Comfort quitting car distribution business

[Mrenegade]

Taken from the Business Times today...

 

Comfort quitting 2 businesses, 50 jobs may go

Taxi operator's 9-mth profit jumps 40.5% to $72.6m

 

By CHRISTOPHER TAN

 

 

(SINGAPORE) Singapore Labour Foundation-linked Comfort Group is dumping its courier and car distribution businesses - a move expected to cost 50 or more jobs - despite posting another set of glowing financial results yesterday.

 

In an apparent review of all 'non-core' activities in light of its proposed union with bus group DelGro Corp, Comfort said it would exit the two loss-making businesses on March 30. Analysts reckon there may be more streamlining to come.

 

Last year, the group sold another business in Hong Kong, barely a year after buying into it. It has yet to receive full payment for the sale. It also sold NCH (Tampines), a venture that developed executive condos, last year.

 

Comfort, which is reliant on the taxi business, yesterday posted a 40.5 per cent rise in net earnings to $72.6 million for the nine months ended Dec 31, 2002. Turnover was up 8.4 per cent at $369.9 million.

 

Its profitability was boosted by the continued conversion of smaller taxis to bigger ones (which command higher rental from the drivers), as well as Singapore's lowered corporate tax rate. The latter resulted in a $6.8 million writeback for the period.

 

G K Goh senior analyst Teo Hiang Boon reckons its full-year earnings will hit $94 million - or nearly 40 per cent higher than the previous record of $68 million.

 

Despite the less-than-ideal timing, exiting the car and courier businesses was not entirely unexpected.

 

Comfort entered motor distribution back in 1996 to great fanfare.

 

After selling previous franchises (including Peugeot, which current representative Sime Darby is said to be making decent returns from), the latest move jettisons the remaining Seat and Perodua car units, as well as the Hicom truck unit, a non-starter.

 

It entered the courier business in 2000, when it sought to tap the potential of the delivery service on the back of a booming e-commerce sector. It also had scooters left over from the relinquished Piaggio agency. The e-commerce boom did not quite materialise.

 

With the imminent merger with DelGro, analysts say Comfort - as well as DelGro - will review all non-performing and non-core businesses.

 

For the period under review, Comfort's earnings per share rose to nine cents, from 6.4 cents previously. Net asset value per share stood at 65.2 cents, from 59.6 cents at March 31, 2002.

 

The board has declared a second gross interim dividend of 9 per cent, or 2.25 cents.

 

Together with the interim dividend paid on Dec 17, total interim dividends for the nine-month period is 15 per cent, or 3.75 cents.

[Mrenegade]

Hmm....now that there isn't going to be a dealer for SEAT soon...anyone willing to come together pool money and take up the dealership?

 

Bet we can do better than Comfort and make it profitable just like what Sime Darby did with Peugot after obtaining the distribution rights from Comfort

[Rover75]

Great idea! But guess Peter Gwee will be( or has been) eyeing on it, as it makes perfect sense for him to take over the Seat Distributorship just like the way he took over Skoda.

[Rennsport]

Ya Boy, that's almost more that 1/2 a VAG brand, except AUDI which is still sold by Premium.

[Mrenegade]

Not necessarily good for Mr Gwee to take over...might end up killing his VW business for all you know I mean why pay $100 plus k for a Bora when you can get the same thing (with a different badge - SEAT Toledo) for $20k less?

[Super7]

"........40.5 per cent rise in net earnings to $72.6 million for the nine months ended Dec 31, 2002. Turnover was up 8.4 per cent at $369.9 million. .....

Its profitability was boosted by the continued conversion of smaller taxis to bigger ones (which command higher rental from the drivers).........."

 

what i can't understand is:-

 

#1:- with gahmen discouraging the use of private cars, taxi has become more or less a form of public transport........... therefore its operation should not be allowed to make huge profits at the expense of users ie high taxi fares/charges..... with such "healthy' profit, why aren't Comfort considering offering more competitative/lower fares.....??????... too painful to give up profiteering in a more or less controlled market????

 

#2:- do we really need many big taxis which cab drivers need to pay high rental and therefore charge passengers high fares??? ..... big cabs also add to road congestion...... in other international cities like Bangkok, Taipei, Rome, etc etc, not all cabs are of the size of Crown/Cedric we see on sgp roads.............??

 

Cheers

[Assassin]

Sounds juest like another way to squeeze the people on the ground.

[Guyver]

?? Are they quitting on a $$ making business?? ... i smell fish....