Saudi Airlines Catering’s net profit up 9% to SAR 481.1m for the first nine months of 2014

Saudi Airlines Catering Company, which provides in-flight catering, reported a net profit of SAR 481.1m for the nine months ended September 30, 2014, a 9% increase compared to the same period last year.

A net profit of SAR 155m was reported for Q3-2014 compared to SAR 164.4m for Q2.

The company attributed the increase of the first nine months of 2014’s net profit compared to the same period last year to the increase of revenue revenue by 15% compared to the same period of last year, main drivers were strong airline division sales. Net income increased by 9% because of the increases of general & administrative expenses. General & administrative expenses have been impacted by salary increments, a new housing allowance policy which has been implemented beginning of the actual year, alignments of end of service awards and non-recurrent operating income which was recorded last year.

The increase of Q3-2014’s net profit compared to the same period last year was attributed to revenue’s increase by 20% with major contribution from strong airline division sales, particularly in-flight catering sales +19% and Al-Fursan lounges sales +45%.

Non airline revenues increased by 47%. Main drivers for the substantial increase were contract wins in business and industry catering and remote site management. Gross profit increased by +20% in line with the total revenue increase, net income increased by 16% mainly because of the strong growth rates in business and industry catering and remote site management which generate lower margins than the airline division activities and non-recurrent other income recorded previous year.

The decline of Q3’s net profit compared to the previous quarter (Q2-2014) was attributed to that the revenues remained on the same level as in the previous quarter despite the lower sales Ramadan season in Q3. Gross profit decreased by 9.5% due to releases of expense accruals recorded in the previous quarter. Because of savings in general and administrative expenses and adjusted management fees the net income decrease only 5.70 %.