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SMRT confident of new rail financing model as Q1 net profit up 37% on-year

The public transport operator is confident that ongoing talks with authorities to implement a new rail financing model will pull through, and expects its prospects to improve with the impending regulatory changes.

SINGAPORE: No deadline has been set, but public transport operator SMRT says it is more a question of when, rather than if, its proposal to transfer rail assets to the Government will be accepted in some form.

During an earnings conference call on Wednesday (July 30), SMRT expressed confidence that ongoing talks with authorities to implement a new rail financing model, similar to what has been done for public buses, will pull through.

"This new rail proposition is meant to be a robust one, just like the bus services – in order to attract operators in the future,” said Sam Ong, SMRT’s Group Chief Financial Officer. “What makes sense for a rail proposition to be sustainable, viable, bankable… all those discussions are on the table."

Looking ahead, SMRT says its prospects are expected to improve with the impending regulatory changes. The transport operator booked a net profit of S$22.4 million for its fiscal first quarter, the three months ended June. This is an increase of 37 per cent compared to the same period a year ago. Group revenue climbed 4.3 per cent to hit S$297.1 million.

Operating profit increased 32 per cent to S$29.3 million due to lower operating losses of S$1.1 million for its fare business as well as higher operating profit in its non-fare business of S$29.9 million. For train operations, operating profit increased by 73.4 per cent due mainly to higher revenue with growth in ridership and average fare and lower electricity costs. But this was partially offset by higher staff costs, repairs and maintenance expenditure, and the S$1.6 million penalty imposed by the Land Transport Authority for a series of train disruptions.

Bus operations registered a lower operating loss of S$5.5 million due mainly to higher revenue partially offset by higher staff and diesel costs. SMRT says fare adjustments which took place from April 6 will partially offset increases in operating costs.  

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