Vicom's Q2 profit drops 8.3% to S$6.07m

Singapore

VICOM'S net profit for the second quarter ended June 30 fell 8.3 per cent to S$6.07 million from the corresponding period last year, as revenue slipped 5.2 per cent to S$24.08 million on lower business volumes. But the company declared a higher interim dividend as it revised its payout policy.

Vicom is the vehicle inspection and testing unit of land transport giant ComfortDelGro, and Singapore's vehicle population has fallen from 12 months ago.

In line with the lower business volumes, Q2 operating costs was lower, by 4.4 per cent to S$17.08 million. As a result, operating profit was down 7.2 per cent at S$7 million.

Staff costs formed the biggest component of operating costs but it slipped 2.2 per cent in the second quarter to S$11.42 million.

Q2 taxation inched up 1.3 per cent to S$1.21 million mainly due to lower enhanced capital allowance on qualifying expenditure under the Productivity and Innovation Credit Scheme.

Q2 earnings per share were 6.85 cents, down from 7.47 cents the previous corresponding quarter.

A tax-exempt one-tier interim dividend of 13.12 cents per ordinary share has been declared, up from 8.0 cents a year ago. The dividend policy has been revised with immediate effect to a payout ratio of 90 per cent of net profit attributable to shareholders from the previous 50 per cent.

For the first half, net profit fell 7.3 per cent to S$12.92 million while revenue dropped 5 per cent to S$48.2 million. Interim earnings per share were 14.58 cents, down from 15.72 cents a year ago.

The group's net asset value was 165.11 cents, down from 169.05 cents six months earlier.

Looking ahead, Vicom said business conditions are expected to remain challenging. The vehicle testing business will continue to face a high de-registration rate although this will be offset partially by the increase in the number of COE or certificate of entitlement revalidations.

As for the non-vehicle testing business, it will continue to weaken with the general slowdown in the industries that the company serves.

Vicom shares closed two cents higher at S$5.69 on Monday.