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SMRT posts profits for all units October 31, 2009

Posted by hafizbam in Miscellaneous, SMRT.
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Transport operator SMRT is on the way to matching bigger player ComfortDelGro in profits.

In the first half ended September 30,  SMRT posted a 21.9 per cent rise in net earnings after tax to $101 million – the first time it has crossed the $100 million mark at the interim.

This was on the back of a 0.5 per cent rise in revenue to $445.3 million, mainly from higher MRT ridership, which was boosted by the commencement of Circle Line Stage 3.

Lower energy costs, government budget measures and tighter control of expenses helped bolster the bottom line.

All of SMRT’s business units were in the black – even its long-suffering bus and taxi operations.

Buses turned in an operating profit of $3.05 million while cabs posted $1.89 million. They saw $4.5 million and $1.8 million in losses, respectively, in the same period last year.

Rental of retail space at SMRT stations continued to shine. The non-transit division reported an operating profit of $25.2 million for the six months, up from $22.6 million last year.

The group leased out more than 29,000 sq m of space. When the city stretch of the Circle Line opens in the middle of next year, SMRT will have even more retail space – the 2,000 sq m Esplanade Xchange.

Chief financial officer Lim Cheng Cheng said the group’s newly acquired Chinese transport firm, Zona, is expected to show material profit contribution in about five years’ time.

Chief executive Saw Phaik Hwa described the first-half performance as “a reasonable set of results”.

But she warned of choppier times ahead, saying profitability “will continue to be impacted by the fare reduction package ending next June, lower Jobs Credit, volatility in diesel prices and ramp-up costs” of the Circle Line.

The group’s contracted electricity rates will be 11 per cent higher in the second half.

Analysts do not expect SMRT to reap profits from the Circle Line any time soon. The orbital line will incur higher manpower costs but ridership is not expected to be commensurate.

However, some observers reckon the Circle Line, which links mature residential estates, will feed more people into its network.

The rail business continued to be the company’s main profit churner, accounting for $75.4 million of its total operating profit of $121.05 million.

SMRT shares closed one cent up at $1.68 yesterday.

The Straits Times, Money, page C30, Saturday October 31 2009

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