SMRT’s Q4 profit falls 41.4% to $22.7m on higher costs

But increasing train ridership helps Q4 revenue climb 3.7% to $225.1m

SMRT Corp’s net profit for the fourth quarter ended March 31, 2010, slipped 41.4 per cent to $22.7 million on higher staff expenses and repair and maintenance costs, as well as an increase in income tax. But Q4 revenue climbed 3.7 per cent to $225.1 million on higher train ridership.

The higher staff costs were due to the opening of the Circle Line. Stage 3 of this new orbital line was opened for operations in May 2009, followed by Stages 1 and 2 in April 2010. SMRT said the rest of the Circle Line – Stages 4 and 5 – will open in 2011.

Earnings per share for the fourth quarter was 1.5 cents – down from 2.5 cents in the same quarter a year ago.

For the full year, net profit for Singapore’s biggest rail operator rose a marginal 0.1 per cent to $162.9 million while full-year revenue inched up 1.8 per cent to $895.1 million. Operating income was higher and the company benefited from the government’s budget measures, lower energy costs and lower other operating expenses.

FY2010’s earnings per share was unchanged at 10.7 cents.

A final ordinary dividend of 6.75 cents per share has been proposed, bringing the total dividend for the year to 8.5 cents.

‘SMRT has achieved a satisfactory net profit of $162.9 million despite the fare reduction,’ said SMRT president and CEO Saw Phaik Hwa.

She said train ridership for FY2010 had increased 5.2 per cent as compared with a year earlier.

‘We expect the recovery of the Singapore economy and the progressive opening of Circle Line stages to continue to contribute to the increase in ridership,’ Ms Saw added.

During FY2010, revenue from train operations rose 1.4 per cent to $480.7 million due mainly to higher MRT ridership from the North-South and East-West lines and contribution from Circle Line Stage 3. Total ridership for the full year had risen 5.2 per cent to 536.6 million.

But the revenue increase was partially offset by lower average MRT fare. Operating profit was 0.6 per cent lower at $129.7 million, mostly because of higher repair and maintenance costs, staff and related expenses and electricity costs.

SMRT also runs a smaller fleet of buses and taxis. Its FY2010 revenue from bus operations slipped 3.6 per cent to $199.7 million mainly because of the lower average fare. A lower operating loss of $1.9 million was incurred compared with $4.9 million the previous year mainly due to lower diesel cost, although this was partially offset by the provision for the fuel equalisation account.

The group’s taxi operations posted 1.0 per cent less revenue of $71 million. Operating profit returned to the black with $1.8 million against an operating loss of $6.3 million a year ago.

Two other businesses also showed strong gains – rental, and engineering and other services. Rental revenue jumped 13 per cent to $65 million as a result of better yield and expanded space following the redevelopment of MRT stations. Operating profit was up 9.4 per cent at $50.8 million.

Revenue for engineering and other services jumped 29.8 per cent to $47.3 million on improved consultancy revenue, partially offset by lower diesel sales to taxi hirers. Operating profit surged 55.9 per cent to $9.9 million but this was partially offset by higher allowance for doubtful debts.

Going forward, Ms Saw said that a 2.5 per cent fare reduction in accordance with the fare formula would be applied to the overall fares once the 15-month fare discount of 3 per cent ceases from July 3, 2010.

She added: ‘In the next 12 months, volatility in energy prices and the cessation of government budget measures as announced in the budget speech 2009 will also impact our profitability.’

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