SINGAPORE: SMRT's net profit for FY2016 came in at S$109.3 million, up 20.1 per cent from the full-year net profit of S$91 million year ago, the public transport operator said in a news release on Thursday (Apr 28).
Group revenue increased 4.9 per cent to $1.3 billion in FY2016, while operating profit improved 14.6 per cent to S$138.5 million.
The Board has proposed a final dividend per ordinary share (DPS) of 2.5 cents. Including the interim DPS of 1.5 cents, this will bring the total DPS in FY2016 to 4.0 cents, representing a 55.8 per cent payout from the FY2016 profits after tax and minority interests.
RAIL LANDSCAPE 'CHALLENGING' AS FARES NOT KEEPING UP WITH COSTS: SMRT
Despite the overall rise in profits, SMRT said the current rail operating landscape "continues to be challenging" as fare adjustments have not kept pace with rising operating costs.
Operating expenses increased by 5.4 per cent in FY2016, to S$1.2 billion. This was mainly due to higher staff costs, repairs and maintenance costs, and depreciation because of the capitalisation of new buses and taxis and a larger train fleet, SMRT said.
The company said it had engaged a higher headcount in rail and bus operations to support a larger train and bus fleet and meet "heightened operational requirements", and had also increased maintenance-related expenditure in tandem with its "commitment to enhance rail reliability".
Other increases in operating expenses included full period costs associated with Kallang Wave mall, S$8 million contribution to the Public Transport Fund, S$5 million contribution to the Land Transport Authority (LTA)'s demand management schemes, higher equipment maintenance relating primarily to the planned upgrade of enterprise-wide infocomm system, and higher incidental costs and bus chartering expenses related to train disruptions.
Overall, rail operations reported a lower operating profit of S$7.4 million in FY2016 compared to S$9.6 million in FY2015, SMRT said. It added that the operating profit recorded in FY2016 included a net property tax refund of S$17.1 million relating to prior years’ over assessment, without which rail operations would have suffered an operating loss of S$9.6 million.
In comparison, the operating profit from SMRT's non-rail businesses increased 22.6 per cent to S$1.33.3 million in FY2016. Bus operations posted an operating profit of S$5.9 million, reversing from a loss of S$6.5 million. This large difference was attributed to training grants, reliability incentives, lower diesel costs and higher revenue, SMRT said.
Rental operating profits also increased 4.7 per cent to S$83.4 million on the back of higher rental revenue contributions from train stations and bus interchanges, while taxi operating profits rose 24 per cent to S$17 million with higher taxi rental contributions from a newer and larger hired-out fleet.
SMRT said that in the group is expected to incur even higher rail operating expenses due to the intensive maintenance and renewal programmes of the ageing network, in addition to running an enlarged train fleet. The commencement of the Tuas West Extension in FY2017 is also expected to result in higher costs, it added.
In addition, the public transport operator expects its fare revenue to be hit by the 1.9 per cent fare reduction in public transport fares that set in on Dec 27 last year, and by "cannibalisation" of fare revenue by rival operator SBS Transit's Downtown Line 2.
SMRT president and group chief executive officer Desmond Kuek said the company remains "focused on improving rail safety, reliability and service quality".
"We have been increasing headcount and maintenance-related expenditures to drive higher performance standards, and will continue to work closely with the authorities to strengthen the robustness and resilience of the rail network," he added.