SINGAPORE (Aug 8): Public transport operator SBS Transit saw its earnings jump 24.5% to $24.2 million for the 2Q19 ended June, driven by higher margins.

Earnings per share climbed to 7.76 cents in 2Q19, from 6.24 cents in 2Q18.

2Q19 revenue rose 3.9% to $358.5 million, from $344.9 million a year ago.

Revenue from Public Transport Services grew 3.9% to $342.9 million, due mainly to higher average fare arising from the fare increase effective Dec 29, 2018, as well as higher ridership from rail services, and higher fees earned with higher operated mileage from bus services.

For 2Q19, average fare for DownTown Line (DTL) was 7.7% higher than 2Q18, or an increase of 5.2 cents. Average daily ridership for the DTL grew by 6.9% to 467,000 passenger trips.

Average fare for North-East Line (NEL) was 2.6% higher, with average daily ridership growing by 1.5% y-o-y to 588,000 passenger trips.

Meanwhile, average fare for Light Rail Transit (LRT) was 6.3% higher, with average daily ridership up 8.0% y-o-y to 139,000 passenger trips

Operating profit grew 28.5% to $30.6 million in 2Q19, from $23.8 million a year ago, mainly to higher revenue and lower premises costs.

The increase was partially offset by higher repairs and maintenance costs, higher depreciation, higher fuel and electricity costs and higher staff costs.

Total operating costs edged up by 2.1% to $328.0 million during the quarter.

EBITDA margin rose to 15.7% in 2Q19, 2.1 percentage points higher than a year ago.

As at end June, cash and cash equivalents stood at $7.6 million.

The board has declared an interim dividend of 7.15 cents per share, to be paid on Aug 27. This is 23% higher than the interim dividend of 5.80 cents paid in the corresponding period last year.

Looking ahead, the group says revenue from Public Transport Services is expected to increase, as bus service revenue is expected to be higher with full year contribution from the Seletar and Bukit Merah Bus Packages while rail service revenue is expected to be higher with higher ridership as well as the 4.3% fare adjustment in December last year.

Despite the fare adjustment, SBS Transit says total rail revenue is not sufficient to cover operating and maintenance costs of the rail lines.

The group expects overall operating costs to increase significantly with increased repairs and maintenance costs associated with an ageing bus and rail fleet.

In 2Q19, repairs and maintenance costs rose 8.3% to $47.4 million, contributing the most to the increase in total operating costs.

“Growth in rail operating and maintenance costs has outstripped revenue growth over the years,” the group says in a filing to SGX on Thursday.

In particular, the group says the NEL and the Sengkang/Punggol LRT (SPLRT) will require higher maintenance as they are into their mid-life cycles, while the DTL has come out of its defect liability period for most of its maintenance.

The group adds that increased investments in predictive maintenance capabilities are being made to keep up with reliability standards in a sustainable manner.

Last year, some 60% of collected rail fare revenue was spent on repairs and maintenance for the older NEL and SPLRT lines, up from about 50% in 2016, it says.

Shares in SBS Transit closed 4 cents higher at $4.12 on Thursday before the results announcement.