&rsquo s Mitsui in expanding its food solutions business

 

In the coming quarters, Sats expects to maintain its positive momentum.

 

&ldquo The acceleration of e-commerce, the shift to air cargo because of seaport congestion, and disruption in maritime shipping are expected to continue to underpin demand for air cargo services,&rdquo the company said.