Saudi Airlines Catering Q1 profit slides as Covid-19 halts flights

Saudi Airlines Catering Company posted an 85 per cent plunge in first quarter profit, mainly because of a disruption in business as the government suspended flights in and out of the kingdom to contain the spread of the coronavirus.

Net income for the first three months of the year ending March 31 fell to 15.6 million Saudi riyals (Dh15.3m), compared with 103.5m riyals in the same quarter last year, the company said in a filing to the Saudi Arabian stock exchange, Tadawul, on Wednesday. First quarter revenue declined 13.2 per cent to 452.7m riyals.

"The main reason for the decrease in net profit was the disruption of the business activities," the company said. "Substantially, the suspension of the commercial flights due [to] the implementation of the precautionary measures by the government, in order to overcome the outbreak of the Covid-19, which resulted in lower sales."

The accounts receivable provision increased by 15.3m riyals while fixed costs remained the same, it said.

Saudi Arabia halted all international flights into and out of the kingdom in March and suspended the Umrah pilgrimage as a precautionary measure to curb the spread of the coronavirus. Global airlines have slashed capacity and cut jobs in efforts to preserve cash as the virus dipped air travel demand. While some countries are easing lockdown measures, airline passenger traffic is unlikely to return to pre-crisis levels until 2023, according to the International Air Transport Association.

Saudi Airlines Catering's bottom line results missed the analyst estimates of EFG Hermes by 85 per cent due to a combination of "lower-than-expected" revenue and margins, it said in a note on May 20.

"While we were anticipating a weak set of results, the extent of the revenue and margin pressure is somewhat surprising, given that Covid-19 flight restrictions only started in the last two-to-three weeks of the quarter," EFG Hermes said. It has a neutral rating on the stock.

The company provides catering services in-flight and for airport lounges, retail, private sector companies and government offices.

In March, the company said it will postpone fourth-quarter dividend distribution to shareholders until further notice and after "current conditions are settled" as a "precautionary measure" to preserve liquidity.

The company provides ground handling services such as baggage handling, cargo loading and offloading, fleet services and traffic control services at 27 airports in Saudi Arabia, according to its website.

Saudi Arabia has recorded 59,854 coronavirus cases with a death toll of 329 as of Wednesday, according to Johns Hopkins University, which tracks the spread of the virus globally. There have been 31,634 recoveries as well.

Globally, 4.9 million cases have been recorded while the number of deaths is at 323,413 with 1.69 million recoveries.

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Conflict, drought, famine

Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.

Band Aid

Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.

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The specs

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Transmission: 8-speed dual-clutch automatic

Fuel consumption: 11.2L/100km

On sale: Now, deliveries expected later in 2025

Price: expected to start at Dh1,432,000

Specs

Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request

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