SMRT Q2 profit inches up 1.9% to $25.7m

Transport company SMRT saw its net earning rise 3.7 per cent to $25.8 million for the three quarters ended Sept 30.
Transport company SMRT saw its net earning rise 3.7 per cent to $25.8 million for the three quarters ended Sept 30. ST PHOTO: KUA CHEE SIONG

SINGAPORE - Transport group SMRT Corp posted a 1.9 per cent rise in earnings to $25.7 million for the second quarter ended Sept 30, as revenue grew 4.7 per cent mainly on the back of non-fare operations to $328.8 million.

Total expenses rose by 7.1 per cent to $313.6 million, with cost increases like manpower and depreciation outstripping lower energy and fuel costs.

Despite improved non-fare performance, SMRT's operating margin before interest, tax and depreciation shrank slightly by 0.1 points to 25.4 per cent.

Earnings per share stood at 1.69 cents, up from 1.66 cents, while net asset value per share rose from 56.47 as at March 31 to 57.47 cents as at Sept 30.

Its core MRT business incurred an operating loss of $2.8 million, from a profit of $7.6 million previously. LRT, which has never been profitable, saw losses widen to $1.2 million from $705,000.

SMRT's once lacklustre bus division turned in a profit of $2.6 million, from a loss of $1.4 million.

But it was its non-transit businesses that shone. Taxis made $4.5 million, up 31.8 per cent. Rental income rose by 7.8 per cent to $20.5 million, fuelled by its new Kallang Wave mall.

Income from advertising grew by 42.7 per cent to $7.4 million, while engineering services saw losses narrowing significantly to $124,000, from $923,000 same time last year.

On the whole, SMRT's non-transit businesses posted a 21.7 per cent growth in operating profit to $33.1 million. Its transit operations spilt $1.4 million in red ink, from a profit of $5.5 million last year.

This was despite higher ridership, higher fares and lower electricity cost. Expenditure on repairs and maintenance continued to weigh on the Temasek-owned group's traditional star performer.

Costs associated with the addition of new trains widened LRT losses further.

Looking ahead, directors expect SMRT to face "continuing challenges in the rail operating landscape" as expenses will continue to rise on the back of "intensive maintenance and renewal programmes".

The bus business is expected to improve. "We are in discussion with the authorities on the contract terms for the remaining bus services beyond the licence expiry in August 2016," SMRT said, adding that discussions on the migration to a new rail financing framework was also "making progress".

Directors are declaring an interim dividend of 1.5 cents, unchanged from previously, as half-time earnings dipped by 2.5 per cent to $46 million.

As at Sept 30, SMRT was in a net current liabilities position of $232.1 million, with higher payables related to 13 new North-South, East-West line MRT trains, and eight new LRT trains.

Its net gearing grew from 0.77 to 0.8. Cash and equivalents stood at $136.6 million, down from $170.7 million.