SINGAPORE - SMRT Corporation reported lower profit for its financial first quarter, when the transport operator was again burdened by high expenses and struggling train operations.
Profit after tax for the three months to June 30 was down 10 per cent year-on-year to S$20.1 million, even as revenue rose 7.8 per cent year-on-year to S$320.3 million, SMRT said when announcing its latest results after market close on Thursday.
But the revenue growth was largely offset by a 10.1 per cent year-on-year increase in total operating expenses to S$308.9 million, "due mainly to higher staff costs, depreciation, repairs and maintenance and other operating expenses," SMRT said in a release.
The expenses rose as headcount increased, but the company had also spent more on "a more intensified maintenance regime" in order to keep its aging MRT and LRT systems in good shape, amid the intermittent incidents of system breakdown that have sparked widespread consumer anger.
As a result, train and LRT fare businesses did poorly in the quarter. Operating profit from the train unit dropped a massive 174.3 per cent year-on-year to a loss of S$3.7 million. In the LRT unit, operating loss widened from S$0.6 million a year ago to S$1.6 million.
The bus unit turned in a profit of S$1.5 million for the quarter, but all three units still combined to a loss of S$3.8 million, which widened from S$1.1 million a year ago.
The non-fare segment fared better, with profit for the quarter rising 5.5 per cent year-on-year to S$31.5 million due largely to an increase in profit from taxi operations and rental segment. Taxi profit in particular rose 32.2 per cent year-on-year to S$5.5 million.
Total net asset value for the quarter was 57.78 cents per share, up from 56.47 cents in the previous quarter, while earnings per share were 1.32 cent, down 10.2 per cent from a year ago. No dividend was declared.
Commenting on its outlook, SMRT warned that the public transport operating landscape remains challenging, and the already high operating expenses are set to keep rising.
"The Group is making progress in its discussions with the authorities on the transition to a new rail financing framework," SMRT added, referring to the government's proposal in 2010, under which the government will own the rail assets while operators such as SMRT will focus on providing and improving services. The negotiation for the framework remains in a deadlock.
But SMRT chief executive Desmond Kuek said: "Our key focus continues to be in strengthening our rail reliability, and we are committed to the multi-year programme to upgrade and renew the ageing network."
Mr Kuek was himself at the centre of public scrutiny in June, when it was reported that he earned over S$2.25 million in 2014, an amount which doubled in less than three years despite the company's ongoing struggle and a seeming lack of improvement in the quality of train services.