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Taxi, driving centre and bus station operations in China hit by virus outbreak, says ComfortDelGro

COMFORTDELGRO managing director and group CEO Yang Ban Seng on Friday said 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. In Singapore, we have started seeing some negative impact on our taxi operations as tourist arrivals fall and residents avoid crowded places," he said. "I think things will get worse before they get better."

ComfortDelGro’s net profit for its FY2019 ended Dec 31 fell 12.6 per cent to S$265.1 million, hit by higher operating and finance costs.

In its results release on Friday, it also posted a 2.6 per cent incline in revenue to S$3.9 billion, thanks to new acquisitions and higher contribution from existing businesses, 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, compared to 14.01 Singapore cents a year ago.

While the group’s revenue from its public transport services business rose 6.2 per cent year on year to S$2.9 billion, due mainly to contributions from new acquisitions in Australia, higher fees earned with higher mileage operated and better performance from its bus services, as well as higher fares following the fare adjustment from December 2018 and higher ridership from rail services in Singapore, 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.

ComfortDelgro said the effects of the virus outbreak is currently unclear, 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 Singapore cents per share, which together with the interim dividend of 4.5 Singapore cents paid earlier, brings the total dividend for 2019 to 9.79 Singapore cents per share or a payout ratio of 80 per cent, compared to a total dividend of 10.5 Singapore cents per share for FY2018.

The final dividend will be voted on by shareholders at the annual general meeting on April 24, 2020.

Shares of the company closed flat at S$2.18.