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Bumpy Ride at SBS Transit

sbs transit logo SBS Transit Limited (SGX: S61) saw a 6.7% increase in revenue for 2nd quarter of 2013 (2Q 2013) to $209.3 million, as compared to 2Q 2012. The net profit, however, was down by 30.6% to $3.2 million.

The revenue for first-half of 2013 (1H 2013) was at $414.1 million, an increase of 6.9% over 1H 2012. The net profit was down as well as compared to the previous year. For 1H 2013, it was at $6.0 million versus that of $9.4 million in 1H 2012. This was a drop of 36.3%.

The revenue increased mainly due to increase in revenue from bus operations, rail operations and rental business. The revenue from the advertisement business decreased.

The staff cost for 1H 2013 increased by 14.5% to $187.6 million. The earnings per share for 1H 2013 was at 1.94 cents, down from 3.04 cents in 1H 2012.

As of 30 June 2013, the total borrowings stand at $325.5 million. After accounting for its cash balances of $6.2 million, SBS had a net debt position of $319.3 million. This translates to a net gearing ratio of 93.8% which was higher than that of 64.7% as at 30 June 2012.

There was a net cash outflow of $4.6 million for 2Q13 mainly due to “the purchase of buses, repayment of loans and payment of dividends, partially offset by new loans raised and net cash generated from operations.”

The outlook for the company looks grim. It said, “Bus and Rail riderships are expected to increase at slower rates. Advertising revenue is expected to be maintained while Rental revenue is expected to be higher due to new shops and rental renewals. Staff costs are expected to be higher due to headcount increase, salary adjustments and increases in foreign workers’ levy. With the renewal and expansion of the bus fleet, depreciation and financing cost are expected to increase. The Bus Segment is expected to be impacted more significantly by these cost increases and its outlook remains challenging. With the gearing up for operations of Stage 1 of DTL, more costs are correspondingly being incurred.”

Interim dividends declared by the company was 0.90 Singapore cents, down 33.3% from 1.35 cents dished out in 2Q 2012. The shares closed at $1.355 on results announcement day.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.