SPH net profit down 1.2% to $53.5m

Display and classified ads caused the decline.

Singapore Press Holdings reported a 1.2% decline in net profit in its 2Q17 which ended in March.

According to UOB KayHian, the group saw a $11.7m one-off gain from disposal of investments. This pushed the headline net profit up to $53.3m. Excluding one-off items, core net profit was $39.4m, down 19.6%.

The weakness came from the 16-19% drop in display and classified ad revenues due to lower demand.

Meanwhile, circulation revenue remained stable at $39.6m, as the decline in print subscriptions was offset by the increases in digital subscriptions.

Here's more from UOB KayHian:

SPH’s key media segment is expected to remain weak, reflecting the lacklustre Singapore economy. All 12 trade segments in Singapore remained weak, with no particular trade segment leading the decline. The weakness is expected to persist. Diversification into other business segments has not yet been able to supplant earnings from SPH’s traditional media business, and is not expected to happen in the near term.

Interim dividend cut a possible hint at strains in cash flow. We understand from management that the interim cut was to soften the percentage decline in its final dividend. More notable was that the interim dividend cut was also in part due to the lower cash flows generated from the media business. Assuming the media’s business decline accelerates, cash flow reduction could translate to sharper-than-expected cuts in dividend.