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ComfortDelGro Corporation Limited Continues Growth Path in 2013

ComfortDelGro Corporation (SGX: C52), which released its full year earnings yesterday evening, posted a record revenue of S$ 3.75 billion for 2013, up 5.7% from the previous year.

ComfortDelGro is one of the global leaders in land transport with a fleet of more than 46,000 buses, taxis and rental vehicles. It currently operates in seven countries across three continents. In fact, about 50% of its revenue and profits come from foreign shores.

Performance for 2013

The company’s collective expenses had grown in-line with revenue, hence its net profit growth of 5.7% to S$263 million.

ComfortDelGro reports its performance under 8 operating segments: Bus; Bus Station; Rail; Taxi; Automotive Engineering Services; Inspection & Testing Services; Car Rental & Leasing; and Driving Centres.

For 2013, the Bus, Bus Station, Rail, Taxi, and Inspection & Testing Services all experienced a growth in revenue while the Driving Centres, Car Rental & Leasing, and Automotive Engineering Services segments experienced some revenue decline.

As mentioned earlier, overall expenses generally increased at a similar pace as revenue did. However, ComfortDelGro did suffer an increase of 11% in staff costs, which has always been the largest contributor to its overall expenses.

In terms of operating profits, all segments turned in an improved profit except for the company’s local rail business in Singapore.

The bus-related business is currently the largest revenue contributor at S$1.86 billion, a figure which grew 8.8% from 2012. ComfortDelGro’s overseas bus operations contributed about 92% of total bus operating profits as the bus business based in Singapore faced losses in the year.

For 2013, ComfortDelGro’s overseas operations now contribute 51.1% of the group’s operating profits, which is an indication of the geographical diversity of the company’s earnings base.

Elsewhere, annual operating cash flow for the company inched up 1.5% year-on-year from S$687 million to S$698 million.

ComfortDelGro’s balance sheet had also improved for the year, as seen below:

 

2013

2012

Total cash

S$830.6 million

S$694.6 million

Total debt

S$807.9 million

S$703.6 million

Net Cash position (total cash minus total debt)

S$22.7 million

-S$9 million

Source: ComfortDelGro 2013 Earnings Report

Outlook for the future

The company expects cost pressures will continue to be the main concern going forward. In particular, the bus business in Australia might be facing some headwinds, mainly due to the weakening Australian Dollar.

On the other hand, ComfortDelGro is generally still positive on most of its businesses, including its subsidiary, Vicom Ltd (SGX: V01), an inspection and testing company based and listed in Singapore. Vicom’s results for 2013 were released a few days back and showed the company growing its profits by 7.7% to S$28.4 million with its annual dividend jumping by 23.6% to S$0.225 per share.

Foolish summary

ComfortDelGro had proposed a final dividend of S$0.04 per share, bringing its full year dividend to S$0.07. That’s a 9.4% increase from the pay-out of S$0.064 per share declared in 2012, and is the fifth consecutive year since 2008 where annual dividends have grown. At ComfortDelGro’s current share price of S$1.965, its dividend for 2013 translates into a dividend yield of 3.6%.

Shares of the company are also valued at 15.8 times trailing earnings.

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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 Stanley Lim doesn’t own shares in any companies mentioned.