By Elizabeth Wilmot

BUS and rail operator SBS Transit suffered a 17 per cent slump in third-quarter net profit to $8.3 million as higher expenses such as fuel costs eroded stronger revenue.

Revenue for the period ended Sept 30 rose 10.5 per cent year-on-year to $188.2 million.

But operating costs increased 12 per cent to $178.3 million with fuel and electricity expenses surging 51.9 per cent or $17.7 million during the period.

Easily the best revenue growth was in the company's rental business, which shot up 94.5 per cent to $3.5 million due to higher rental income from new shops at the bus interchanges.

Turnover from rail operations also increased substantially by 17.3 per cent to $26.1 million, due to increase in ridership of the North-East Line and the light rail transit systems of 17.6 per cent and 16.1 per cent respectively.

Revenue growth from bus operations was a relatively modest 8.5 per cent to $148.1 million. This was mainly due to a 6.1 per cent rise in bus ridership.

In terms of operating profits, bus operations declined a steep 78.2 per cent to $900,000 in the third quarter. This was mainly due to higher fuel cost. In contrast, operating profits for rail operations surged 92.3 per cent to $2.2 million, mainly owing to higher rail fare revenue.

The advertising business saw a marginal drop in operating profit of 2 per cent to $4.4 million, while operating profit in the rental segment increased by 71.2 per cent to $2.4 million.

SBS Transit expects its revenue from the bus and rail operations to continue to improve on the back of growth in ridership and fare increases. With the economic downturn, however, the firm expects advertising revenue to slow down. The cost of diesel and electricity is expected to be lower due to the recent drop in oil prices.

Earnings per ordinary share for the third quarter this year was 2.70 cents, compared to 3.27 cents for the corresponding quarter last year.

Net asset value per share as at Sept 30 was 80 cents, up from 77 cents at Dec 31 last year. SBS Transit's share price fell three cents to close at $1.69 on Nov 12.

Read also:
Three more bus lanes from Nov 17
SBS Transit, SMRT Buses fined
Where's my bus? SBS info not accurate

This article was first published in The Straits Times on Nov 13, 2008.

For more The Straits Times stories, click here.