SINGAPORE: ComfortDelGro's net profit fell nearly 20 per cent in the first quarter as its taxi business continued to take a beating from private-hire players, but the company said it expects revenue in the division to stabilise with the rationalisation of the competition landscape in Singapore.
Net profit for the quarter ended March fell 19.6 per cent to S$66.3 million, due in part also to the non-recurrence of special dividends from its subsidiary Cabcharge Australia, the company said in a statement on Friday (May 11) after market close.
Group revenue was S$878.8 million, or 1 per cent higher than the same period last year.
ComfortDelGro has faced intense competition from third-party apps such as Uber and Grab, for both passengers and cab drivers.
The private-hire industry, however, has undergone changes recently, after Grab announced in March that it would acquire Uber's Southeast Asia operations.
While the deal is pending regulatory approval in Singapore, Uber has already shut down its app and exited the market.
"Revenue from the taxi business is expected to stabilise with the rationalisation of the competition landscape in Singapore," ComfortDelGro said in its financial statement.
ComfortDelGro Group CEO, Mr Yang Ban Seng, added in a press release that he believes there will be a more level playing field ahead.
"With the reduced subsidy and incentives for drivers and riders by ride-hailing apps operators, and the Authority’s review of regulations for private hire vehicles, we believe that the competition will be on a more level playing field going forward. This is a positive development,” he said.
At a group level, the company saw revenue decrease across most divisions, including its automotive engineering services, inspection and testing services, car rental and leasing, and bus station businesses.
The public transport services business posted an increase in revenue, while the driving centre business remained the same.
The company has stepped up the pace of mergers and acquisitions in recent months, with a total spend of S$123 million so far in 2018 - compared with S$166 million in the preceding five years.
In April, the company announced that it would acquire Australian bus company Tullamarine Bus Lines for A$32.2 million (S$32.7 million), as well as another S$30.2 million to expand into Australia's patient transportation business.
That same month, it also announced the acquisition of the private bus chartering assets of Singapore's AZ Bus for S$10.25 million.
“The first quarter of 2018 has been very eventful for us. We have inked several acquisitions as we step up our pace of mergers and acquisitions," said Mr Yang.
"The group will continue to actively seek acquisition opportunities to scale up our existing operations, and in adjacent businesses that will leverage on our strength," he added.