ComfortDelGro's 2019 profit driven down by S'pore business

12.6% fall also due to foreign currency effects, higher costs; group warns of hard ride ahead

Lower contributions from its Singapore business, higher costs and the impact of unfavourable foreign exchange pulled transport giant ComfortDelGro Corp's 2019 net earnings 12.6 per cent lower to $265.1 million.

For the year ended Dec 31, 2019, group revenue rose by 2.6 per cent to $3,905.7 million on the back of contributions from new overseas acquisitions.

Operating expenses rose by 3.7 per cent to $3,489.9 million, led by staff cost, and depreciation and amortisation arising from the adoption of new accounting standards last year. There was also an impairment charge of $27.3 million for the taxi businesses in Singapore and China.

The negative foreign currency effect amounted to $7.4 million. As a result, earnings per share fell from 14.01 cents to 12.24 cents.

Profitability, however, remains sound, with margin before depreciation, interest and tax rising to 22.2 per cent, from 21.9 per cent in 2018.

Net asset value per share stood at 119.8 cents, from 120.7 cents.

In the various segments, taxi operating profit shrank to $104.2 million from $129.4 million in 2018. In Singapore, ComfortDelGro had 10,700 taxis, representing 58 per cent of the market, at the end of last year. At the start of 2019, it had 12,216 cabs and 60 per cent of the market.

Its automotive engineering division, which includes fuel sale to cabbies, posted an operating profit of $27.8 million, up from $25.3 million.

The vehicle inspection business had an operating profit of $30.6 million, down from $39.8 million.

Its driving centre business saw operating profit rise from $11.8 million to $14.6 million.

Public transport, which is ComfortDelGro's largest division, posted an operating profit of $224.3 million, up from $216.5 million.

Geographically, overseas units accounted for 42.1 per cent of revenue and 33.7 per cent of operating profit.

ComfortDelGro chief executive Yang Ban Seng said: "Having just emerged from a year of consolidation and reorganisation, we are now faced with new challenges brought on by the 2019 novel coronavirus outbreak that first started in Wuhan, China.

"Our taxi, driving centre and bus station operations in China have been hit amid measures to try and contain the spread. In Singapore, we have started seeing some negative impact on our taxi operations as tourist arrivals fall and residents avoid crowded places.

"I think things will get worse before they get better."

The group said its taxi, public transport and transport-related businesses in Singapore and China are "witnessing lower ridership and volumes" because of the outbreak.

Notwithstanding the uncertainties, ComfortDelGro said it continues to focus on its strategy and to "transform and build capabilities".

Directors are recommending a final dividend of 5.29 cents, down from 6.15 cents previously.

The group remains in a strong cash position. It had a net cash inflow of $8.1 million for 2019. As of Dec 31, it had cash and equivalents of $594.2 million.

After accounting for borrowings of $530.1 million and lease liabilities from financial institutions of $104.1 million, the group had a net debt position of $40 million - translating to a net gearing ratio of 1.3 per cent - compared with a net cash position of $16.2 million as of Dec 31, 2018.

A version of this article appeared in the print edition of The Straits Times on February 15, 2020, with the headline 'ComfortDelGro's 2019 profit driven down by S'pore business'. Print Edition | Subscribe