ComfortDelGro reports 2018 net profit rose slightly, beating some analysts’ forecasts

ComfortDelGro taxi in SingaporeComfortDelGro taxi in Singapore

This article was originally published on Wednesday, 13 February 2019 at 18:15 SGT; it has since been updated.

Taxi operator ComfortDelGro reported on Wednesday that its 2018 net profit rose 0.6 percent on-year to S$303.3 million on contributions from new acquisitions. That beat some analysts’ forecasts.

Revenue for the year ended 31 December increased 6.4 percent on-year to S$3.81 billion, it said in a filing to SGX after the market close on Wednesday.

CGS-CIMB had forecast full-year net profit of S$295.5 million on revenue of S$3.66 billion, while in a November note, Deutsche Bank had forecast full-year net profit of S$297.4 million on revenue of S$3.71 billion.

“The increase in revenue came mainly from the public transport services business offset by decreases in the taxi and automotive engineering businesses,” the filing said.

New acquisitions in late 2017 and 2018 accounted for S$124.2 million of the revenue increase, ComfortDelGro said.

Yang Ban Seng, managing director and group CEO, said that 2018 was the company’s most aggressive expansion effort so far, with around S$439.4 million invested overseas, mostly in Australia.

“Our M&A activities have started to bear fruit, giving a much needed boost to our existing businesses. We will continue to look at investment opportunities and new technological initiatives which will further strengthen our foundation for growth,” Yang said in the statement.

But in its outlook, the company said it expected the operating environment would remain challenging, and that it would continue to manage costs while seeking acquisition opportunities.

Operating costs for the year also rose 6.3 percent to S$3.37 billion, mainly on higher staff costs to support new bus packages in Singapore and higher costs from new acquisitions as well as higher maintenance costs, it said.

Taxi revenue declines

In the taxi segment, full-year revenue fell 9.7 percent to S$726.5 million on a smaller operating fleet, ComfortDelGro said.

“Revenue from the taxi business is expected to be maintained amidst the keener competitive environment,” it said in the outlook, noting that Singapore’s Land Transport Authority has issued proposed changes to regulations for the sector.

ComfortDelGro said it also has taken delivery of 900 new hybrid taxis and has ordered another 600 to be delivered this year.

Public transport revenue increases

For public transport services, full-year revenue increased 12.9 percent on-year to S$2.71 billion, with S$96.01 million coming from new acquisitions, the company said.

The company said the segment also got a boost from higher fees from increased mileage after the Seletar and Bukit Merah Bus Packages began operating in March and November, while rail ridership increased from the full-year operation of the Downtown Line 3.

“Revenue from the public transport services business in Singapore is expected to grow,” it said in the outlook, pointing to the two new bus packages. It also said rail revenue was likely to rise after the December fare increases, but the segment would still face rising operating and maintenance costs.

The Australia bus business was expected to see higher revenue, while U.K. bus revenue was expected to be maintained, it said.

The inspection and testing services division saw revenue increase 6.3 percent for the full year to S$110.5 million, mainly on a net gain for surrendering the lease on property at Teban Gardens in Singapore, the filing said.

ComfortDelGro proposed a final dividend of 6.15 Singapore cents, which combined with the 4.35 Singapore cent interim dividend, brought the 2018 total to 10.5 Singapore cents. In the previous year, it declared a final dividend of 6.05 Singapore cents.

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