SINGAPORE - Bus and rail operator SBS Transit posted a 43.2 per cent surge in third-quarter profits to $7.82 million on the back of higher ridership and lower fuel, depreciation and finance costs.
For the nine months to Sept 30, the company, a subsidiary of transport giant ComfortDelGro Corp, reported a 41.9 per cent rise in net earnings to $23.15 million.
Revenue rose by 4.8 per cent for the three months to $274.67 million, and 5.6 per cent for the nine months to $807.16 million.
Third-quarter earnings per share rose from 1.77 to 2.52 cents. Net asset value per share rose from $1.10 as at Dec 31 to $1.31 as at Sept 30. Its operating margin improved to 3.6 per cent in the quarter, up from 3 per cent in the same period last year.
Buses posted a 35.1 per cent rise in operating profit to $9.2 million, with lower diesel cost contributing to its margin of 4.5 per cent (up from 3.3 per cent previously).
Rail posted a 21.2 per cent drop in operating profit to $778,000 even as revenue grew. Higher staff and other costs associated with the ramp-up for Downtown Line 3, which is opening next year, eroded profitability. Operating margin for this segment shrank from 1.8 per cent last year to 1.1 per cent.
SBS Transit said average ridership for the Downtown Line grew by nearly 200 per cent in the third quarter to 234,000 trips a day.
Average daily ridership for North-East Line grew by 5.3 per cent to 577,000 trips, and that for the Sengkang-Punggol LRT rose by 14.7 per cent to 118,000 trips.
As at Sept 30, its total equity rose by 19.7 per cent or $66.6 million to $405.3 million as compared to Dec 31, 2015, on the back of profits generated from operations and an increase in other reserves.
As at Sept 30, SBS Transit had cash and bank balances of $4.7 million. After accounting for the borrowings of $297.5 million, it had net debt of $292.8 million and a net gearing ratio of 72.2 per cent, down from 98.4 per cent as at Dec 31.
Directors expect rail ridership to continue to grow. However, fare revenue will be affected by the recently announced 4.2 per cent fare reduction, which kicks in on Dec 30. Its bus business commenced operations under the Bus Contracting Model with effect from Sept 1. Directors expect revenue "to be maintained".
With salary adjustments announced in June, staff costs are expected to be higher, it added.
Analysts expect SBS Transit's rail business to be hit harder by the 4.2 per cent fare cut vis-a-vis rival SMRT, which has since migrated to a new financing framework which partially shields it from sharp fluctuations in margins.
SBS Transit shares rose six cents or 2.8 per cent to $2.21 before the results were announced.