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Investment income dip dents SPH Q2 earnings - Apr 13, 2006 (BT)

BackApr 13, 2006

The Straits Times / The Business Times News On SPH

Investment income dip dents SPH Q2 earnings

Profit down 11.9% at $84.6m; operating revenue up 2.1% at $240m.

By Wong Wei Kong
Apr 13, 2006
The Business Times

A FALL in investment income led media group Singapore Press Holdings (SPH) to report yesterday a 11.9 per cent decline in second quarter net earnings.

Net profit fell to $84.6 million in its second quarter ended Feb 28, 2006 from $96 million a year ago, SPH said. Profit before investment income, however, was 0.7 per cent higher at $83.1 million. Earnings per share for the quarter fell to 5 cents from 6 cents.

SPH declared an interim net dividend of 7 cents per share payable on May 16, 2006.

The group said investment income for the quarter fell 56.9 per cent to $19.5 million from $45.3 million a year ago. The previous year's results included higher profits on the sale of investments and income arising from a capital reduction by an investee company. In addition, contributions from externally managed investments were lower due to the weakening of the US dollar.

The group's operating revenue in the second quarter - including the effect of the cessation of operations by its broadcasting unit SPH MediaWorks in January 2005 - rose 2.1 per cent to $239.9 million.

'The growth momentum in the economy continued to benefit the group's newspaper, magazine and property segments as operating revenue came in higher over the same quarter last year,' SPH said. Revenue for the core newspaper and magazine operations increased 3.2 per cent to $209.7 million, while revenue for the property division rose 11.5 per cent to $25 million.

Among SPH's newspapers, The Sunday Times saw the highest circulation growth of 2.5 per cent, followed by The Business Times with 2.2 per cent. Circulation of flagship paper The Straits Times rose 1.1 per cent.

SPH said total operating expenses at $158.6 million was 2.8 per cent higher. Newsprint cost rose 10.7 per cent as a result of higher prices. Staff cost was marginally up 0.6 per cent while total headcount as at end February 2006 was 3,472, from 3,461 a year ago. Other expenses were higher in line with increased business activity.

There was also no write-back of provisions as in the previous year. Cost savings from the closure of SPH MediaWorks partially offset the increase in expenses.

For the half-year ended February 2006, SPH registered a net profit of $183 million, down 42 per cent from $316.7 million a year ago. The previous period had included a $128.5 million gain from the sale of a substantial portion of the group's stake in StarHub.

SPH said recurring earnings for the second half are expected to be satisfactory. Commenting on the outlook, SPH chief executive Alan Chan said: 'The group's advertising revenue is expected to maintain its growth momentum on the back of continued optimism in the economy.'

'Nonetheless, there remain downside risks such as pressure on oil prices, threats of terrorism and an outbreak of avian flu, which could have negative impact on consumer and business sentiments.'

SPH shares rose 4 cents to $4.52 yesterday. So far this year, the stock is up 5.1 per cent.