Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) managed to narrow its losses to NT$2.7 billion (US$82.3 million) in the first half thanks to lower overhead costs, the company said yesterday.
The debt-ridden company, which has been hit by a slump in demand amid the economic downturn, trimmed its net loss by 75 percent to NT$2.7 billion compared with NT$11 billion for the same period last year.
THSRC spokesman Ted Chia (賈先德) attributed the improvement to a recovery in the number of passengers, lower interest rates and changes to the company’s accounting rules.
Despite the downturn, passenger ticket revenue totaled NT$11.5 billion in the first half, up from NT$10.8 billion last year, after the company introduced a series of discounts that cover 81.2 percent of its trains, the data showed.
The central bank’s relaxed monetary policy helped lower the company’s borrowing costs, with interest dropping to NT$5.5 billion in the first half from NT$8.1 billion last year, Chia said.
The spokesman said the company is seeking to cut its expenses further as its interest rates remain relatively high at between 2.6 percent and 2.8 percent. The rate stood at about 4 percent for part of the loan last year, from 8 percent a year earlier, Chia said.
In addition, Chia said THSRC abandoned the straight-line method in favor of a different formula for writing off depreciation costs, which fell to NT$4.07 billion in the first six months from NT$9.45 billion a year earlier.
Under the new method, depreciation costs pick up modestly in the short run but surge sharply in the long run, Chia said, adding that the company is seeking government approval for dividing the expenses over a longer period.
The summer saw mixed results, with the number of passengers rising to 2.95 million in July from 2.81 million last year, but dropping sizably last month, when the company suspended operations for two days because of Typhoon Morakot, Chai said.
“The storm must have dented revenues, although final figures are not available yet,” he said, adding that passengers averaged 90,000 a day.
Eric Lai (賴建承), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), said THSRC expected to report further improvement in the second half as companies and individuals spend more on travel amid a recovery in the economy.
However, Lai said a dramatic improvement was unlikely based on the company’s financial records.
Despite its improved finances, THSRC has more than NT$70 billion in accumulated losses, representing 67 percent of the company’s capital.
Chai said the company’s refinancing plan had made no headway as banks kept calling for a capital injection — an idea that the company has dismissed as impractical.