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SMRT full-year profit up 20 per cent to $109.3M

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Photo by: Safras Khan/Yahoo Singapore

SMRT posted a 20.1 per cent rise in net profit to $109. 3 million for FY2016, despite pressure on its business, the transport operator said.

Group revenue increased 4.9 per cent to $1.3 billion, while operating profit rose 14.6 per cent to $138.5 million in the same period.

Operating expenses increased 5.4 per cent to $1.2 billion due to higher staff costs, repair and maintenance (R&M) costs and depreciation, which were partially offset by lower energy expenditure, SMRT said in a news release on Thursday (April 28).

The increase in R&M costs is mainly attributed to the “rigorous maintenance regime for the ageing network”, as well as the overhaul and maintenance work on more trains, which is due to a larger bus fleet and managing the taxi life cycle.

SMRT said it had also increased its headcount for rail and bus operations to support a larger fleet of trains and buses “to meet heightened operational requirements.

SMRT’s President and Group CEO Desmond Kuek reiterated the public transport company’s focus “on improving rail safety, reliability and service quality; and the multi-year projects to renew and upgrade the systems are making steady progress.”

“We have been increasing headcount and maintenance-related expenditures to drive higher performance standards, and will continue to work closely with the authorities to strengthen robustness and resilience of the rail network,” he said.

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Photo by: Yahoo Singapore

Rail operations, however, reported lower operating profit of $7.4 million, down from $9.6 million. The FY2016 operating profit included a net property tax refund of $17.1 million relating to the previous year’s over-assessment, which SMRT said without it, rail operations would have suffered an operating loss of $9.6 million.

The overall operating profit from the group’s non-rail business saw a 22.6 per cent increase to $133.3 million in FY2016, largely due to improved profitability in the bus, rental and taxi segments, the company said.

SMRT said it expects to incur higher operating expenses due to the intensive maintenance and renewal programmes of the network, on top of running an enlarged train fleet, as well as the commencement of the Tuas West Extension in FY2017.

It added that fare revenue will also be impacted by the 1.9 per cent fare reduction and “cannibalisation by Downtown Line 2 operations.”