Sunday, September 09, 2012

2012 Net profits for SMRT to smile and more Squeeze for the commuters

An inverse relation between the SMRT and the commuters

If we are old enough to remember our train rides in 2002, it might not be perfect but the current frequency of halts and scale of breakdowns were unheard of. And definitely the squeeze on the trains then pale in comparison to the current kind of squashed commuting experience. I still remember that train rides were always cold and air conditioning was far too luxurious. Nowadays, I understand what it is like to be perspiring on the train and enjoying all kinds of body odour (inevitable but inevitably unpleasant too). Nobody remembers though that the earnings per share for SMRT then (in 2002) was only 3.8 cents and that its net profits were only 56. 8 million. Both its EPS and net profits grew as relentlessly as the fall of travel quality for commuters over the decade since then.

2012 SMRT Net Profits
All are rosy for SMRT despite experiencing a greater “hardship” for their FY 2012, “suffering” a 25.6% drop in their net profits. Fortunately, SMRT still gets to bag in a net profit of 119.1 million Singapore dollars although it might lament at their previous good reap of 160.1 million net profits in FY 2011. Earnings per share took a dip to 7.9 from its previous 10.6 cents. Nevertheless, it is still twice of that amount in 2002 (Earnings per share was only 3.8 cents in 2002) given the much smaller ridership (and higher level of comfort for the commuters then).  

Between FY 2011 and FY 2012, what has changed for the commuters?

First a price hike in Sep 2011 followed by two major train breakdowns in Dec 2011. To the commuters’ dismay, the drama didn’t stop just right there. They full bloomed into all kinds of breakdowns or train halts on all lines, regardless of the age of line in use and even the mode does not matter. LRT broke down too. Train halts became a common affair and will be a miracle if it didn’t, all the way up to this day.

Committee of inquiry (COI) for the Dec breakdowns was conducted, where LTA and SMRT both share the costs, and ultimately borne entirely by the taxpayers again. The portion which the SMRT forked out will be eventually compensated indirectly by the commuters-cum-taxpayers anyway through price hike.

As for travelling experience, it is definitely an enhancement of smells. Daily ridership for SMRT has gone up by 130, 000 (8.1%). The physical squeeze during peak period is very real, not just some noises on the ground, as 3 more commuters are added to the already space-constraint car, totalling a number of 191 commuters in a single car smelling each others’ armpit.

Or commuters could choose to relax slightly by travelling off peak period, as the average no. of passengers in a car fell from 70.6 to 66.2. Some might have to make a squeeze on their time by travelling to work super early or travelling home super late to enjoy that limited luxury of space on a SMRT car.

Between FY 2011 and FY 2012, what has changed for SMRT?

The CEO has changed from a woman from retails to a man from the army. Not necessarily an indication of change in ingredients for brewing the soup. I wouldn't expect any change if a rooster instead of a hen is employed to plough the farmlands.

Being fined for 2 million for its poor quality of service. SMRT will bide its time in recovering that same amount somehow, if not more.

Smaller net profits for SMRT but the blissful realization that it has privileges in gaming the local public transport system here. Its profits will be first buffered by the taxpayers’ fund (starting with some 1 billion already) for the purchase of trains and therefore less capital cost, meaning greater profit margins! Then Public Transport Council will also chip in some form of help by never failing to agree to SMRT’s price hike for whatever reasons cited.

SMRT could continue to squeeze more cents from the commuters and more dollars from public funds.