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ComfortDelGro posts 12.6% drop in FY19 earnings to $265.1 mil as taxi business continues to slide

Stanislaus Jude Chan
Stanislaus Jude Chan • 3 min read
ComfortDelGro posts 12.6% drop in FY19 earnings to $265.1 mil as taxi business continues to slide
“I think things will get worse before they get better," says Yang Ban Seng, ComfortDelGro's managing director and group CEO.
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SINGAPORE (Feb 14): Land transport operator ComfortDelGro Corporation saw its earnings fall 12.6% to $265.1 million for FY2019 ended December, from $303.3 million a year ago.

The decline was on the back of higher operating costs, which included provision for impairment in its taxi business.

The group on Feb 13 announced a relief package in excess of $18 million that will be given to cabbies who have been hit by falling demand as a result of the current novel coronavirus (COVID-19) outbreak.

On a fully diluted basis, earnings per share dropped to 12.23 cents for FY2019, from 14.00 cents in FY2018.

And, as managing director and group CEO Yang Ban Seng puts it: “I think things will get worse before they get better.”

For FY2019, group revenue grew 2.6% to $3.91 billion, from $3.81 billion a year ago, with revenue from new acquisitions contributing $154.2 million to ComfortDelGro’s top-line.

Revenue from the group’s public transport services business rose 6.2% to $2.88 billion, led by contributions from new acquisitions in Australia.

The segment also benefitted from higher fees earned with higher mileage operated, better performance from bus services, as well as higher fares and ridership from rail services.

Revenue from the group’s taxi business fell 8.0% to $668.6 million, largely due to strong competition from ride-hailing operators, which resulted in a reduction in ComfortDelGro’s operating fleet.

Revenue from the group’s automotive engineering services business was 5.9% lower at $246.3 million, mainly due to the reduced taxi fleet.

Group operating costs climbed 3.7% to $3.49 billion in FY2019, outpacing the increase in revenue.

The $123.5 million increase in operating costs were mainly due to staff costs from acquisitions, depreciation and amortisation charges from the adoption of a new accounting standard, and the provision for impairment in its taxi business.

The group’s net asset value per share dipped to 119.80 cents as at Dec 31, 2019, down slightly from 120.70 cents a year ago.

As at end December, cash and cash equivalents stood at $594.2 million.

The group has proposed a final dividend of 5.29 cents per share for FY2019, payable on May 13. This is some 14% lower than the final dividend of 6.15 cents paid a year ago.

“Having just emerged from a year of consolidation and reorganisation, we are now faced with new challenges brought on by the 2019 novel coronavirus (COVID-19) outbreak that first started in Wuhan, China. Our taxi, driving centre and bus station operations in China have been hit amid measures to try and contain the spread,” Yang says.

The group at the end of January suspended all operations at 60%-owned subsidiary Nanjing ComfortDelGro Xixia Driver Training Co as a “precautionary measure”, after Chinese authorities ordered the mandatory closure of the driving centre, located about 530km from Wuhan – the epicentre of the coronavirus outbreak.

The group said its 60%-owned bus station in Guangzhou, Tianhe Bus Station, had also seen a reduction of about 15% in the number of bus trips operated for the Chinese New Year period compared to the same period last year.

ComfortDelGro also operates taxi services in eight Chinese cities – Beijing, Jilin, Shenyang, Chengdu, Shanghai, Suzhou, Nanjing and Nanning – with a fleet of 11,000.

See: ComfortDelGro suspends Nanjing driving centre amid Wuhan virus outbreak

While how the coronavirus outbreak will turn out is currently unclear, ComfortDelGro anticipates a “prolonged” battle ahead.

Amid the outbreak, the group says its taxi, public transport and transport-related businesses are witnessing lower ridership and volumes as it faces “significant operational challenges”.

“In Singapore, we have started seeing some negative impact on our taxi operations as tourist arrivals fall and residents avoid crowded places,” Yang says.

Shares in ComfortDelGro closed flat at $2.18 on Friday. Year-to-date, the counter has fallen 8.4%.

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