ComfortDelGro posts profit growth despite continued slide in taxi performance

A ComfortDelgro cab at a taxi stand in Singapore central business district.
A ComfortDelgro cab at a taxi stand in Singapore central business district.PHOTO: ST FILE

SINGAPORE - Transport giant ComfortDelGro Corp posted a modest 0.6 per cent rise in net earnings to $303.3 million for the year ended Dec 31, 2018, as weaker taxi and automotive engineering performances offset a strong public transport segment.

The absence of a special dividend from Australian unit Cabcharge and a drop in investment income also weighed on its bottom line.

The Singapore-based global group reported a 6.4 per cent rise in revenue to $3.81 billion, with contributions from new acquisitions making up more than half of the increase. New acquisitions contributed to a $20.7 million growth in operating profit, while existing businesses contributed $10.7 million.

Group operating expenses rose by 6.3 per cent to $3.37 billion, with the biggest jumps in fuel and energy costs, as well as staff cost.

Earnings per share rose from 13.95 cents in 2017 to 14.01 cents last year. Net tangible asset value per share stood at 120.7 cents, down from 121.01 cents.

Profit margin before tax and depreciation narrowed from 22.9 per cent to 21.9 per cent.

ComfortDelGro chief executive Yang Ban Seng said: "2018 was a watershed year for the group, marked by our most aggressive expansion programme yet. We invested $439.4 million overseas alone - the bulk of which was in Australia.

"Our M&A (mergers and acquisitions) activities have started to bear fruit, giving a much needed boost to our existing businesses."

In response to queries at its results briefing on Wednesday (Feb 13), Mr Yang said the drop in taxi earnings came more from China. In Singapore, he said the group had scrapped "a lot of unhired cabs... and replaced those bought with high COEs".

 
 
 

The replacement vehicles are hybrids, saving the group in diesel tax. They also fetch a higher rental of around $117 per day, as compared with around $98 for the diesel-powered Hyundai Sonata.

Its local taxi fleet shrank 6.7 per cent to 12,360 as at end-December. ComfortDelGro said around 2,000 of these are hybrids, adding that all replacements from hereon will be either hybrids or pure electric cars.

At the operating level, ComfortDelGro's taxi business (including overseas) posted a 3.4 per cent drop in profit to $129.4 million. Automotive engineering (which includes fuel sale to cabbies) posted a 25.4 per cent drop to $25.3 million.

Its public transport businesses chalked up a 20.2 per cent rise in operating profit to $216.5 million, while its inspection and testing unit reported a 22.1 per cent increase to $39.8 million.

Revenue contributions from overseas businesses remained largely unchanged at 41.1 per cent, while profit contribution shrank from 40.4 per cent to 35.6 per cent.

Directors have recommended a final dividend of 6.15 cents, up from 6.05 cents previously. Looking ahead, they expect its public transport businesses in Singapore and Australia to increase in revenue this year, while that of its UK unit will "maintain" current levels.

It also expects all other units to maintain their revenue contributions, including taxis, signalling that the worst may be over from a segment battered by the flood of private-hire players.

The only exception was car rental and leasing, which the group said would see a drop in revenue this year.

Mr Yang said: "We will continue to look at investment opportunities and new technological initiatives which will further strengthen our foundation for growth."