What Investors Should Know About ComfortDelgro Corporation Limited’s Latest Earnings

ComfortDelgro Corporation Limited (SGX: C52) reported its third quarter earnings yesterday. The reporting period was for 1 July 2014 to 30 September 2014.

ComfortDelgro is a global land transport giant with operations mainly in Singapore, Australia, the United Kingdom, and China. The company has a total fleet size of about 46,500 buses, taxis, and rental vehicles.

It is also the majority owner of vehicle testing and inspection outfit, Vicom Limited (SGX:V01), and bus and rail operator, SBS Transit Ltd. (SGX:S61). You can learn more about the company here and here. You can also look up the second quarter earnings here.

Financial highlights

Here’s a rundown on ComfortDelgro’s financial figures for the quarter ended 30 September 2014:

  1. Overall revenue for ComfortDelgro rose by 6% to $1.04 billion on a year on year comparison. Sales growth was relatively broad-based with the major contributors being the bus, taxi, and rail operations.
  2. Net profit increased by 5.3% to $80.8 million, mainly due to higher staff costs, and higher payments for contract services. This was offset by a decline in income from investments and a small increase in taxes.
  3. Earnings per share (EPS) followed suit with a 4.7% increase from 3.61 cents in the third quarter last year to 3.78 cents in the past quarter.
  4. Cashflow from operations, though, came in 40% lower at $168.9 million for the third quarter of 2014 with capital expenditures clocking in at $129.2 million. This gives ComfortDelgro $39.7 million in free cash flow.
  5. As of 30 September 2014, the company had $748.8 million in cash and equivalents and $733.4 million in debt. This gives ComfortDelgro a net cash position of S$15.4 million and is an improvement from a year ago when the company had net debt of S$97 million.

In short, ComfortDelgro’s revenue and profit has continued its steady climb – not unlike the previous quarter. The global land transport outfit has a manageable balance sheet, and positive free cash flow. Foolish investors though should continue to monitor how the increases in  revenue trickles down to the bottom-line and free cash flow.

Operational Highlights

ComfortDelgro enjoyed low double digit growth in its bus operations in Singapore and the United Kingdom. It benefited from higher fares and ridership in Singapore, while new services and service enhancements boosted sales in the United Kingdom. This was offset by a 17.3% drop in bus revenue in Australia, mainly arising from a loss of contracted routes.

On the taxi segment, Singapore and the United Kingdom again led the charge with quarterly sales growth of 8.7% and 12% respectively. With Singapore making up more than 75% of total revenue for the entire taxi business segment for the quarter, ComfortDelgro’s taxi business enjoyed a healthy 7.9% overall increase in sales.

The last major contributor to sales growth for ComfortDelgro was the rail business segment. This segment saw a hefty 21.4% increase in sales due to higher average daily ridership and higher average fares from the Downtown Line.

Future outlook

Looking ahead, ComfortDelgro’s management team expects to see continued growth from the same areas this quarter. This means that much of the growth is expected to come from its bus, taxi, and rail operations in Singapore as well as its bus operations in the United Kingdom. On a more cautionary note, management stated that “cost pressures will continue to be felt” across all its operations.

Foolish summary

At its closing price yesterday of $2.62, ComfortDelgro traded at around 20 times trailing earnings with a dividend yield of around 3%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.