SPH Reports Net Profit of $365.5M (BT)

BackOct 13, 2012

SINGAPORE Press Holdings yesterday posted a 5.9 per cent drop in net profit for the year ended August as investment income declined and the core print business stagnated amid a challenging economy.

The media group, which also owns this newspaper, said that earnings attributable to shareholders slipped 5.9 per cent to $365.5 million, or 23 cents per share, for fiscal 2012. That missed consensus estimates for net earnings of about 24.2 cents as polled by Bloomberg.

But recurring earnings of its media and property businesses – represented by profit before investment income and share of net loss of associates and jointly controlled entities – rose 0.3 per cent year on year to $410.2 million.

SPH has proposed a final dividend of 17 cents per share – comprising a normal dividend of nine cents and a special dividend of eight cents – taking its total payout for the fiscal year to 24 cents per share.

"I am happy that despite all the economic challenges out there, our recurring profit actually improved, albeit by 0.3 per cent, but the fact of the matter is we have improved," SPH chief executive Alan Chan said at a press briefing. "It is really the investment income that has come down. That's why the overall profit has come down."

Investment income, which was impacted by volatility in the financial markets, fell $17.8 million (35.3 per cent) to $32.6 million.

Chief financial officer Tony Mallek said that the company shifted its investment holdings towards a more conservative portfolio during the year, accounting for more modest returns. The bulk of the company's roughly $1 billion investible fund is invested in cash and short-term securities, Mr Mallek said. Equity holdings of the fund are mostly legacy holdings in telcos M1 and StarHub.

Growth in the property and exhibitions businesses cushioned the lower profits from the newspaper and magazine segment. The core newspaper and magazine business saw revenue dip one per cent to $1 billion for the year.
Circulation revenue fell 2.1 per cent to $202.9 million, while print advertisement sales shrank 0.7 per cent to $769.4 million. Looking ahead, SPH said that it expects print ad revenue to move in tandem with a "modest" near-term outlook for the Singapore economy.

Leslie Fong, senior executive vice-president of marketing, said that he was confident that the company could hold display revenue at existing levels for a few more years.

He acknowledged challenges in the classifieds space amid online competition, but said that "we are redeploying ourselves and we are devoting a lot of resources and we will try to recapture our lead in those areas".

Property revenue climbed 14 per cent to $191.4 million as fully leased retail properties Paragon and The Clementi Mall provided a steady stream of rental income.

Looking ahead, SPH plans to retain its property development focus on the commercial retail space.

Shares of SPH closed at $4.07 yesterday before the results were announced, up by two cents or 0.5 per cent.