SPH reports net profit of $99m in third quarter - Jul 13, 2005 (ST)

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The Straits Times / The Business Times News On SPH

SPH reports net profit of $99m in third quarter

Performance beats analysts' average forecast of $96m.

By Bryan Lee
Jul 13, 2005
The Straits Times

SINGAPORE Press Holdings (SPH) reported yesterday a better-than-expected third quarter net profit of $98.6 million, boosted by a 26.5 per cent jump in operating income.

Operating revenue for the three months ended May 31 was up 2 per cent to $259.8 million, as the media group enjoyed higher advertisement sales from the newspapers and magazines it publishes.

It also enjoyed a rise in turnover from its property business.

The company said it expects operating profit for the year ending Aug 31 to beat the previous year's despite rising newsprint costs. For the nine months ended May 31, operating profit was already up 12.7 per cent at $296.9 million.

SPH's third-quarter income bettered the $96 million average of a Reuters poll of four analysts.

But it was lower than the $369.5 million earned during the same period last year.

This was largely because last year's profit had been boosted by one-off gains totalling $280.6 million. SPH racked up a $170.5 million gain from selling an indirect stake in Belgian telco Belgacom, while the sale of the former Times House site added another $110.1 million to its bottom line.

The improved performance at the operating level was due largely to cost savings from the cessation of its broadcasting operations, following the merger of its free-to-air TV operations with MediaCorp.

SPH said material, consumable and broadcasting expenses fell $13.2 million or 24.8 per cent, driven mainly by the 'non- recurrence of broadcasting production costs'. The savings would have been higher, if not for rising newsprint and magazine production costs.

The closure of SPH's TV business also helped to reduce staff costs, but this was largely negated by an increase in headcount at its magazine operations. Overall staff expenses declined by $1 million. The company, however, incurred an exceptional loss of $11.6 million from charges associated with the merger.

In its core newspaper and magazine publishing business, revenues were boosted by contributions from Blu Inc, acquired last September, and higher newspaper ad sales. Turnover rose 6.3 per cent to $235.7 million, helped by higher ad sales which rose 7.2 per cent to $178 million.

Looking ahead, SPH said high oil prices would continue to be a factor bearing on consumer and business sentiment. It, however, noted that several business sectors continued to exhibit signs of improving sentiment.

The company also said that newsprint prices are likely to rise, but at a 'moderating pace'.

'The group's newspaper advertising revenue is expected to grow in tandem with the moderating economic growth for the year 2005,' said chief executive Alan Chan.

'Overall, the directors expect the profit from operations of the group for the current financial year to be better than the last financial year.'

Earnings per share slipped to six cents from 20 cents. Net asset value per share rose to 97 cents from 93 cents as at Aug 31, last year.

SPH shares closed two cents lower yesterday at $4.52.