SMRT’s Q2 net rises 7.7% to $42.6m

HIGHER train ridership, as well as its rental and advertising business, helped propel SMRT Corp’s net profit forward by 7.7 per cent to $42.56 million for the second quarter ended Sept 30, 2008, compared with the same period a year ago.

Group revenue in Q2 grew 15.1 per cent to $227.03 million as total operating expenses also rose 17.9 per cent to $181.14 million due mainly to increased diesel and staff costs.

‘SMRT has continued to grow its profits in this quarter,’ said president and CEO Saw Phaik Hwa. ‘However, volatile energy costs, inflation and higher operational costs will have an impact on our performance.’

Earnings per share in the second quarter rose to 2.8 cents from 2.6 cents year-on-year.

SMRT operates Singapore’s biggest rail network, along with a smaller fleet of buses and taxis. In Q2, the average daily ridership on the MRT jumped 13 per cent to 1.435 million. During this period, revenue grew 13.7 per cent to $122.8 million, with operating profit increasing 10.5 per cent to $37.1 million.

The company added that LRT daily ridership had also increased – it grew 8.8 per cent to 45,300 in Q2, with revenue 10 per cent higher at $2.3 million. More significantly, it was in the black for the first time since operations started almost nine years ago – Q2 operating profit was $0.2 million compared with a loss of $0.1 million in the previous corresponding period.

But SMRT’s buses and taxis remained in the red in Q2 due mainly to diesel. Higher diesel costs dragged buses to an operating loss of $0.9 million despite improved ridership, while substantial diesel subsidies caused taxis to post a loss of $0.5 million amid declining revenue.

In Q2, diesel costs rose 54.1 per cent to $15.2 million for the group. Together with electricity, total energy costs were up 31.1 per cent at $29.3 million for Q2.

But the biggest component of operating expenses remained its staff and related costs. These were 13.5 per cent higher at $71.8 million. This is because SMRT has been ramping up recruitment since Q1 for the Circle Line, which will become operational in mid-2009.

Rental and advertising revenue in Q2 fared better, rising 44.7 per cent to $14.2 million and 25.6 per cent to $6.0 million respectively. Rental operating profits spiked up 39.3 per cent to $10.7 million, while advertising profit rose 19.9 per cent to $3.7 million.

Revenue from engineering and other services soared 97 per cent to $9.7 million in Q2 due mostly to higher diesel sales and consultancy revenue – derived from the Palm Jumeirah monorail project in Dubai – resulting in an operating profit of $0.9 million.

For the first half ended Sept 30, 2008, SMRT’s net profit rose 7 per cent to $82.87 million. Interim group revenue was 13.1 per cent higher at $442.97 million.

Earnings per share for the first half was 5.5 cents, up from 5.1 cents in the corresponding period. An interim ordinary dividend of 1.75 cents per share has been declared.

Looking ahead, the group expects the operating environment to be difficult in the next 12 months due to the global economic slowdown.

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