ComfortDelGro Corporation Ltd’s 2016 Year in Review: A Mixed Year

ComfortDelGro Corporation Ltd (SGX: C52) released its 2016 annual report earlier this week.

The report is a great repository of information about what happened with the company’s business in 2016.

As a brief background, ComfortDelGro’s business can be divided into seven different segments: public transport services; taxi; bus station; automotive engineering services; inspection and testing services; car rental and leasing; and driving centre.

The company also has business interests in seven countries, including Singapore, China, Australia, the United Kingdom, Ireland, Vietnam, and Malaysia.

2017-04-05 ComfortDelgro Revenue
Source: ComfortDelGro 2016 annual report

ComfortDelGro’s public transport services and taxi businesses collectively made up almost 90% of its revenue base in 2016.

The taxi segment posted a 1% increase in revenue to $1.34 billion during the year. Meanwhile, public transport services, which consists of bus and rail services, experienced a 1.1% decline in revenue to $2.3 billion. The fall in the British pound (following the Brexit vote in the middle of 2016) may have affected ComfortDelGro’s sales. On the whole, all but two business segments recorded a decrease in revenue in 2016.

Moving on, we will take a look at each segment’s operating profit.

2017-04-05 ComfortDelgro Operating Profit
Source: ComfortDelGro 2016 annual report

Public transport services is the largest contributor in terms of operating profit. However, the segment only contributed 38.6% of 2016’s operating profit despite accounting for 57% of total revenue.

The reverse is true for the taxi segment, where operating profit was 36.2% of the total despite the segment only contributing 33% to ComfortDelGro’s total revenue. This suggests that the taxi business has better profit margins.

Notably, automotive engineering services and the inspection and testing services segments are punching above their weight with respectable contributions to ComfortDelGro’s operating profit. The former accounted for 11% while the latter pitched in with 7.5% of the total pie.

Public transport services and automotive engineering services both registered an increase in operating profit in 2016 despite declines in their revenue.

In all, ComfortDelGro’s operating profit growth looks much healthier when compared to its revenue.

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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.