SPH's 1st-quarter net gains fall, but recurring profits up - Jan 13, 2009 (ST)

BackJan 13, 2009

The Straits Times / The Business Times News On SPH

SPH's 1st-quarter net gains fall, but recurring profits up

Gains from property arm cushion lower profits in print media business.

By Chua Hian Hou
Jan 13, 2009
The Straits Times

MEDIA group Singapore Press Holdings (SPH) has posted a 34.8 per cent slide in first-quarter net profits to $73 million, owing to weaker advertising income and a slump in its investment portfolio. Net profits in the corresponding quarter last year was $111.9 million.

However, despite tough market conditions, SPH achieved a 1 per cent rise in recurring profits to $127.8 million as gains in the property business helped cushion lower profits in the print media business.

The global financial meltdown - which erupted during the quarter under review ended Nov 30 - took a big bite out of SPH's investment portfolio, which reported a loss of $33.7 million after being marked down to market values.

Group operating revenue was 9 per cent higher at $340.2 million.

Earnings per share were five cents, down from seven cents. Group net asset value per share was $1.28 as at Nov 30, down from $1.30 as at Aug 31.

The ongoing financial turmoil exacted a heavy toll, particularly, on the group's externally managed funds. In view of the continued volatility, the company 'will continue its conservative stance in its asset allocation strategy', SPH said.

Its core print business had not been spared the sharp downturn in the economy. Print advertising revenue fell 7.3 per cent to $188.2 million, it said.

But its property arm provided the silver lining. Its revenue rose 86.3 per cent to $81.1 million, the bulk of the increase coming from its Sky@eleven freehold condominium project on Thomson Road.

SPH chief executive officer Alan Chan warned that the 'economic downturn is expected to last several quarters and this will continue to impact the group's advertising revenue'.

'We have taken measures to enhance revenue and contain costs, and will proactively implement further cost and efficiency initiatives.'

SPH recently announced that the salaries of senior management would be frozen, while hiring has been slowed.

There was some good news, as newsprint prices 'have started to slide'. Newsprint prices, which had risen by over 20 per cent, were the main contributor to higher consumable costs, which went up by $6.8 million.

SPH said it should also continue to enjoy good returns from its property businesses, with near 100 per cent occupancy at its Orchard Road mall Paragon providing a stable, recurrent income stream.

Staff costs fell 2.1 per cent to $76.9 million, despite a higher headcount of 3,944 compared to 3,771 last year, as the company trimmed bonus payouts.

Barring unforeseen circumstances, the company expects the recurring earnings for the current financial year to be 'satisfactory', said Mr Chan.

SPH is Singapore's biggest listed media company. Every day, more than 2.9 million people read one of SPH's 17 newspapers, which includes Singapore's biggest English daily, The Straits Times. Its websites, including AsiaOne, The Straits Times Online and citizen journalism site Stomp (Straits Times Online Mobile Print), enjoy over 150 million page views every month. The company also publishes more than 100 magazine titles.

SPH shares ended three cents lower at $3.02 yesterday. The results were announced after the market closed.