ComfortDelgro ended 2012 with record profit despite huge loss from DTL

Higher staff costs remain a major drag.

4Q12 net profit increased by 2% y-o-y to S$57.6m, ending FY12 at a record profit of S$248.9m (+6% y-o-y).

4Q revenue rose by 2%, driven by all business segments, except bus station and automotive engineering in China.

EBIT margins dipped marginally to 10.6% (4Q11: 10.8%) as operating expenses rose by 2% mainly from higher staff costs (+6% to S$284.3m) and contract services (+12% to S$121.4m), offset partially by lower materials and consumables (-11% to S$79.8m) and fuel and electricity costs (-13% to S$64.3m).

Management indicated that they have hedged 60% and 40% of its fuel requirements in Singapore and the UK, respectively. DBS notes that This should continue to provide visibility and stability to its earnings in 2013, as in 2012.

According to DBS, staff recruitment is expected to continue towards the operation of Downtown MRT Stage 1 (DTL1) in 2013 with about 400 staff, up from 210 currently. DTL incurred a $6.1m loss in 2012.

"While we expect losses to continue as operations ramp up, this should not pose a huge impact to the group given its larger size and geographical/ business
diversification, in our view. "

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