SBS Transit announces 1.5% rise in net profit for 2023
SBS Transit disclosed a 1.5% surge in 2023 net profit, totaling $69.1 million, despite operational challenges. The Group observed a 0.8% rise in revenue, reaching $1.53 billion, while operating costs increased by 1.1% to $1.45 billion.
SINGAPORE: SBS Transit has released its audited results for the fiscal year ending on 31 December 2023.
The Group reported a 0.8% increase in revenue, amounting to S$1.53 billion, compared to the previous year.
However, group operating costs rose by 1.1% to S$1.45 billion, driven by increased fuel and electricity expenses, as well as higher manpower costs.
This was partially offset by reduced premises costs, lower repairs and maintenance costs, and decreased depreciation expense.
Consequently, the Group's operating profit decreased by 4.1% to S$76.7 million.
After accounting for interest income, finance costs, and taxation, the net profit attributable to shareholders was $69.1 million – representing a 1.5% increase over 2022.
Mr Jeffrey Sim, SBS Transit Group CEO, attributed the performance to the recovery of ridership as Singapore returned to pre-pandemic normalcy.
"We kept focus on strengthening our operational excellence, enhancing customer experience and sustainability efforts," he stated.
In terms of operational review, revenue from Public Transport Services increased by 0.4% to $1.5 billion, primarily from higher rail ridership and increased bus mileage.
Rail ridership experienced a notable 18.7% growth to 428.1 million passenger trips, nearing pre-pandemic levels.
Other Commercial Services revenue also rose by 13.0% to $56.9 million, driven by higher advertising revenue due to improved economic conditions and increased ridership after the lifting of COVID-19 restrictions.
A final tax-exempt one-tier dividend of 5.58 cents per share has been proposed, with a total dividend for 2023 expected to be 11.16 cents per share, subject to shareholder approval at the Annual General Meeting on 25 April 2024.
Looking ahead, rail fare revenue is anticipated to grow with higher ridership and fare increases effective from 23 December 2023.
However, bus operations revenue is expected to decline with the expiry of the Jurong West bus package, scheduled for handover to a new operator on 1 September 2024.
In a significant development related to the Downtown Line's transition to the New Rail Financing Framework (Version 2), SBS Transit Rail Pte. Ltd. (SBST Rail) was initially expected to transfer the rail advertising business to the Land Transport Authority (LTA) starting 1 January 2024.
Alternatively, there was a possibility that LTA might permit SBST Rail to continue operating the rail advertising business at a concession fee determined by LTA.
Throughout LTA’s consultation on rail advertising in 2023, SBST Rail advocated for retaining control of the rail advertising business.
As a result, following a thorough review by LTA, it has been decided that SBST Rail will retain operation of the rail advertising business from 1 January 2024, until the conclusion of the rail license period on 31 December 2032, operating under a concession agreement.
However, it is crucial to acknowledge that despite the favorable development, challenges persist in the realm of operating costs.
These challenges arise due to uncertainties linked to factors like inflation, a constrained labor market, and heightened electricity prices.
Netizens share diverse views on SBS Transit's profitability
Netizens engaged in a discussion under The Straits Time Facebook post, sharing varied opinions.
One user expressed the belief that public transportation remains a lucrative business due to the high volume of transactions.
The user pointed out that even with a reduced number of trips, the daily ridership is substantial, emphasizing the resilience of the sector.
This user clarified that despite the minimum fare being slightly over a dollar, there are still seven million trips each day.
Even if the number were halved, it would still be a significant 3.5 million daily trips.
Further halving would still result in 1.75 million trips per day, showcasing the robust nature of public transportation revenue.
Contrastingly, another user contended that the reported profit of S$69.1 million seems relatively low for such a large market.
They highlighted the importance for SBS Transit to consider future expansion and replacement costs in their strategic planning.
Netizens raise concerns over bus fare hikes despite SBS Transit's $69.1 million net profit
Despite the reported net profit of $69.1 million, some netizens expressed discontent, pointing out the continuous increase in bus fares and questioning the profitability of the service.
One user attributed this discontent to their belief that top management benefits through higher pay and bonuses, which they claim are obtained by extracting more money from commuters through annual fare hikes.
The Public Transport Council (PTC) revealed that the upcoming bus and train fare increases, set to be implemented from 23 December 2023, will more than double the hike seen in 2022.
In an announcement made on 18 September last year, the PTC, the regulatory body overseeing public transport fares in Singapore, disclosed an overall fare increase of 7% following the completion of their annual fare review exercise.
As a consequence of this decision, adult commuters can expect to pay an additional 10 to 11 cents per journey.
