The Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) has performed well, if not better than many international enterprises, if taxes, interest payments and depreciation costs are taken into account, the Ministry of Transportation and Communications (MOTC) said in a report yesterday.
The assessment was made based on the earnings before interest, taxes, depreciation and amortization (EBITDA) indicator, one of the most universal and comparable performance indicators, which reflects the actual earning potential of a company.
The company’s EBITDA margin reached 56.1 percent last year. That was higher than Hong Kong MTR Corp’s 52.9 percent, the Central Japan Railway Co’s 40.8 percent, Singapore MRT Ltd’s 34 percent, East Japan Railway Co’s 28 percent and West Japan Railway Co’s 20.4 percent.
THSRC’s earnings, after taxes, interest, deprecation and amortization, however, reached a negative 59.6 percent.
Attributing THSRC’s lackluster operating performance to its unreasonable financing structure, the ministry report said that beginning last year, the company’s monthly revenues totaled about NT$2 billion (US$62 mllion), but after deducting operating outlays, the revenues were not enough to make interest and depreciation payments.
The NT$500 billion high-speed line was 80 percent funded through bank debt, leaving a legacy of huge interest payments.
THSRC’s annual report last year said the company’s business turnover was NT$23.05 billion last year, a significant 70.7 percent growth over the previous year. But the company also reported interest payments of NT$17.4 billion and depreciation charges of NT$18.9 billion, which led to an accumulated loss after taxes of NT$25.01 billion.
If the company wants to become profitable, it should seek a reasonable resolution to its interest and depreciation problems, aside from tapping new sources of revenue and cutting expenditure, the ministry said.
In related developments, Susan Chang (張秀蓮), chairwoman of the state-run Taiwan Financial Holding Co (台灣金控) and Bank of Taiwan (台灣銀行), said yesterday that the syndicated loan lenders have lowered the interest rate for the company’s NT$308.3 billion in first-round syndicated loan to 2.6 percent.
If there was still room for further cuts, it would probably be within 1 percentage point, and would be expected to begin from next month, she said.
Meanwhile, Chinese Nationalist Party (KMT) Legislator Chen Chieh (陳杰) said THSRC’s five major shareholders should serve as guarantors when the second-round syndicated loan involving NT$65.5 billion is granted.
Another concern is the extraordinarily high salaries THSRC top executives receive, even though the company has been in the red.
Last year’s annual reports said each of the 22 vice presidents were paid more than NT$2 million per year, while each of its three foreign consultants earns NT$10 million a year.
THSRC spokesman Ted Chia (賈先德) said the three foreign executives were professionals that many international firms have been scrambling to recruit.
Chia said there was still a lot of work since the high speed rail became operational, including training and development of drivers and other staff, equipment maintenance, marketing, engineering, and the three have been very helpful in the company’s operations.
CHIP RACE: Three years of overbroad export controls drove foreign competitors to pursue their own AI chips, and ‘cost US taxpayers billions of dollars,’ Nvidia said China has figured out the US strategy for allowing it to buy Nvidia Corp’s H200s and is rejecting the artificial intelligence (AI) chip in favor of domestically developed semiconductors, White House AI adviser David Sacks said, citing news reports. US President Donald Trump on Monday said that he would allow shipments of Nvidia’s H200 chips to China, part of an administration effort backed by Sacks to challenge Chinese tech champions such as Huawei Technologies Co (華為) by bringing US competition to their home market. On Friday, Sacks signaled that he was uncertain about whether that approach would work. “They’re rejecting our chips,” Sacks
NATIONAL SECURITY: Intel’s testing of ACM tools despite US government control ‘highlights egregious gaps in US technology protection policies,’ a former official said Chipmaker Intel Corp has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter. Intel, which fended off calls for its CEO’s resignation from US President Donald Trump in August over his alleged ties to China, got the tools from ACM Research Inc, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have
It is challenging to build infrastructure in much of Europe. Constrained budgets and polarized politics tend to undermine long-term projects, forcing officials to react to emergencies rather than plan for the future. Not in Austria. Today, the country is to officially open its Koralmbahn tunnel, the 5.9 billion euro (US$6.9 billion) centerpiece of a groundbreaking new railway that will eventually run from Poland’s Baltic coast to the Adriatic Sea, transforming travel within Austria and positioning the Alpine nation at the forefront of logistics in Europe. “It is Austria’s biggest socio-economic experiment in over a century,” said Eric Kirschner, an economist at Graz-based Joanneum
OPTION: Uber said it could provide higher pay for batch trips, if incentives for batching is not removed entirely, as the latter would force it to pass on the costs to consumers Uber Technologies Inc yesterday warned that proposed restrictions on batching orders and minimum wages could prompt a NT$20 delivery fee increase in Taiwan, as lower efficiency would drive up costs. Uber CEO Dara Khosrowshahi made the remarks yesterday during his visit to Taiwan. He is on a multileg trip to the region, which includes stops in South Korea and Japan. His visit coincided the release last month of the Ministry of Labor’s draft bill on the delivery sector, which aims to safeguard delivery workers’ rights and improve their welfare. The ministry set the minimum pay for local food delivery drivers at
RSS