Despite having the 10% surcharge it used to place on credit card payments cut in half by the NSW and WA governments, and Uber being legalised in NSW and Canberra, Australia’s biggest taxi business, Cabcharge, has posted a 21.7% fall in profit to $24.4 million for the half year to December.
The figure leaves the former monopoly business, which has fallen foul of regulators in recent years as technological charges disrupted the taxi industry, down around 20% in profitability on two years ago.
A short time ago, Cabcharge shares were down 2.6% to $2.99.
CEO Andrew Skelton described the result as “solid”, with both the fleet size and payment turnover increasing during the half. The company announced a fully franked final dividend of 10 cents per share.
“We are pleased that we’ve been able to offset some of the decreased revenue from government mandated changes affecting our payments business with continued growth in our taxi networks business,” he said.
Net debt was down $7.8 million to $99.7 million, while earnings per share slipped to 20.3 cents from 25.9 cents.
Skelton said the balance sheet was “positioned for growth with conservative gearing” and the business was investing in service improvements.
Taxi fares processed increased by $2 million or 0.3% to $567.9 million, fleet growth continues with an increase of 88 cars, taking the total number of cars affiliated with Cabcharge taxi networks to 7,347. Network subscription fee income increased to $28.7 million up 6.8%.
Despite increased competition from the likes of Uber and other ride-sharing services, Cabcharge is pushing hard to increase the number of drivers on the road and reduce waiting times. Skelton said 50 drivers a week are being added in Sydney compared to 13.5 drivers 12 months ago and that waiting times across the city fell by 9%.
“The operational improvements we have made are beginning to take hold,” he said.
The next challenge for the business is likely to come from legislation passed by the Australian parliament this week aimed at reducing credit card surcharges to cost recovery only and giving the consumer watchdog the ACCC power to investigate excessive charges. Cabcharge currently charges 5% on credit card payments.