ComfortDelGro unlikely to mirror SMRT's wage hike scheme

SMRT's staff costs to rise by $10m.

According to CIMB, SMRT has announced a pay hike for its non-executive staff. The revision will raise staff costs by S$10m in 4Q13.

It raised the wages of its non-executive staff, effective from 1 Mar 2013. The hike will raise SMRT's staff costs by S$10m, comprising S$5m in base salary revisions (structural) and a S$5m one-off market adjustment component (non-recurring).

Here's more from CIMB:

These revisions will show up in the group’s 4QFY13 P&L, due in Apr-May.

The wage hike aims another blow at SMRT’s profitability. Margins have been compressed by high staff, repair and maintenance costs. EBIT margins fell to a low of 11.4% in the recent quarter.

We see no signs of a reprieve. As we have already factored in a 16%, or S$54m, increase in FY13 staff costs, we do not see the need to adjust our estimates. To put these numbers in perspective, the S$10m increase represents 2.5% of our FY13 staff cost estimate.

SMRT's wage hike comes in the wake of bus driver strikes and talk of inferior pay vs. industry norms. We do not expect ComfortDelGro to follow suit with a blanket pay review, as this exercise appears to realign SMRT's pay with the industry’s, which presumably includes SBS Transit.

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