SMRT's profits crashed 44.1% to $14.2m

But here's why no one is surprised.

According to OCBC Investment Research, as expected, SMRT reported another set of lacklustre results for 3QFY14. Although revenue climbed 4.1% YoY to S$293.3m due to positive contribution from all segments except its Taxi and LRT operations, PATMI dipped 44.1% to S$14.2m as operating expenses increased at a faster pace of 10.6%.

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The main culprit was a 21.4% hike in SMRT’s staff costs to S$119.6m, which formed 40.8% of its topline, versus 35.0% in 3QFY13.

For 9MFY14, revenue rose 4.3% to S$874.4m but PATMI slumped 52.8% to S$45.0m. SMRT’s Rail operations (Train and LRT combined) recorded its first ever quarterly loss of S$0.2m in 3QFY14, while its overall fare business (Train, Bus and LRT) suffered a S$9.0m operating loss, in contrast to 3QFY13’s S$7.4m operating profit.

In terms of balance sheet strength, SMRT’s net gearing increased from 8.3% as at 31 Dec 2012 to 63.7% as at 31 Dec 2013, largely due to the payment of S$392.7m for 17 trains and operating assets taken over from the LTA.