ComfortDelGro reported 2Q18 net profit fell 5.5 percent amid higher costs

ComfortDelGro taxi in SingaporeComfortDelGro taxi in Singapore

Transportation operator ComfortDelGro reported on Friday that its second quarter net profit fell 5.5 percent on-year to S$75.0 million amid higher operating costs, in part due to higher headcount.

Revenue rose 5.4 percent in the quarter to S$941.1 million on contributions from new acquisitions related to the company’s “aggressive expansionary policy” and improvement in the underlying businesses, it said in a filing to SGX after the market close on Friday.

ComfortDelGro has made S$269 million worth of acquisitions, both in Singapore and overseas, since the beginning of the year, it noted.

“Maiden contributions from new subsidiaries like National Patient Transport and Tullamarine Bus Lines in Australia as well as AZ Bus in Singapore helped boost topline figures,” it said, adding there was a positive foreign currency translation effect of S$1.8 million.

But group operating costs rose 6.5 percent on-year in the quarter to S$831.6 million, mainly from additional headcount needed to support the Seletar Bus Package in Singapore, higher mileage operated and newly acquired subsidiaries, ComfortDelGro said, adding that costs also faced a S$1.7 million negative currency translation effect from the stronger British pound and Chinese yuan.

Revenue from the public transport services segment rose 13.9 percent on-year in the quarter to S$667.9 million on growth across its three geographies, Singapore, Australia and the U.K., with higher fees earned, higher mileages operated and contributions from new acquisitions, it said.

But it added that in Singapore, while rail ridership continued to grow, operations still posted losses as the fare revenue wasn’t sufficient to cover rises in operating and maintenance costs.

Taxi revenue falls

Its taxi business revenue fell 12.0 percent on-year in the quarter to S$184.7 million on a smaller operating fleet, ComfortDelGro said.

The inspection and testing services segment saw revenue fall by 1.2 percent on-year in the quarter to S$25.3 million, with the cessation of business in Beijing partially offset by an increase in Singapore, it said.

In its outlook, ComfortDelGro said it expected Singapore public transport services revenue to rise with the commencement of the Seletar Bus Package in March 2018 and the Bukit Merah Bus Package in the fourth quarter of 2018, it said.

While it expected the full-year contribution from Singapore’s Downtown Line 3 would boost rail-service revenue, it also expected the rail segment would remain “challenging” after the fare reduction at the end of last year and rising operating and maintenance costs, it said.

It said it expected revenue from the Australia bus business to rise, while the U.K. segment’s revenue would be maintained, with the recent acquisition of new bus businesses in Australia, Singapore and the U.K. to contributed to revenue growth.

ComfortDelGro said it expected the taxi business revenue would be maintained, with stabilization in Singapore and recent acquisitions in China, Australia and the U.K. In Singapore, it expected delivery of 200 new hybrid taxis by August, with orders for another 1,000 to be delivered in 2019, it said.

For the first half, net profit fell 12.7 percent on-year to S$141.3 million, while revenue rose 3.2 percent on-year to S$1.82 billion, it said.

ComfortDelGro declared an interim dividend of 4.35 Singapore cents, unchanged from the year-earlier period.

 

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