ComfortDelGro enhances dividend policy even as H1 profit falls on higher costs
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ComfortDelGro will raise its minimum dividend payout to 70 per cent of profit after tax and minority interests – up from 50 per cent.
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SINGAPORE – Transport giant ComfortDelGro Corp reported a 31.9 per cent drop in interim net earnings for the first half of the year to $78.5 million, on the back of higher expenses and the absence of a one-off gain recognised in the previous corresponding period.
The Singapore-listed global operator announced at its results briefing on Monday that it would raise its minimum dividend payout to 70 per cent of profit after tax and minority interests – up from 50 per cent.
Its actual payout had been between 70 per cent and 80 per cent historically.
Revenue for the six months ended June 30 rose by 1 per cent to $1.86 billion as underlying businesses continued to return to pre-pandemic levels. The uptick was partially offset by a $62.2 million foreign exchange loss from the weaker Australian dollar and British pound.
Operating costs rose by 4.4 per cent to $1.75 billion. Among the bigger increases were fuel and electricity, depreciation and amortisation, and contract services – partially offset by lower costs for staff, vehicle repairs and maintenance, and materials and consumables.
Excluding a one-off gain from the sale of a bus depot in London in the first half of 2022, the group’s net profit was down by 7.4 per cent, or $6.3 million.
Overall, earnings per share for the interim period fell from 5.32 cents to 3.62 cents. Net asset value per share remained relatively stable at 118.54 cents, compared with 118.79 cents previously.
Quarter to quarter, the group’s performance showed improvement. Profit after tax and minority interests for the second quarter of 2023 was $45.7 million, up from $32.8 million in the first quarter, and $25.5 million in the fourth quarter of 2022.
ComfortDelGro group chief executive Cheng Siak Kian said: “Despite headwinds in some parts of the business, our overall performance has recovered. We have seen this recovery accelerate in the second quarter of 2023, particularly in our core business of public transport and taxi and private hire.
“To sustain this momentum, we are exploring new growth opportunities beyond our existing core business, particularly in the areas of electrification and autonomous vehicles.”
Public transport remained the group’s biggest income contributor in the first half, generating $52.4 million in operating profit, down from $117.4 million in the first half of 2022, followed by taxi and private hire with $42.7 million, up from $25.1 million.
Other private transport services incurred an operating loss of $400,000, compared with a profit of $2.3 million previously, while inspection and testing services posted a gain of $16.6 million, from $16.5 million.
For the period, the group had a net cash outflow of $90 million on the back of a special dividend as well as an increase in capital expenditure, versus a cash inflow of $51.4 million for the same period in 2022. Borrowings decreased from $35.7 million to $11.3 million.
For the interim period, directors are declaring a dividend of 2.9 cents per share, representing an 80 per cent payout ratio.
“We believe in rewarding our shareholders,” said group chairman Mark Greaves, who was confident of meeting the new minimum dividend payout, “given our stable cashflows and strong balance sheet”.
Looking ahead, the group expects core businesses to continue to recover, with more favourable terms of public transport contracts in key markets kicking in and inflation stabilising.
Revenue for the taxi and private-hire operations will grow with the introduction of ride-hailing platform fees
