Cabcharge denies losing market share

Cabcharge announced a net profit for the December 2009 half year of $29.7 million, down eight per cent on the corresponding period one year ago. Earnings before interest and tax also fell by eight per cent.

Total revenue for the first half was down three per cent to $87.8 million from $90.3 million in the first half of last year.

Turnover on Cabcharge payment system turnover increased by 7.9 per cent,  with a 13.3 per cent decline in Cabcharge account turnover partially offset by a small increase in bank-issued card business.

Taxi services revenue increased by five per cent, largely due to an increase in the number of taxis using Cabcharge network services, especially in Victoria.

Cabcharge's executive chairman Reg Kermode, in commentary published through the ASX, said yesterday that the result was due to the global financial crisis and not to "alleged loss of market share and negative unsubstantiated media distractions."

Cabcharge has made no provision for a possible adverse outcome from the Australian Competition and Consumer Commission proceedings against it for alleged breaches of sections 45 and 46 of the Trade Practices Act.

Kermode says the company believes it is in a strong position to defend the ACCC allegations and that the case is not expected to have a material impact on the company.

The ACCC alleges that Cabcharge refused to enter commercial agreements with suppliers of alternative payments instruments and also that Cabcharge abused its market power by supplying taxi meters and fare schedule updates at below cost rates.

Cabcharge is continuing to roll out its chip terminals and expects that project to be completed by June.

Despite Kermode's insistence that the company is not losing market share, there are some small signs that the Cabcharge empire is feeling the heat of competition in taxi payments for the first time.

Macquarie Equities Research tracks monthly spending on taxi trips made by Macquarie staff.

For the first time, that report records that in January 2010, Cabcharge handled less than half of all payments made - 49.5 per cent, down from 60 per cent in December 2009.

The competitors who are picking up market share according to the Macquarie Taxi Tracker report are GM Cabs, an operation based near Sydney Airport, and Taxiepay.

The research indicates that Suncorp is also winning share with its partner Taxi Services Australia.