SPH second-quarter net profit sinks 15% to $71.5 million

As ad revenues continue to fall.

Singapore Press Holdings Limited (SPH) reported its results for the second quarter ended 28 February 2013 (2Q FY13). revealing that Group recurring earnings of $79.6 million was $10.4 million (11.6%) lower than that of the corresponding quarter last year (2Q FY12).

Operating revenue fell $16.3 million (5.5%) to $282.2 million, but this was mitigated by a reduction in operating costs of $6.9 million (3.2%).

Net profit attributable to shareholders was $71.5 million, $12.6 million (15.0%) lower compared to 2Q FY12.

Revenue for the Newspaper and Magazine business declined $17.2 million (7.1%) to $224.4 million. This was mainly attributable to a fall in advertisement revenue of $13.9 million (7.6%) to $168.5 million, especially in the property and transport sectors. In addition, circulation revenue contracted by $2.4 million (4.9%) to $47.3 million.

Rental income for the Group rose by $2.2 million (4.5%) to $50.2 million on the back of higher rental rates achieved by Paragon, while income from The Clementi Mall remained stable.

Operating revenue from the Group’s other businesses dipped $1.2 million (13.5%) to $7.6 million.

Materials, production and distribution costs were lower by $5.3 million (10.1%), with a reduction in newsprint costs of $4.1 million (16.6%). Staff costs decreased by $4.4 million (4.9%) due to lower variable bonus provision partially offset by salary increments. Other operating expenses were $2.3 million (7.8%) higher due to step-up in promotional and other business activities for the online businesses.

Investment income was $4.2 million, slightly behind 2Q FY12 by $0.2 million (3.7%).

For the half year ended 28 February 2013 (1H FY13), the Group’s recurring earnings of $189.0 million decreased by $22.3 million (10.6%) compared to the same period last year (1H FY12). Group operating revenue declined $26.6 million (4.2%) while total operating costs fell $3.6 million (0.8%). Investment income improved $2.3 million (46.5%) to $7.3 million. Net profit attributable to shareholders of $162.6 million was $19.0 million (10.5%) lower compared to 1H FY12.

On the outlook for FY 2013, Mr Alan Chan, Chief Executive Officer of SPH commented: “The Group’s advertising revenue performance will be driven by market conditions and consumer sentiment in the key advertising sectors. Against the backdrop of evolving media consumption trends, we will continue to explore opportunities in new growth areas and other adjacent businesses, while striving for a sustained performance in the core newspaper business.”

The Directors have declared an interim dividend of 7 cents per share which will be paid on 23 May 2013.