ComfortDelGro Corporation Ltd’s Latest Earnings: Stung by Brexit

Last Friday, ComfortDelGro Corporation Ltd (SGX: C52) reported its second-quarter earnings. The reporting period was for 1 April 2016 to 30 June 2016.

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 around 46,000 buses, taxis and rental vehicles. It is also the majority owner of testing and inspections outfit Vicom Limited (SGX: V01) and bus and rail operator SBS Transit Ltd  (SGX: S61).

You can learn more about ComfortDelGro in here and here. You can also look up the results from the company’s previous quarter in here.

Financial highlights

The following’s a rundown on some of the latest financial figures for ComfortDelgro:

  1. Revenue slipped by 1.4% to $1.02 billion, dragged down by lower automotive engineering services revenue and lower bus business revenue.
  2. For the reporting quarter, net profit attributable to shareholders increased by 5.3% year-on-year to $85.2 million.
  3. Consequently, diluted earnings per share (EPS) was 3.94 cents, up 5.1% from the 3.75 cents reported in the same quarter last year.
  4. For 2016’s second-quarter, cash flow from operations was $111.3 million with capital expenditure clocking in at $107.5 million. The combination gave ComfortDelGro positive free cash flow of around $4 million, up from the negative $94 million seen a year ago ($121.6 million in cash flow from operations and $215.5 million in capex).
  5. As of 30 June 2016, ComfortDelGro had $772.8 million in cash and equivalents and $449.7 million in debt. This is an improvement from the end of last year, when ComfortDelgro had $787.8 million in cash and equivalents and $558.6 million in debt.

In all, ComfortDelGro saw its revenue decrease by $14.9 million after being hit by weaker currencies. The British pound, which fell after the Brexit vote was announced, cost ComfortDelgro $13 million in unfavourable currency movements. Free cash flow was also minimal during the quarter.

The good thing is Comfortdelgro was still able to grow its bottom line at a decent rate. The land transport firm also maintained a net cash position on its balance sheet.

The board of directors declared an interim dividend of 4.25 cents per share, up from 4.00 cents a year ago.

Operational highlights and the road ahead

The Bus business revenue was $513.5 million for 2016’s second-quarter, a decrease of 4.6% year-on-year. Sales fell in part due to the weaker British pound and Australian dollar.

Meanwhile, the Taxi business grew its revenue by 2.8% year-on-year to $340.2 million. The segment’s growth was supported by higher rental income from a larger operating fleet and higher volume of cashless transactions in Singapore.

Rail business sales soared 24.5% year-on-year to around $65 million. The Automotive Engineering Services Business saw its revenue decline by over 10% to $83.9 million for the reporting quarter.

On the outlook ahead, ComfortDelGro expects to see growth from its Rail operations. The Rail operations is expected to benefit from the opening of Downtown Line Stage 2. Elsewhere, its Singapore bus operations will be transitioning to a new Bus Contracting Model (read more about it here).

There are some troubled spots as well.

ComfortDelGro expects revenue for its UK Bus business to be lower due to the weaker British pound. ComfortDelGro also expects the Automotive engineering services business revenue to be down due to lower diesel prices.

At its closing price last Friday of $2.86, the company traded at around 20 times trailing earnings with a dividend yield of around 3.2%.

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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 owns shares in Vicom.