SMRT’s 1Q2014 Net Profit Plunges

smrt logo SMRT Corporation Limited (SGX: S53) released its First Quarter Financial Year 2014 (1Q 2014) results after the market closed yesterday.

Even though revenue rose 3.5% to $284.8 million, net profit plunged 55.2% over the previous year to $16.3 million. The decline in net profits was mainly due to increased staff costs and depreciation. Repairs and maintenance costs also went up slightly due to more scheduled repairs and maintenance of the trains. Electricity and diesel costs remained flat at $42.9 million.

The diluted EPS for 1Q 2014 clocked at 1.1 cents, 55.2% below that of in 1Q 2013.

Total borrowings was at $619.6 million in 1Q 2014 versus $609.5 million in the previous year. The net gearing rose to 64% as at end June 2013 compared to 8% as at end March 2013. The ROE for 1Q 2014 was at 8.4% while that in the previous year was at 18%.

The cash flow from operations was at $13.6 million and capital expenditure was at $462 million for 1Q 2014. This translates to a negative free cash flow for 1Q 2014.

No dividends were declared.

Mr Desmond Kuek, SMRT’s President and Chief Executive Officer, said: “Our first quarter result reflects continued challenges in the fare business which negated the improved performances from taxis and rental. There remain various critical issues that we are working through with the authorities to derive a sustainable and equitable model for the trains and bus businesses, and we are doing our utmost to move speedily to a favourable outcome. Even as we work through these challenges in the fare business, we will continue to strive for improvements in our overall operational performance and expand our commercial revenue stream. The successful completion of the Woodlands Xchange this year will add to our retail space and increase commercial contribution.”

SMRT is in continuing discussion with the Government on a new rail financing framework and there are also developments in the bus operational framework, which could lead to a more viable business model.

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