ComfortDelGro's profit falls 12.6%; CEO warns of fallout from virus outbreak

Singapore

COMFORTDELGRO Corp managing director and group CEO, Yang Ban Seng, has warned that the group is facing new challenges brought on by the 2019 novel coronavirus (Covid-19) outbreak, just shortly after it had emerged from a year of consolidation and reorganisation.

"Our taxi, driving centre and bus station operations in China have been hit amidst measures to try and contain the spread," he said in a results statement on Friday.

"In Singapore, we have started seeing some negative impact on our taxi operations as tourist arrivals fall and residents avoid crowded places. I think things will get worse before they get better."

ComfortDelGro's net profit for the year ended Dec 31 fell 12.6 per cent to S$265.1 million, hit by higher operating and finance costs.

On the other hand, it posted a 2.6 per cent rise in revenue to S$3.9 billion, thanks to new acquisitions and higher contribution from existing businesses. This was offset by the unfavourable foreign currency translation from the weaker sterling pound and Australian dollar.

"The increase in revenue from the existing businesses was mainly driven by higher mileage and ridership in Singapore public transport services, and offset by lower Singapore taxi revenue as a result of increased competition from ride-hailing operators," it explained.

Higher operating costs was due largely to staff costs from acquisitions and depreciation and amortisation charges from the adoption of SFRS(I)16 and provision for impairment in its taxi business.

Earnings per share was 12.24 Singapore cents, down from 14.01 cents a year earlier.

Segment wise, revenue from the public transport services business rose 6.2 per cent to S$2.9 billion. This was due mainly to contributions from new acquisitions in Australia, higher fees earned with higher mileage operated, better performance from bus service,s as well as higher fares and ridership from rail services in Singapore.

However, turnover from the group's taxi business fell 8 per cent to S$668.6 million due to "strong competition" from ride-hailing operators which resulted in a smaller operating fleet.

Revenue from the group's inspection and testing services business fell 6.1 per cent to S$103.8 million in the absence of the net gain on the surrender of lease of property at Teban Gardens in Singapore in 2018.

Looking ahead, ComfortDelgro said it is unclear how the virus outbreak will turn out and a prolonged outbreak is anticipated.

"Covid-19 and measures to fight it will result in the economic slowdown of affected countries. Our taxi, public transport and transport related businesses are witnessing lower ridership and volumes as we face significant operational challenges."

The transport operator proposed a final dividend of 5.29 cents per share, which together with the interim dividend of 4.5 cents paid earlier, brings the total dividend for 2019 to 9.79 cents per share or a payout ratio of 80 per cent, compared to a total dividend of 10.5 cents per share for FY18.

The final dividend will be voted on by shareholders at the annual general meeting on April 24.

Shares of the company closed flat at S$2.18 before the results were announced.