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.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
RSS