Vicom posts 14% fall in FY2020 net profit to S$24.5 million

MAINBOARD-LISTED vehicle inspection company Vicom, a subsidiary of transport operator ComfortDelGro, reported a 13.8 per cent fall in its full-year earnings from the year-ago period to S$24.5 million.

In results released on Monday, Vicom said that it expects profit margins to "continue to be under pressure due to greater competition for contracts and higher manpower and compliance costs to deal with shortages of manpower and Covid-19 restrictions".

For its financial year ended Dec 31, 2020, revenue for the group slipped 16.6 per cent to S$86.5 million.

Vicom said that its full-year results comes "after the full impact of a global pandemic, the likes of which few of us have ever seen".

"With economic activity grinding to a halt especially during the circuit-breaker period, Vicom's operations for the year have been hard hit. This has been especially so for the non-vehicle testing business, which is directly dependent on the level of economic activity in the country," it added.

Both the company's operating costs and operating profit also fell year-on-year (y-o-y). Its operating costs declined 17.8 per cent y-o-y to S$57.1 million, due to lower operating costs of S$4.7 million and various government reliefs of S$7.7 million.

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Operating profit stood at S$29.3 million; 14.2 per cent lower than in FY2019. Without the Covid-19 government reliefs of S$7.7 million, Vicom said its operating profit of S$21.6 million for FY2020 was 36.8 per cent lower than the year-ago period.

Following its share split last June, earnings per share for Vicom fell to 6.91 Singapore cents in FY2020 from 8.01 Singapore cents in FY2019.

Despite the impact of the pandemic on its business, Vicom said that the demand for vehicle inspection is "expected to remain strong with the implementation of periodic inspection for all licensed ride-hail and street-hail service providers".

The demand for non-vehicle testing is also expected to improve under Phase 3, it said, though it remains to be seen whether the demand will "recover to pre-Covid-19 levels or to a new normal".

Vicom added that the outlook for the vehicle inspection and non-vehicle testing businesses assumes that the pandemic situation in Singapore "remains under control".

The board has recommended a final dividend of 6.22 Singapore cents a share. It had paid out 6.07 Singapore cents per share the previous year. The books closure date is May 6, and the final dividend will be paid on May 18.

Shares of Vicom closed S$0.01 or 0.47 per cent higher at S$2.16 on Monday, before the results announcement.