SBS Transit posts earnings growth despite weak rail performance

SBS Transit's new Downtown MRT line has continued to bleed - not uncommon for a new line as ridership lags behind costs.
SBS Transit's new Downtown MRT line has continued to bleed - not uncommon for a new line as ridership lags behind costs.PHOTO: LIANHE ZAOBAO

SINGAPORE - Transport operator SBS Transit posted a 52.9 per cent rise in net earnings to $19.43 million for the second quarter ended June 30, chiefly on the back of better bus performance.

The improvement came with a 19.8 per cent rise in revenue to $344.92 million, which SBS Transit attributed mainly to higher fees earned following the commencement of the Seletar Bus Package in March, and higher ridership from its rail lines.

For the first half, SBS Transit's net profit climbed 57.7 per cent to $36.2 million, largely due to the 17.8 per cent growth in revenue to $673.1 million.

Although its public transport services division remained profitable, SBS Transit's new Downtown MRT line (DTL) continued to bleed - not uncommon for a new line as ridership lags behind costs.

According to the Accounting And Corporate Regulatory Authority, SBS Transit DTL posted a loss of $47.6 million for the full year ended Dec 31, 2017.

SBS Transit's earnings per share for the second quarter stood at 6.24 cents, up from 4.09 cents at the same time last year. Its net asset value per share was $1.52, up from $1.44.

But its margin before interest, tax and depreciation shrank from 14 per cent to 13.6 per cent.

Directors expect revenue from buses and trains to rise in the next quarters, adding that the company has started running the Seletar Bus Package, with the Bukit Merah Bus Package slated to start in the fourth quarter of this year.

Even as rail ridership is expected to continue growing, they said rail business "will continue to be challenging due to the fare reduction effective from Dec 29, 2017, and rising operating and maintenance costs".

"Operating costs will be higher, with higher staff costs following salary adjustments and increments," the company added. "Repairs and maintenance costs are expected to increase with DTL fully operational and higher maintenance requirements as the bus and train fleets age."

Nevertheless, directors are recommending an interim dividend of 5.8 cents per share, up from 3.65 cents previously. It will be paid on Aug 27.