ComfortDelgro – BT

ComfortDelGro’s Q3 income dips 18.1% to $48.3m

Group says fundamentals remain sound

HIGH energy costs and diesel subsidies to taxi hirers, as well as a weaker British pound, put the brakes on Comforters Corp’s third-quarter net profit, dragging it down 18.1 per cent to $48.3 million from a year ago.

But revenue for the three months to Sept 30 rose 5.2 per cent to $811.5 million on organic growth in Singapore, China, Australia and Vietnam.

Q3’s earnings per share dropped 18.3 per cent to 2.32 cents from 2.84 cents.

The land transport giant reported growth in bus and rail readership, taxi hired-out rates, vehicle inspections and driving school enrolment but the translation effect of the weaker currencies of the UK and Australia weighed down these positive factors.

Q3 operating expenses rose 8.2 per cent to $733.6 million due mainly to increases in fuel and electricity costs, purchases of diesel for resale, provision of accident insurance claims, payment for credit and Nets card transactions, and diesel subsidies. Fuel and electricity costs, for example, jumped 37.8 per cent to $78.7 million, while materials and consumables (diesel purchases) soared 48.6 per cent to $90.2 million.

These were mitigated by lower vehicle leasing charges, lower repair and maintenance, and the writeback of pension provisions.

ComfortDelGro said Q3’s overseas turnover accounted for 42.2 per cent of total group turnover, down from nearly 48 per cent a year ago, with the long-stated goal to derive half of group revenue from abroad facing a speed hump in the form of a depreciating British pound.

Otherwise, the group said Q3’s group operating profit was 50 per cent higher compared with Q2 due to improvements across all businesses.

‘Our group remains fundamentally sound,’ said Kua Hong Pak, ComfortDelGro managing director and group CEO. ‘We have grown all our businesses in the first nine months of this year despite very challenging financial and economic conditions.’

Turnover for the group’s bus business slipped 1.2 per cent to $396.8 million on the weaker pound. But operating profit of $26.4 million was 36 per cent lower from a year ago because of higher fuel costs. UK bus operations accounted for over 70 per cent of overseas bus turnover, which itself was 58.9 per cent of total group bus turnover. In Singapore, SBS Transit’s turnover grew 8.7 per cent on increases in bus ridership and rental income. But operating profit was 32 per cent lower from a year ago because of higher fuel costs.

The taxi business saw turnover inch up 2.7 per cent in Q3 to $238.2 million. Turnover from Singapore jumped 10.5 per cent to $157.6 million on the back of more cashless transactions and a larger fleet. But overseas taxi operations’ turnover fell 9.7 per cent due mainly to a 19.6 per cent decline in UK turnover, although this was offset by higher turnover from China and Vietnam. Overall, total operating profit dipped 15.6 per cent to $28.6 million.

Turnover from the North-east MRT Line and two LRTs soared 19.7 per cent to $28.5 million as ridership grew steadily, boosting the rail’s operating profit 73.9 per cent to $4 million.

For the first nine months ended Sept 30, 2008, net profit was down 10.2 per cent to $155.3 million, while revenue was 5.6 per cent higher at $2.36 billion.

The year-to-date earnings per share was 7.45 cents – 10.6 per cent lower than the 8.33 cents previously.

ComfortDelGro, which traditionally has low gearing, has short-term bank loans of $70.1 million – down from the $72.6 million at the end of the last financial year. Its total current liabilities of $790.4 million fell from $807.5 million nine months ago.

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