SMRT reports core business loss for the first time

The Straits Times reported that transport operator SMRT Corp has, for the first time, lost money on its core business of operating trains and buses.

Yesterday, it reported a loss of $25 million on its fare businesses for the financial year ended 31^st March, pulling down its overall net earnings to an 11-year low of $61.9 million.

Even though train services saw a 2.9 percent increase in ridership, operating profit dropped sharply from $65.1 million the year before to just $5.5 million. Meanwhile, losses from operating the LRT also doubled from $1 million the year before to $2.1 million.

And despite a 4.6 percent increase in ridership and productivity gains, bus operations continued to register a sizeable loss of $28.4 million.

Staff cost also shot up by 17 percent to $462.4 million as the company beefed up its maintenance arm. And as SMRT paid for 17 new trains that increased peak-hour train frequencies, cash in hand plunged from $546.3 million to $155.5 million. Net gearing also rose, from eight percent to 60 percent.

Better performance by its taxi, retail space rental and advertising divisions failed to offset the disastrous results of its core business.

SMRT's taxi business posted a 49.7 percent rise in operating profit to $9.6 million - possibly its best ever. Rental income from retail spaces in its train stations emerged again as the biggest profit churner - it made $73.4 million, up from $67 million previously. Advertising income was runner-up with $20.8 million, up from $18.4 million.

Looking ahead, the group expects impending changes to its rail financing and bus operating models to address the sustainability of its fare business here.