Weaker investment income hits SPH's 3rd-quarter gain - Jul 12, 2008 (ST)

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The Straits Times / The Business Times News On SPH

Weaker investment income hits SPH's 3rd-quarter gain

Earnings drop to $133m amid equity market slump, despite increase in revenue to $344m.

By Chua Hian Hou
Jul 12, 2008
The Straits Times

SHARPLY reduced investment income stemming from turmoil in global financial markets sent third-quarter net profits at Singapore Press Holdings (SPH) down 15.6 per cent to $133.4 million.

However, revenue for the three months to May 31 was up 19.5 per cent at $344.4 million.

The surge in sales failed to offset the hit from investment income, which came in at $25.7 million, down 65.9 per cent from the $75.3 million in the same period last year.

Last year's number had also included income from a capital reduction exercise by telecommunications firm M1, in which SPH has a stake.

But SPH's core publishing business and property-related segment remained robust. They combined to boost non-investment-related earnings by 26.2 per cent to $135.1 million, from $107.1 million last year.

SPH chief executive officer Alan Chan is optimistic that 'recurring earnings for the current financial year will be better than in the previous financial year', despite the moderating economic growth and continued rises in newsprint costs.

Slowing economic growth is expected to have an impact on advertising revenue, although the segment has 'registered commendable growth and remained resilient so far', he said.

SPH will be raising advertising rates for eight newspapers, including flagship The Straits Times, by between 2.7 per cent and 9.1 per cent, on Sept 1. The last increase was in January.

Print advertising revenue rose 6.3 per cent to $207.9 million last quarter. The newspaper and magazines business grew by 5 per cent in the same period.

The Sky@eleven condominium, which is expected to obtain its Temporary Occupation Permit by 2010, contributed $38.1 million. Meanwhile, the Paragon mall, which is undergoing an $82 million makeover to 'increase its commercial and retail space', contributed another $3.1 million, said SPH.

Expenses rose as the group intensified efforts to expand into new media and magazines.

Staff costs, for example, rose 13.8 per cent to $87.3 million, with SPH hiring staff for various initiatives including its upcoming Web TV station, The Straits Times RazorTV, which is expected to be launched next month.

SPH also launched the Rednano search engine service earlier this year. Total headcount was 3,874 as at May 31, up from 3,684 a year ago.

The group said it was necessary to 'invest resources to develop our digital and interactive media, so as to position ourselves for future growth'.

Non-staff expenses were up 15 per cent, 'on the back of an increase in business activity and inflationary pressures', it said.

Earnings per share were eight cents, down from 10 cents last year, while net asset value per share was $1.26, a drop from $1.33 as at Aug 31 last year.

SPH shares dipped one cent to $4.18 yesterday. The stock is down about 7 per cent this year, compared with the Straits Times Index's 15 per cent drop.