Kerry Mok says SATS is working closely with branded hawkers to develop inflight cuisines to " wow the customer"

 

DIGITALISATION has been a huge buzzword amid the pandemic but incoming SATS president and chief executive Kerry Mok' s priorities lie elsewhere - in his people.

 

His goal? To make ground handler and caterer SATS among the best workplaces in the world.

 

Mok said his key focus is making sure employees - regardless of their seniority - are aware that they are making a difference to the company.

 

From chefs to equipment operators, Mok wants every employee to understand they play a significant role in driving outcomes for SATS.

 

" We should not underestimate this soft aspect of running a business," said Mok in a recent interview with The Business Times.

 

" When we add in our technology, investments . . . this then becomes how we power our business going forward."

 

Mok replaces Alex Hungate, who resigned after 8 years at the helm of SATS. Hungate will leave the company in December to join Grab as its chief operating officer from Jan 4.

 

" I know I have got big shoes to fill. Alex has done a fantastic job to get us where we are," said Mok, adding that he too aspires to make SATS a better place.

 

Mok joined SATS in 2018 as chief executive officer of food solutions.

 

He recalled the awkwardness of the first food tasting session with his colleagues, in which he was the only one who gave the dishes glowing reviews.

 

As Mok put it, he was " not a food guy" . But the accountancy graduate had spent over 2 decades in the supply chain industry, which he said is closely intertwined with the production and supply of food.

 

" When you look at a food business 80 per cent of it is logistics (and) supply chain, 20 per cent is about technology and culinary skill set," said Mok.

 

The food business has lately become particularly important for SATS.

 

Although the company had embarked on its path towards diversification ahead of the pandemic, Mok said aviation was still the key focus when he joined.

 

But when the aviation business took a hit from the coronavirus outbreak, Mok jumped at the opportunity to accelerate the growth of SATS' non-aviation segment.

 

" Because aviation dropped, everyone had the time to look at things differently," he said.

 

" If aviation was running at full steam, there was no way anyone would spend time looking at the non-aviation business."

 

When Mok first joined SATS, the company was in fact mulling over the sale of its chilled and frozen processed foods distributing business Country Foods.

 

" But when I came in, I said: ' No, you cannot sell the business. It is vital to my end-to-end supply chain strategy' ."

 

SATS ended up buying the remaining 49 per cent of Country Foods (then known as SATS BRF Food) in 2019.

 

Today, Country Foods is a significant contributor to the group' s non-aviation revenue, which is now neck-and-neck with aviation.

 

SATS' non-travel business accounted for about 47 per cent of total revenue for the half year ended Sep 30, closing in on its travel-related segment which accounted for 53 per cent of revenue.

 

Today, Mok said, SATS' " sector-based approach" has given its business model greater resiliency.

 

As the travel business slowly picks up, he hopes that there will continue to be tension between the company' s food and aviation business segments.

 

" In any company, you need to have some healthy competition," he said.

 

In search of adventure

 

Mok started his career as a consultant at Accenture.

 

" It was probably the most influential (point) in my career, because at a very young age, I was given a lot of authority and exposure," he said.

 

" As a consultant, it also trains you to think out of the box and constantly be learning.

 

" If you ask me to do a stable job . . . you know that I will never take the job because I don' t get to test myself, I don' t get to learn new things. It becomes boring for me," he said.

 

He later took on a global position at DHL, which involved shuttling back and forth between Singapore and both Europe as well as the United States.

 

The opportunity to spend a great deal of time abroad gave Mok front-row seats to the inner workings of the global logistics environment.

 

But these frequent travels came at a cost - missing out on his children' s growing years. So, in 2013, Mok traded his jet-setting lifestyle for time with his family.

 

He left his role as regional senior vice-president of service logistics and technology at DHL to join then

 

Singapore-listed Goodpack, a provider of intermediate bulk containers.

 

While at Goodpack, Mok said, he received a job offer from YCH Group' s executive chairman.

 

" When Robert Yap, whom I had known for a long time, asked me to join and help him grow the business and take it global, I was inspired by the fact that I have a chance now to make a difference to a local logistics company," he said.

 

He shook hands with Yap and served his notice at Goodpack, even though he was due to take over as chief executive there.

 

Within the first month of joining YCH, however, Mok was offered a position at SATS.

 

He initially rejected SATS' offer, but was eventually persuaded when he realised it would be difficult for him to make an impact at YCH - a family-owned business.

 

" I realised that I was never going to be able to make decisions," he said.

 

More brands, new markets

 

Mok is making plenty of decisions now. He sees opportunities from introducing branded food products on flights to " wow the customer" .

 

For instance, SATS has been working closely with hawker brands such as chicken rice chain Boon Tong Kee, Song Fa Bak Kut Teh, and handmade noodle joint Qiu Lian Ban Mee.

 

In addition, SATS is developing alternative proteins in a bid to address the growing demand for safe, healthier, and more convenient food.

 

Country Foods, for instance, has partnered food tech startups such as Impossible Foods, v2food, Fable Food and JUST Egg since end-2019.

 

The group is also looking to serve new customer segments through overseas expansion.

 

It is setting up central kitchens in Tianjin, China and Bengaluru, India. It recently acquired a large-scale food production facility, Food City, in Thailand.

 

" Growing the network overseas is a very important part of our future," said Mok, adding that Singapore' s population of 5.9 million is important but not enough to help the company become a global champion.

 

Cargo growth

 

Meanwhile, a global logistics crunch is boosting demand for SATS' cargo services.

 

SATS handled some 808,300 tonnes of cargo in the 6 months ended Sep 30 - 64.4 per cent higher than the same period last year.

 

The price difference between ocean and air freight has narrowed, with air freight providing much more certainty and stability amid port congestions.

 

SATS has been boosting its cargo business through collaboration with e-commerce players, deepening partnerships with national postal services and airlines, as well as enhancing its cold chain capabilities across its network.

 

" Air freight plays a key role in supply chain resilience and that realisation has led to an increase in demand for air freight" , said outgoing chief executive Hungate.

 

" What that means for SATS is that we will put more of our resources into investing and growing our cargo business relative to the rest of our business.

 

" We believe that the premium for resilience is something that will be a permanent feature of the post-Covid world."

  Sats reported net profit of $13.2 million for the first six months to Sept 30, reversing a loss of $76.9 million last year.

 

SINGAPORE - Airport services firm Sats will strengthen its food and cargo divisions to reinforce its in-flight catering and ground handling businesses and strike a better balance between travel and non-travel revenues, it noted on Friday (Nov 12).

 

The moves come as the aviation sector sees a pick-up in business with more vaccinated travel lanes and easing border restrictions across the region.

 

Incoming president and chief executive Kerry Mok told a result briefing that the company wants to extend its capabilities in food production and distribution while investing in food innovation, such as developing alternative protein-based items.

 

Mr Mok has replaced Mr Alex Hungate, who resigned last month after eight years at the company. He joins ride-hailing company Grab as chief operating officer on Jan 4.

 

Revenue from Sats' non-travel related divisions has swelled since the pandemic hit, yielding new opportunities for the company to expand in food.

 

Key to the new strategy is supply chain resilience. This involves establishing supply partnerships and diversifying food sources, expanding its network of food factories, central kitchens and assembly centres as well as distributing to new markets in Singapore and overseas.

 

Sats will also invest further in expanding its capabilities in alternative proteins and increase and commercialise its portfolio of food products and brands, said Mr Mok.

 

New central kitchens in Tianjin, China, and Bengaluru, India, are being set up, as well as a large-scale food production facility in Thailand. The food and non-travel related business now represents 47 per cent of total revenue.

 

Sats will bolster its cargo division as well, including investing in terminals in the Saudi Arabian cities of Riyadh and Jeddah to expand its reach in the region.

 

" Over the past two years, our cargo volumes have grown and are now above pre-pandemic levels," Mr Mok added.

 

This was driven by demand to move Covid-19 vaccines and higher volumes of goods ordered via e-commerce.

 

Sats moved 808,300 tonnes of cargo in the six months to Sept 30, up 64.4 per cent from the same period last year.

 

It also served 26.3 million non-flight meals to institutions and restaurants, up 27.2 per cent.

 

Sats reported net profit of $13.2 million for the first six months to Sept 30, reversing a loss of $76.9 million last year.

 

It attributed the recovery to a 29.3 per cent surge in revenue to $569.5 million for the half-year in tandem with growth in cargo volumes, non-travel revenue and resumption of ship calls. This helped offset the lower aviation volumes for the food catering business.

 

Gateway services revenue jumped 61.4 per cent to $257.3 million while food solutions turnover increased 12.6 per cent to $310.3 million. This resulted in an operating profit of $4 million for the first half, compared with an operating loss of $36 million in the same period last year.

 

Sats associates and joint ventures also returned to the black, contributing $900,000 to earnings, from a loss of $44.2 million in the previous year. This marks a gradual recovery from Covid-19, with marked improvement from most of the aviation associates and joint ventures.

SATS on Friday (Nov 12) reported a profit of S$13.2 million for H1 FY2021-22, reversing a loss of S$76.9 million a year ago.

 

In a bourse filing before market open, the ground handling and inflight caterer attributed the recovery to higher revenue for the half-year period, growing 29.3 per cent to S$569.5 million in tandem with growth in cargo volume, non-travel revenue and resumption of ship calls. This has helped to offset the lower aviation volumes for the food catering business.

 

Gateway services revenue jumped 61.4 per cent to S$257.3 million from S$159.4 million, while food solutions revenue increased 12.6 per cent to S$310.3 million from S$275.5 million. This resulted in H1 FY2021-22 operating profit of S$4 million, from an operating loss of S$36 million in the year-ago period.

 

A tax credit of S$8.9 million also helped to boost profits, but was 64.4 per cent lower than the previous year' s S$25 million.

 

Share of results of associates and joint ventures also returned to the black for H1 FY2021-22, contributing S$900,000, from a loss of S$44.2 million in the year prior. This marks a gradual recovery from Covid-19 with marked improvement from most of the aviation associates and joint ventures.

 

No interim dividend was declared by the board of SATS, which the group believes is a prudent move to allow for the preservation of jobs and capabilities to support customers as aviation volumes return, as well as pursue opportunities outside of aviation.

SATS sees the Vaccinated Travel Lanes and the easing of border restrictions across the region as helping to improve aviation volumes. The company is looking to catch the rebound in travel with its retained domain capabilities.

 

With investments in cargo terminals in the Saudi Arabian cities of Riyadh and Jeddah, SATS is expanding its cargo-handling reach in the region, and investing in innovations such as digitally connected command centres for real-time decision-making together with customers by sharing relevant data.

 

New central kitchens in Tianjin, China and Bengaluru, India are being set up, as well as a large-scale food production facility in Thailand to capture growth in the non-travel segment, which has grown 15 per cent in H1 FY2021-22 and represents 47 per cent of total revenue.