SMRT Corporation Ltd’s Latest Earnings: Wrapping Up A Positive Financial Year

Yesterday evening, SMRT Corporation Ltd (SGX: S53) reported its fourth-quarter and full-year earnings for its fiscal year ended 31 March 2016 (FY2016).

The business of SMRT Corporation can be divided into eight different segments – Train operations, Light Rail Transit (LRT) operations, Bus operations, Taxi operations, Rental, Advertising, Engineering Services, and Others. The first two are collectively referred to as the Rail business. The rest are considered Non-Rail businesses.

You can learn more about the land transport company in here or catch up with the results from its prior quarter here.

Financial highlights

The following’s a rundown on some of the latest important financial figures for SMRT Corporation:

  1. Revenue for the quarter rose 3.7% year-on-year to $342.8 million. For the full fiscal year, revenue ended at $1.3 billion, up 6.2% from a year ago.
  2. Net profit attributable to shareholders jumped by 27.6% year-on-year to $26.6 million for the reporting quarter. For the whole of FY2016, net profit was $109.3 million, a 20.1% improvement from FY2015.
  3. Consequently, SMRT Corporation’s diluted earnings per share (EPS) for the reporting quarter grew 27.9% from 1.36 cents a year ago to 1.74 cents.. For FY2016, SMRT Corporation recorded 7.15 cents in diluted EPS, a 19.8% increase from FY2015.
  4. For the reporting quarter, cash flow from operations was $150.6 million with capital expenditure clocking in at $69.7 million, giving rise to $80.9 million in free cash flow. The good performance in the fiscal fourth-quarter helped to put the train operator in positive free cash flow territory for FY2016. SMRT Corporation managed to bring in $38.9 million in free cash flow during the year, up from the negative $185 million in free cash flow seen in FY2015 ($277.4 million in cash flow from operations and $462.5 million in capex).
  5. As of 31 March 2016, the land transport group had $232.2 million in cash and equivalents and $821 million in debt, giving it a net debt position of $589 million. This is an improvement from the net debt position of $666 million ($156.1 million in cash and equivalents and $821.6 million in debt) that the MRT operator recorded last year.

In all, SMRT Corporation saw its profit soar in both the reporting quarter as well as the full year. The land transport operator’s free cash flow was positive for the full fiscal year as well. This is important as the company’s balance sheet has a sizable amount of debt.

The board proposed a final dividend of 2.5 cents per share. If we add the interim dividend of 1.5 cents per share, that would make up a total dividend of 4.0 cents per share for FY2016. This is an improvement from the 3.25 cents per share in dividends paid out last year.

Operational highlights

SMRT Corporation’s top-line was up across the board.

The Rail segment brought in $681 million in revenue for FY2016, up 4.1% from a year ago. But, the segment’s operating profit lagged, falling 22.5% due to bigger losses in the LRT sub-segment.

Elsewhere, the Non-rail segment was stronger, registering a 5.9% increase in sales for the fiscal year. Operating profit grew even more, stepping up by 22.6%. The notable performers were the bus, taxi and rental sub-segments.

SMRT Corporation has also been in discussion with authorities on the new rail financing framework (NRFF). Under the new setup, its trains segment will transition to an asset light model which focuses on the operations and maintenance of the lines. SMRT Corporation will pay a licence fee to the Land Transport Authority (LTA) for the right to operate these lines.

Summing up the quarter, SMRT Corporation’s Chief Executive Officer, Desmond Kuek, added the statement below:

“SMRT remains focused on improving rail safety, reliability and service quality; and the multiyear projects to renew and upgrade the systems are making steady progress. We have been increasing headcount and maintenance-related expenditures to drive higher performance standards, and will continue to work closely with the authorities to strengthen the robustness and resilience of the rail network.

The Group’s overall earnings has been supported by better performance in our Non-Rail businesses, and we will continue to pursue sustainable growth in line with our core competencies as a multi-modal transportation group.”

Looking ahead, SMRT Corporation warned that “the current rail operating landscape continue to be challenging” as a result of fare adjustments failing to keep pace with an increase in operating costs. But, the company also pointed out that it is “expected to benefit from lower energy prices” and is working to “extract further cost efficiency from producitivty improvements and reliability incentives in [the] Bus operations.”

At its closing price of $1.48 yesterday, SMRT Corporation traded at above 20 times trailing earnings and had a dividend yield of around 2.7%.

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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.