Lower fuel costs drive up ComfortDelGro Q2 profit

Lower fuel and power costs continued to bolster ComfortDelGro Corp's bottom line for the second quarter ended June 30.
Lower fuel and power costs continued to bolster ComfortDelGro Corp's bottom line for the second quarter ended June 30.ST PHOTO: LIM YAOHUI

Lower fuel and power costs continued to bolster ComfortDelGro Corp's bottom line for the second quarter ended June 30.

The transport giant posted a 5.3 per cent increase in earnings to $85.2 million, even as revenue dipped by 1.4 per cent to $1.02 billion. At the half time, its profit after tax was 6.8 per cent higher at $158.6 million.

Besides lower diesel and electricity cost, the group spent appreciably less on materials and consumables. Staff cost continued to grow, rising by 5.9 per cent to $363.5 million. In all, operating expenses shrank by 1.8 per cent - or $16.9 million - to $899.4 million in the second quarter. Revenue was hit by foreign exchange losses from its businesses in Australia, China and Britain. This was mitigated by growth in the Singapore rail, bus and taxi businesses, as well as the driving school division. In fact, the Singapore units accounted for 58.2 per cent of second-quarter operating profits - up from 53.7 per cent at the same time last year.

For the second quarter, earnings per share stood at 3.96 cents, up from 3.77. Net asset value per share was 108.07 cents, down slightly from 108.6 as at Dec 31, 2015.

ComfortDelGro's operating margin before tax and depreciation improved to 21.5 per cent, from 20.9 in the same period last year.

As at June 30, it had a net cash position of $323.1 million. Liabilities shrank by $233.2 million to $1.97 billion. Its gearing stood at 15 per cent, down from 18.5 at the end of 2015.

  • AT A GLANCE

  • NET PROFIT:
    $85.2 million (+5.3%)

    REVENUE:
    $1.02 billion (-1.4%)

    DIVIDEND PER SHARE:
    4.25 cents (+6.3%)

At the half-year mark, the group's bus and related businesses contributed $90.1 million to operating profits, down slightly from $91.8 million in the same time last year. Its rail business, undertaken by SBS Transit, saw operating profit falling to $3.9 million, from $4.9 million, even though revenue surged. This was because start-up costs for the Downtown Line 2 continued to weigh on profitability. On the whole, however, SBS Transit reported a 41.2 per cent rise in net earnings to $15.3 million for the first half.

ComfortDelGro's second-biggest profit contributor was the taxi segment, which posted $85.1 million in interim profit - up from $80.7 million. Its automotive engineering business, which includes diesel sales to cabbies, was next with $26.1 million, up from $18.6 million.

The vehicle inspection business, undertaken by Vicom, saw operating profit shrinking from $19.3 million to $17 million. Vicom reported a 12.9 per cent drop in net earnings to $13.9 million for the first half.

The group's car rental and leasing division posted an interim operating profit of $4.2 million, down slightly from $4.3 million. Its driving school saw profit rising from $4.4 million to $5.9 million. The 34 per cent growth was fuelled by higher enrolment.

Directors are recommending an interim dividend of 4.25 cents, up from 4 cents in the previous corresponding half.

Looking ahead, they expect most key businesses to maintain their revenue levels, but warned that costs would rise.

Meanwhile, SBS Transit's share price ended 4.8 per cent or 11 cents higher yesterday at $2.40 - a day after news broke that the two incumbent bus operators in Singapore would move over to the new contracting model from next month. SMRT's share price was flat primarily because parent Temasek had announced earlier that it would delist the operator.

A version of this article appeared in the print edition of The Straits Times on August 13, 2016, with the headline 'Lower fuel costs drive up ComfortDelGro Q2 profit'. Print Edition | Subscribe