Forecast earnings drop drives down P2P share price

SHARES in ride share and taxi fleet management company P2P Transport, which controls about half the taxis on the Gold Coast, have fallen sharply after the company warned of a drop in earnings due to higher costs and lower revenue.

P2P said earnings for 2017-18 were expected to be between $10.1 million and $11.1 million, down from its prospectus forecast of $12.7 million.

Shares in P2P, which listed with a $1.32 issue price, were down 24¢, or 21.8 per cent, to 86¢ at market close, wiping more than $11 million from their market capitalisation.

In December, P2P acquired Ashmore-based Professional Taxis Gold Coast, claiming a near-50 per cent market share of cabs in the city.

It said the cost of increasing its fleet beyond prospectus forecasts and weak trading conditions in May and June forced the earnings revision.

P2P listed on the ASX in December with a business aimed at capturing some of the growing ride-share market dominated by the likes of Uber, as well as having a significant fleet of taxis.

It rents cars to ride-share service drivers, operates across most states of Australia and has a fleet of 1134 vehicles.

About 20 of those are regular hire cars and about another 20 are hired to ridesharing contractors such as Uber. The rest are leased as taxis.

Managing director Tom Varga said the rapid expansion of P2P since listing, which has included the acquisition of WA and Queensland-focused Black and White Cabs, had changed the company’s situation.

It will also begin to collect revenue towards the end of the year from installing digital advertising signs on taxi roofs.

Mr Varga said it was difficult to compare results to the prospectus forecast because of the acquisitions combined with worse-than-expected results in May and June.

“While we’re looking at loss (today), the single largest development in our organisation, the Black and White Cabs and now the fully funded digital tops, are absolutely pivotal for our future,” Mr Varga said.

He said these developments had contributed to the forecast earnings for 2019 being $16.1 million to $16.8 million.