SPH profits slip 6%, but core businesses put up strong showing - Apr 15, 2008 (ST)

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The Straits Times / The Business Times News On SPH

SPH profits slip 6%, but core businesses put up strong showing

Profit before investment income shot up 36% to $111.8 million for the three months ended Feb 29.

By Bryan Lee
Apr 15, 2008
The Straits Times

SINGAPORE Press Holdings (SPH) yesterday said net profits dipped 6.3 per cent as volatility in global financial markets hurt investment income.

However, the fall in second-quarter earnings to $99.6 million masked an otherwise strong showing by its core businesses.

Profit before investment income shot up 36 per cent to $111.8 million for the three months ended Feb 29 as revenues jumped 18.9 per cent to $298.1 million.

Newspaper and magazine operations saw sales rise 8.4 per cent to $236.4 million, as print advertisement revenues surged 11.3 per cent to $179.8 million.

Property revenues doubled to $54.3 million, on the back of contributions from the Sky@eleven condominium project and higher rental income from Paragon shopping mall.

Investment income was the main drag on the bottom line, falling 83.7 per cent to $5.1 million. This was attributed to lower profits on investments sold this year. Also, the fair valuation of investments was affected by continued volatility in global financial markets, the company added.

From Dec 3 to Feb 29, the Dow Jones Industrial Average fell 8 per cent, while the Hang Seng and Straits Times indexes dived 15 per cent and 13 per cent, respectively.

Operating costs rose 10.8 per cent due mainly to development costs incurred for Sky@eleven and higher staff costs. Headcount was raised to staff new media businesses, while salaries were boosted to help keep up with market rates.

For the half-year, net profit was down 2.4 per cent at $211.5 million, even as earnings excluding investment income were up 26.9 per cent.

'Advertisement revenue will continue to be driven by the Singapore economy, which is expected to grow at a more moderate pace in 2008,' said chief executive Alan Chan. 'In view of rising business costs amid the current inflationary climate, efforts will be focused on sustaining operating profit margins.'

Profits from Sky@eleven will help cushion the bottom line, said Mr Chan, adding that the company's directors expect recurring earnings for the year to be 'satisfactory'.

An interim dividend of eight cents per share has been declared. This is better than the seven cents paid out last year.

Earnings per share for the second quarter were six cents, down from seven cents. For the half- year, earnings per share were 13 cents, down from 14 cents.

Net asset value per share was $1.25, down from $1.33 as at Aug 31.