How long can SPH hold off its deteriorating advertising revenues by cost cutting?

Advertising has contracted to worrying levels.

Singapore Press Holdings has continued to muster significant profit growth consistently, but their constantly dropping advertising numbers shouldn’t be ignored.

According to analysts from UOB Kay Hian, the large contraction in advertising revenue is worrying, with newspaper AR contracting by a whopping 12%, headlined by a 13% and 10% dip in display and classified advertising revenues respectively.

For now, SPH is banking on aggressive cost cuttings and other measures to offset the decline.

“[The AR] was offset by aggressive cost cuttings - materials, production and distribution costs (-8%), depreciation (-13%) and interest expense (-13%) - and higher property earnings (+16% yoy), a surge in investment income (+614%) and lower associates’ loarnings,” UOB Kay Hian.

UOB Kay Hian adds that the concern now is for how long SPH can continue to shore up earnings if AR continues to contract.