Rail operator SMRT Corp reported a 10 per cent drop in net earnings to $20.1 million for the first quarter ended June 30 as increases in staff cost, depreciation, and repairs and maintenance more than offset a rise in revenue.
Total revenue, including other operating income, rose by 8.6 per cent to $336.6 million.
Total expenses rose by 10.1 per cent to $308.9 million.
Staff cost accounted for the single biggest hike of $10 million in absolute terms.
Other operating expenses grew by $11.9 million as full-quarter cost associated with Kallang Wave mall, higher contribution to the Public Transport Fund and off-peak travel incentives kicked in.
AT A GLANCE
REVENUE: $336.6 million (+8.6%)
NET PROFITS: $20.1 million (-10%)
Income from operations was once again led by the Temasek-owned company's non-fare businesses, which saw a 4.8 per cent rise in operating profit to $32.1 million.
The improvement was led by taxis and rental of retail space.
The core rail business plunged by more than 230 per cent to register a loss of $5.7 million - from a profit of $4.3 million same time last year.
SMRT said this was largely because of higher costs associated with "an expanded and ageing network, larger fleet, tightened regulatory standards and heightened operational demands".
The bus division, on the other hand, performed much better. It went from a loss of $5.6 million last year to an operating profit of $1.2 million.
SMRT's chief executive, Mr Desmond Kuek said: "While we have made progress on many fronts in the group, the rail business remains a challenge."
SMRT's earnings per share worked out to 1.32 cents, down from 1.47 previously.
Its net asset value per share was 57.78 cents, up from 56.47.
At the end of the period reviewed, SMRT had cash and equivalents of $131 million, down sharply from $207.2 million.
This was because of a "lower financing cash inflow, partially offset by lower investing cash outflow and higher operating cash inflow".
At the same time, total liabilities fell by 1.3 per cent or $21.6 million because of lower trade and other payables, partially offset by borrowings and tax liabilities.
SMRT's net gearing stood at 0.79, up slightly from 0.77.
Yesterday, SMRT's share price closed unchanged at $1.46. The stock has been trending downwards from a high of $1.80 in February.
In the light of cost pressures faced by the group, analysts have pared down their forecasts.
For instance, Deutsche Bank revised its 12-month price target for the stock to $1.94, down from $2.43.