Published October 31, 2009

SMRT's Q2 net profit rises 24% to $52.8m

By SAMUEL EE

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LOWER energy costs and the government's Budget measures helped SMRT Corp to a 24.1 per cent year-on-year increase in net profit to $52.8 million for its second quarter ended Sept 30.

Measures like the Jobs Credit scheme and property tax rebates, as well as lower operating expenses, lifted profit, though this was partly offset by a fare reduction package that began on April 1.

Q2 revenue grew more slowly, edging up just 1.1 per cent to $229.4 million, mainly due to higher revenue from the operation of Circle Line Stage 3 (CCL3), increased rental revenue and higher revenue from overseas.

'We have delivered a reasonable set of results this quarter,' said SMRT president and chief executive Saw Phaik Hwa. 'Looking ahead, the group's profitability will continue to be impacted by the fare reduction package ending June 2010, lower Jobs Credit, volatility in diesel prices and the ramp-up costs to prepare for the progressive opening of the remaining Circle Line stations.'

SMRT runs Singapore's biggest rail network, plus a smaller fleet of buses and taxis.

Revenue from train operations rose a marginal 0.4 per cent to $123.3 million in Q2 - despite the fare reduction - because of higher average daily ridership and the start of CCL3. Along with higher other operating income, operating profit rose 7 per cent to $38.7 million.

Bus revenue slipped 4.6 per cent to $51 million on lower average fare and average daily ridership. But lower diesel costs resulted in an operating profit of $1.8 million, compared with an operating loss of $1.1 million a year back.

Taxi rental revenue fell 2.6 per cent to $17.9 million in Q2 on a smaller average hired-out fleet. But taxi operations posted an operating profit of $0.8 million because of lower other operating expenses from a smaller average holding fleet.

The rental business fared better, with Q2 revenue growth of 13.1 per cent to $16.1 million on better yield and increased space at redeveloped MRT stations. Operating profit climbed 10.8 per cent to $12.7 million.

Equally robust were engineering and other services, with revenue rising 38.0 per cent to $13.4 million and operating profit soaring five times to $5.5 million on increased contribution from consultancy and overseas projects.

But advertising revenue slumped with the economic downturn and was down 9.8 per cent to $5.4 million, causing operating profit to fall 10.8 per cent to $3.4 million.

For its first half ended Sept 30, 2009, SMRT's net profit rose 21.9 per cent to $101.0 million. But year-to-date revenue edged up only 0.5 per cent to $445.3 million.

An interim ordinary dividend of 1.75 cents per share has been declared.

Looking ahead, SMRT said that third-quarter group revenue is expected to be higher, mainly because of stronger non-fare revenue from rents and fees from overseas projects. In addition, the first payment of 240 million renminbi (S$49 million) for 49 per cent equity interest in Shenzhen Zona will be made by Q3.