SMRT’s growth story derailed as train operations book first-ever quarterly loss

It recorded a loss of $2.4m.

The fourth quarter should have been good for public transport operator SMRT. Its bus operations, after all, managed to float back into the black after seventeen consecutive loss-making quarters, while the group’s overall net profit jumped 23% year-on-year to $20.8m.

But it seems SMRT is not yet out of the lurch. As luck would have it, another pressing problem came to the surface just as the other disappeared.

SMRT’s train operations booked its first-ever quarterly loss in Q4, recording an operationg loss of $2.4 million due mainly to higher staff costs, depreciation and repairs and maintenance.

The group’s operating profit from train operations increased $7.9 million in FY15 as a whole, but gains were partially offset by higher costs to support an expanded and ageing network, larger fleet, tightened regulatory standards and heightened operational demands.

“The Group continues to face increasing operating challenges in the Rail business environment with Train operations seeing its first ever loss in the last quarter. There is a need to increase operating expenses to cater to the enlarged fleet of trains, expansion of the network with the commencement of Tuas West Extension operations in FY2017, and intensified repair and maintenance works for the ageing rail system,” SMRT stated.

SMRT also noted that higher headcount will be required to meet tightened regulatory standards and heightened operational demands on service, reliability and capacity, while further investments will have to be made for the acquisition of new operating assets, asset renewal and life cycle upgrades.