Vicom posts 30.2% drop in first-half earnings, expects periodic testing to pick up

VEHICLE inspection firm Vicom's first-half net profit shrank 30.2 per cent to S$9.7 million for the six months ended June 2020, from S$13.9 million in the corresponding period last year.

Earnings per share stood at 2.74 Singapore cents for the half year, down from 3.92 cents in the year-ago period, said Vicom, a subsidiary of land transport giant ComfortDelGro Corp, in results released on Wednesday after market close.

Revenue fell 22 per cent to S$39.8 million, from S$51.1 million a year ago. This was weighed down by lower business volumes as Vicom's operations were "hard hit" by economic activity grinding to a halt, especially during Singapore's "circuit-breaker" period.

The company's non-vehicle testing services business was particularly affected, as it is directly dependent on the level of economic activity in the country.

No interim dividend was declared for H1 2020, in order to conserve cash during this period of pandemic-induced uncertainty, Vicom said. In H1 2019, it paid an interim dividend of 3.5275 Singapore cents per share.

In the second half of this year, the group expects to fund investing activities, including the cost for additions and alterations to the new building at Bukit Batok and to relocate existing machinery and equipment from the current location. The cost of these activities is estimated to be S$25 million, Vicom said.

For its vehicle-testing business, the demand for periodic testing is likely to pick up, as private vehicle inspection resumed from June 8 after the "circuit breaker" ended.

However, demand for emission testing and type approval of new cars will still be soft, given that part of the quota for Certificates of Entitlement for the April-June 2020 period has been carried forward to the next calendar year, the company said.

Shares of mainboard-listed Vicom rose S$0.01 or 0.5 per cent to end at S$2.17 on Wednesday, before the results were released.