SIA Engineering, one of the leading aircraft maintenance, repair, and overhaul (MRO) companies in the Asia-Pacific region, reported a decline in net profit in the third quarter of FY2022-23. Despite an improvement in flight activities, the company’s net profit still dropped significantly, according to a recent bourse filing.
Net Profit Declines by $20.4m YoY in Q3 FY2022-23
SIA Engineering reported a net profit of $12.8 million for the quarter, $20.4 million less than the same period last year (YoY). The decline in net profit can be attributed to various factors, including a rise in expenditure and other expenses. However, the company’s net profit would have shown a marked improvement of $19.8m YoY if we exclude last year’s wage support and one-time tax write-back.
Rise in Expenditure Contributes to Higher Operating Loss
Due to an increase in spending during the same quarter, SIA Engineering reported a higher operating loss of $12.5 million. The company’s expenditure in Q3 FY2022-23 rose by 35.5% primarily because of an increase in manpower costs. The rise in expenditure affected the company’s profitability, and as a result, the operating loss for the quarter went up.
Increasing Costs of Labor Due to a Number of Reasons
According to SIA Engineering, an increase in headcount, the end of manpower cost mitigation measures, and increments were the main causes of the rise in manpower costs. The company attributed the rise in headcount to the higher workload caused by the resumption of maintenance work on various types of aircraft, which was halted due to the COVID-19 pandemic. Additionally, cessation of manpower cost mitigation measures and increments contributed to the increase in manpower costs.
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Despite the improvement in flight activities, SIA Engineering’s net profit declined in the third quarter of FY2022-23. The rise in expenditure, particularly in manpower costs, impacted the company’s profitability. However, the company’s net profit would have improved significantly YoY if we exclude last year’s wage support and one-time tax write-back. SIA Engineering remains committed to managing its costs prudently and exploring new business opportunities to improve its performance in the future.
