SPH braces for even lower earnings as companies slash advertising budgets

Print ad growth will slip on back of sluggish GDP figures.

Singapore Press Holdings will grapple with dwindling advertising revenue as companies trim their marketing budgets, according to a report by DBS.

SPH had previously reported an 8% drop in advertising revenue in the second quarter. DBS believes that the group’s media income can go lower on back of muted economic growth and lower consumer spending.

“We believe print ad growth will be negatively impacted on the back of slower GDP growth. Our Singapore economist has downgraded 2015 GDP growth from 3.2% to 2.4%, the slowest level in six years,” said DBS.

The less positive macroeconomic backdrop will negatively impact companies’ advertising expenditure, said the report.

“Cut back in consumer spending, lower disposable incomes, higher interest rates, and poorer business environment could well lead to lower advertising expenditure by companies. SPH faces downside risk from adex if the economy slips into a recession,” DBS cautioned.