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ComfortDelGro's 1Q earnings dive 49% to $36 mil, lockdowns to 'significantly hurt' 1H business

Uma Devi
Uma Devi5/22/2020 05:58 PM GMT+08  • 3 min read
ComfortDelGro's 1Q earnings dive 49% to $36 mil, lockdowns to 'significantly hurt' 1H business
Although deemed essential services in all geographies, ComfortDelGro's business across its key markets has declined on the back of reduced mileage and ridership.
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SINGAPORE (May 22): ComfortDelGro posted earnings of $36.0 million for 1QFY2020 ended March, some 48.9% lower than earnings of $70.4 million a year ago.

The decline came on the back of a 9% slide in revenue to $862.4 million from $947.3 million last year as all business segments booked declines due to the Covid-19 pandemic.

Revenue from the group’s taxi business fell 25.7%, while contributions from the public transport services segment fell 4.2%. Other segments such as automotive engineering services and inspection and testing services fell 22.3% and 0.8% respectively.

Geographically, ComfortDelGro’s operations in Singapore were affected by bus fuel indexation due to lower oil prices, while business in the UK took a hit from weather conditions, as well as the Covid-19 impact on tourism and route count. Revenue from Australia, too, declined on the back of a weaker Australian dollar.

Operating costs for the quarter fell 3.9% to $806.5 million from $839.9 million in 1QFY2019, partially cushioning the fall in revenue.

Correspondingly, operating profit fell 47.9% to $55.9 million from $107.4 million a year ago. Overseas operating profit contributions totalled 24.5% in 1QFY2020, compared to 32.5% in 1QFY2019. The group’s operating profit margin also fell to 6.5% from 11.3% last year.

As at end-March, cash and cash equivalents exceeded $1.3 billion.

ComfortDelGro notes that although public transport services are deemed essential services in all geographies and scheduled services have continued to operate, there have been reduced mileage and ridership, and unscheduled services have been significantly impacted by lower tourism and school closures.

In Singapore, public bus and rail ridership have decreased by 70%-75% during the circuit breaker measures, while public bus frequency in the UK has been reduced to weekend levels. Services in Australia, however, continue to operate with some service changes.

The group also said that a total of $116 million worth of Covid-19 relief schemes have been extended to drivers. In addition, call centre volumes and cabby daily average earnings have decreased.

Looking ahead, ComfortDelGro says the lockdowns in Singapore, Australia and the UK will significantly hurt 1HFY2020 business.

However, as governments in various countries now formulating exit plans from their lockdown periods, the group says the impact will vary across the different businesses, depending on the operating model and the change in demand for commuting.

“ComfortDelGro will continue to watch and respond to the evolving Covid-19 crisis,” adds the group.

Shares in ComfortDelGro closed five cents lower, or 3.2% down, at $1.54 on Friday prior to the results announcement.

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