SMRT’s profit in Q1 increases 6.2% to $40.3m

STRONG train ridership growth and higher rental revenue boosted SMRT Corp’s net profit by 6.2 per cent to $40.3 million for the first quarter ended June 30, 2008 compared with the corresponding period a year ago.

Group revenue in Q1 rose 11.2 per cent to $215.9 million.

Total operating expenses rose 13.1 per cent to $173.3 million due to increased staff and related costs, energy costs and other operating expenses.

But thanks to the higher revenue and other operating income, the group turned in an operating profit of $48.2 million – an 8.0 per cent improvement over the same quarter last year.

‘SMRT has continued to grow its profits on the back of strong ridership growth and increased rental revenue,’ said president and CEO Saw Phaik Hwa. ‘In the next 12 months, we will be faced with a higher inflationary operating cost environment with volatile energy prices. We will continue to manage costs and focus on increasing revenue.’

Earnings per share rose to 2.7 cents from 2.5 cents year-on-year. No dividend was declared for the first quarter.

SMRT operates Singapore’s biggest rail network, along with a smaller fleet of buses and taxis.

Its Q1 MRT revenue grew 8.2 per cent to $115.6 million as average daily ridership rose. The ridership growth, partially offset by higher staff and electricity costs, led to a 9.1 per cent increase in operating profits to $34.9 million. SMRT’s current six-month electricity supply contract ends in September but it has an option to renew it.

Q1 revenue from bus operations was up 5.3 per cent to $50.9 million but they posted an operating loss of $3.3 million due mainly to higher diesel costs.

Diesel subsidies and a rise in other operating expenses led to an operating loss of $1.3 million for the taxi division in Q1, although taxi rental revenue increased by 5.6 per cent to $18.9 million with a higher average hired-out fleet.

SMRT’s commercial activities fared better. Increased space and better rental yield from various MRT stations pushed Q1 rental revenue up 47.2 per cent to $13.8 million as operating profits grew 51.4 per cent to $10.3 million.

Meanwhile, more advertising on trains and buses and in MRT stations during the first quarter boosted advertising revenue by 5.3 per cent to $5.6 million. Operating profits also rose 12.9 per cent to $3.7 million.

Looking forward, SMRT expects the operating environment to remain challenging in the next 12 months, with the cost of electricity and diesel likely to remain high. It said that if this persists, its bus operations will continue to operate at a loss. SMRT has over 800 buses, or less than a third of market leader SBS Transit’s fleet.

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