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SPH profits slip 12.6% to $87m (ST)

BackApr 14, 2009

Ad sales dip; property revenue rises; interim dividend of 7 cents.

By Chua Hian Hou

MULTIMEDIA group Singapore Press Holdings (SPH) has reported 12.6 per cent lower net profits of $87 million for its second quarter ended Feb 28, compared with the same period a year earlier.

The slide came as companies feeling the bite from the economic downturn cut back on their advertising spending.

Operating revenue was $287.2 million, down 3.7 per cent. Quarterly earnings per share were five cents, down from six cents. Group net asset value was $1.16 per share as of Feb 28, down from $1.30 as of Aug 31 last year.

SPH will nonetheless pay out a seven cent interim dividend, just one cent lower than the eight cents it paid out at half-time last year.

SPH is the biggest listed media company in Singapore with 17 newspapers, more than 100 magazines, and popular sites such as AsiaOne and Stomp (Straits Times Online Mobile Print).

SPH said the 'sharp downturn in the economy' had resulted in an 18.8 per cent drop in advertising revenues in its core print business to $145.9 million. Print advertisements contribute to more than half of SPH's revenue.

Classified ads took the biggest hit, sliding 26.1 per cent. The larger display ads fell a smaller 16 per cent.

Newsprint costs were higher by $6.4 million, while the company's investment portfolio recorded a $100,000 loss.

One bright spot was its property arm, comprising the sold-out District 11 freehold Sky@eleven condominium and Paragon shopping-cum-office complex in Orchard Road. This segment saw a 32.9 per cent rise in revenue to $72.2 million.

SPH's wage control measures such as wage cuts have also begun to pay off, the company said. It had reduced staff costs - its biggest cost category as a talent-driven business - by 13.6 per cent to $69.4 million.

This was despite adding some 200 employees. The new hires had joined 'as a result of the group's expansion of its magazine business and continued investments in its new media businesses', the company said.

SPH's net profits for its first six months ended Feb 28 was $160.1 million, down 24.3 per cent, on the back of a 2.8 per cent rise in revenue to $627.4 million, compared to the same period last year.

'The recession in Singapore is expected to last through 2009 and this would have a continued impact on advertisement revenue,' the company said about the outlook this year.

Its Paragon property in Orchard Road also faces 'downward pressure on its retail and office rentals, but is expected to continue to provide a recurrent income stream'. Paragon, which completed an $82 million upgrade to its facade last month, which added some 40,000 sq ft of space, is 98 per cent occupied.

Meanwhile, newsprint prices, SPH's second biggest cost after wages, are expected to remain high for the year although some moderation in the financial year ended 2010 is expected.

SPH chief executive officer Alan Chan said: 'Trading conditions are expected to remain uncertain until we can see a clear recovery in the economy.' Despite the downturn, he was confident of the company's prospects, and said his priority is to 'preserve resources, protect jobs, and position ourselves so as to emerge stronger when the economy improved'.

SPH's share price closed at $2.89, nine cents higher.