Vicom reports better earnings but may face speed bumps ahead

Revenue for Vicom, owned by transport giant ComfortDelGro Corp, grew by 2.4 per cent to $24.7 million. ST PHOTO: SONG TAO

SINGAPORE - Vehicle inspection group Vicom posted a 2.9 per cent increase in net earnings to $6.2 million for the second quarter ended June 30.

Revenue for the company, owned by transport giant ComfortDelGro Corp, grew by 2.4 per cent to $24.7 million.

The results brought Vicom's first-half net earnings 2.6 per cent higher to $13.3 million, on the back of a 2 per cent rise in revenue to $49.2 million.

Total cost incurred in the second quarter crept up by 1.3 per cent to $17.3 million.

Earnings per share stood at 7.05 cents, up from 6.85 cents in the second quarter of 2017. Vicom was more profitable in the quarter as its margin before tax, interest and depreciation rose from 35.5 per cent to 36.1 per cent.

Its net asset value per share stood at 159.48 cents, down from 167.34 cents.

There was a net cash outflow of $15.2 million in the three-month period on account of dividend payment. Cash and equivalents stood at $97.9 million, down from $100.9 million.

Directors expect revenue to be affected in the coming quarters. The recent fall in certificate of entitlement (COE) prices to their lowest levels in nearly a decade has resulted in the premature deregistration of cars with higher COEs before the 10-year mark.

"This is expected to affect the demand for the vehicle testing business," Vicom said in a statement. "The non-vehicle testing business continues to face intense competition but is expected to remain stable."

That notwithstanding, directors are declaring an interim dividend of 13.46 cents per share, up from 13.12 cents at the same time last year. This will be paid on Aug 24.

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