SPH profits slip by 5% to $127m (ST)

BackJul 14, 2009

Strong Q3 contribution from property arm mitigates ad revenue fall

A DECLINE in recruitment and display ad revenue due to the economic downturn sent third-quarter net profits dipping 5 per cent at media group Singapore Press Holdings (SPH).

Earnings for the three months to May 31 was $126.7 million, down from $133.4 million in the same period last year.

However, there were also bright spots – a fall in overall operating expenses and a rise in revenue for its property arm.

SPH's operating revenue fell 5 per cent to $327.1 million. Its newspaper and magazine arm recorded a 17.4 per cent retreat in revenue to $222 million, affected by challenging economic conditions.

However, these lower numbers were cushioned by the strong performance of the property segment, which saw revenue surge by 40.3 per cent to $94.4 million.

On the outlook for the financial year, SPH chief executive Alan Chan said: "Despite early signs that the decline in global demand is levelling out, the timing and extent of the economic recovery remain unclear. The threat of the Influenza A (H1N1) pandemic further clouds the visibility of business conditions.

"Our advertising revenue is expected to move in tandem with the performance of the economy."

Print ad sales slumped 23.3 per cent to $159.5 million, mainly due to the fall in display and recruitment ads. Classified ads plunged 30.1 per cent while display ads fell 17.8 per cent.

Although newsprint costs rose by $3.3 million, or 11.3 per cent, this was offset by lower production and other material costs, which fell by $2.9 million or 17.8 per cent. Circulation revenue grew $1.9 million to $55.6 million.

Another bright spark was a 6 per cent fall in total operating expenses to $199.9 million due to cost-control measures.

Staff costs fell 18.9 per cent to $70.8 million, as a result of pay cuts implemented from April, a decrease in profit-related bonuses and a $3.4 million grant from the Government's Jobs Credit scheme.

Total headcount as of May was higher at 3,971 compared with 3,874 a year ago, due to the company's continued investment in its new media businesses.

Other operating expenses decreased 12.9 per cent to $6.4 million.

Earnings per share for the third quarter were eight cents, the same as a year ago, while net asset value was $1.17 per share as of May 31, down from $1.30 as of Aug 31 last year.

Mr Chan added: "As trading conditions are expected to remain uncertain, we will continue to be vigilant in managing our costs, growing our revenue and maintaining a strong balance sheet."

SPH's net profit for the nine months to May 31 was down 16.9 per cent to $286.8 million after accounting for taxation. Operating revenue remained flat at $954.5 million.

SPH is the largest listed media company here with 17 newspapers, more than 100 magazines, and popular websites such as AsiaOne and Stomp. Each day, more than 2.9 million people read one of its 17 newspapers, including Singapore's biggest English daily, The Straits Times.

SPH shares closed four cents lower at $3.21 yesterday.