SMRT Q3 profit slips to $39.2m

Impairment of goodwill among factors cited; Q3 revenue up 2.6%

THE impairment of goodwill, the fare reduction package and higher staff and repair and maintenance costs caused SMRT Corp’s net profit to slip 4.8 per cent to $39.2 million for the third quarter ended Dec 31, 2009.

But Q3 revenue inched up 2.6 per cent to $224.7 million on higher train ridership, rental revenue and fees from overseas projects.

SMRT, which runs Singapore’s biggest rail network, as well as a smaller fleet of buses and taxis, said Q3 operating profit was $1.3 million lower at $49.2 million. Excluding the impairment of goodwill, which was allocated to the bus operations, Q3 operating profit would have been $5.4 million higher compared with the year-ago period.

SMRT said the $6.6 million impairment of goodwill arose because the long term bus ridership growth trend is expected to decline as the rail network expands. The increase in transfer rebates will also lead to shorter bus trips.

Other Q3 expenses include staff and related costs, which rose 7.9 per cent to $72.8 million, and repair and maintenance costs, which were 18.9 per cent higher at $18.9 million. But electricity and diesel costs were down 10.2 per cent to $27.1 million.

In the third quarter, revenue from train operations rose 1.8 per cent to $121.8 million, thanks to higher ridership from the North-South and East-West lines, plus contributions from the Circle Line Stage 3, although this was partially offset by reduced fares.

Total Q3 MRT ridership grew 5.8 per cent to 137.3 million. Operating profit increased 9.0 per cent to $37.2 million due to the higher revenue and other operating income, but these were weighed down by higher repair and maintenance, and staff costs.

Q3 revenue from bus operations fell 4.8 per cent to $48.8 million mostly because of the lower average fare. The bus business suffered a higher operating loss of $1.9 million versus $1.4 million a year earlier due mainly to this lower revenue, as well as higher repair and maintenance expenses, although these were offset by lower diesel costs.

Taxi rental revenue rose 2.3 per cent to $17.8 million in Q3 on improved hired-out rates, and taxi operations posted an operating profit of $0.9 million against an operating loss of $0.2 million in the previous corresponding quarter.

One strong result was the Q3 revenue from engineering and other services, which shot up 40.5 per cent to $11.2 million. Operating profit jumped 231.6 per cent to $3.6 million on increased contributions from consultancy and overseas projects.

Q3 earnings per share fell from 2.7 cents to 2.6 cents. No dividend will be declared for Q3.

For the first nine months, net profit climbed 13.0 per cent to $140.2 million while year-to-date revenue crept up 1.2 per cent to $670.0 million. From April to December, earnings per share rose from 8.2 cents to 9.2 cents.

‘SMRT has performed reasonably well for the first three quarters of the financial year 2010,’ said SMRT president and chief executive Saw Phaik Hwa.

‘However, profitability will continue to be impacted by the volatility in diesel prices, the fare reduction package ending June 2010 and the ramp-up costs to prepare for the progressive opening of the remaining Circle Line stations.’

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