SINGAPORE (May 11): ComfortDelGro Corporation saw its earnings fall 19.6% to $66.3 million for the 1Q ended March, from $82.5 million a year ago.
1Q18 revenue rose marginally by 1.0% to $878.8 million, from $869.8 million a year ago.
The increase was due to a favourable foreign currency translation of $5.2 million and an increase in the underlying business of $3.8 million.
The group’s Public Transport Services Business was the only segment to report year-on-year revenue growth during quarter, climbing 8.9% to $611.2 million in 1Q18.
This was on the back of higher fees earned under the Bus Contracting Model (BCM) with higher operated mileage, and higher ridership from rail services with the completed Downtown Line (DTL) in Singapore, coupled with a favourable foreign currency translation.
Meanwhile, revenue from the group’s taxi business fell 14.8% to $212.4 million in 1Q18, due to increased competition and a reduction in operating fleet.
Revenue from the group’s Automotive Engineering Services, Inspection and Testing Services, Car Rental and Leasing, and Bus Station businesses fell by 15.7%, 1.2%, 23.0%, and 8.0%, respectively.
The lower 1Q18 earnings was mainly due to the non-recurrence of $10.0 million in special dividends received from Cabcharge Australia in 1Q17.
In addition, total operating costs outpaced in the increase in revenue, rising 1.8% to $783.1 million during the quarter, from $769.3 million a year ago.
The higher operating costs was led by a $22.7 million increase in staff costs to $383.1 million during the quarter.
As at end March, cash and cash equivalents stood at $635.3 million.
Looking ahead, the group says revenue from the Public Transport Services Business in Singapore is expected to be higher with the commencement of the Seletar Bus Package from March as well as full year revenue contribution from Downtown Line 3. The recent acquisition of new bus businesses in Australia and the UK are also expected contribute to revenue growth.
Revenue from the Taxi Business is expected to stabilise with the rationalisation of the competition landscape in Singapore, as well as the recent acquisition of new taxi businesses in Australia, China and the UK.
“With the reduced subsidy and incentives for drivers and riders by ride-hailing apps operators, and the authority’s review of regulations for private hire vehicles, we believe that the competition will be on a more level playing field going forward. This is a positive development,” says Yang Ban Seng, ComfortDelGro’s managing director and group CEO.
Further, the group has guided that revenue from its other business segments are also expected to be maintained.
“The group will continue to actively seek acquisition opportunities to scale up our existing operations, and in adjacent businesses that will leverage on our strength,” Yang says.
Shares of ComfortDelGro closed 1 cent lower at $2.33 on Friday.
