Transport operator SMRT Corp has posted a 23 per cent drop in net earnings to $15.5 million for the first quarter ended June 30, as rail-related costs continued to rise and cannibalisation from rival SBS Transit's Downtown Line began to deepen.
The bottom line was also eroded by thinner profits from rental and advertising as the economy cooled.
Group revenue dipped by 0.9 per cent to $333.5 million, while operating expenses crept up by 0.8 per cent to $311.5 million.
Staff cost remained the biggest cost item, rising by 7.5 per cent to $138.6 million as SMRT prepares for the opening of the Tuas extension in the fourth quarter.
Repairs and maintenance rose by 12.4 per cent to $38 million.
The group said its bus division would move over to the government contracting model from next month. Under the model, SMRT will be paid a fee to operate routes, while the Government assumes revenue risks.
SMRT group chief financial officer Manfred Seah said first-quarter performance was also affected by the second phase of the Downtown Line, which opened last December.
Operated by SBS Transit, the Downtown Line's average daily ridership had grown from 83,000 before December to more than 250,000 last month. A portion of that came from SMRT's rail lines as well as its bus services.
SMRT's operating margin before interest, tax and depreciation stood at 23 per cent, down from 24.6 per cent at the same time last year.
Earnings per share fell from 1.32 cents to 1.02 cents. Net asset value per share, however, rose to 61.08 cents from 60.1 cents.
By segment, SMRT's rail business incurred $9.4 million in operating losses - more than the $5.3 million it lost during the same time last year.
Buses posted a profit of $202,000, down from $1.5 million. Taxi profit fell from $5.5 million to $4.5 million as more cabbies switched to other firms or migrated to private-hire fleets.
Rental and advertising brought in $25.5 million, down from $26 million. Engineering losses widened from $498,000 to $2.7 million.
SMRT's cash and equivalents as at June 30 was 19.7 per cent lower at $97.9 million, on the back of higher cash outflow. Its net gearing rose from 64 per cent to 67 per cent.
Looking ahead, the group said its bus division would move over to the government contracting model from next month. Under the model, SMRT will be paid a fee to operate routes, while the Government assumes revenue risks.
SMRT added that it will bid for the next route parcel in Seletar.
Commenting on the planned privatisation of SMRT, chief executive Desmond Kuek said it would allow the company to "better fulfil its role as a public transport operator to deliver high-quality services and operational reliability for the benefit of our commuters, without the pressure of short-term market expectations".