Published January 13, 2009

SPH's Q1 net profit falls 34.8%

Results hit by $33.7m investment losses; recurring earnings up 1%

By CHEW XIANG

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SINGAPORE Press Holdings' net profit for the first quarter ended Nov 30, 2008, fell 34.8 per cent to $73 million from the previous corresponding period's $111.9 million.

Profits were hit by $33.7 million in investment losses to its portfolio, compared with $9.84 million in gains a year ago.

'This arose mainly from the $31.6 million loss in the value of the group's externally-managed funds following the global financial market meltdown during the quarter,' said SPH in a statement.

Group earnings per share for the quarter fell to 5 cents from 7 cents.

Recurring earnings from the company's core media and property businesses were up one per cent at $127.8 million as profit recognised from its ongoing Sky@elevendevelopment cushioned reduced profit from the print media business.

Revenue rose 8.9 per cent year-on-year to $343 million, from $315 million.

Overall, its core newspaper and magazine segment posted sales of $249.4 million, down 4.6 per cent.

Print advertisement revenue fell 7.3 per cent to $188.2 million, but circulation revenue rose by $2.2 million.

Classifieds revenue fell 17 per cent, led by the fall in recruitment advertisements.

Revenue from property jumped 86.3 per cent or $37.6 million to $81.1 million, with Sky@elevenand the Paragon shopping mall contributing $34.6 million and $2.7 million respectively to the increase.

Total operating expenses rose 14.1 per cent to $215.2 million.

Materials, consumables and broadcasting costs rose 15.4 per cent.

Total headcount as at November 2008 was 3,944 compared with 3,771 a year ago as a result of expansion of the group's magazine business and continued investments in new media businesses.

But staff costs fell 2.1 per cent as the increase in costs brought about the higher headcount and annual salary increment was more than offset by the decrease in variable bonus provision.

The group said advertising revenue will continue to be affected by the economic downturn.

It added that 'while newsprint prices have started to slide behind recent market corrections, charge-out rates remain high and continue to add pressure to the group's production costs'.

SPH also cautioned that higher start-up losses are expected in new media businesses 'in the near term as the group invests resources and builds up capabilities to position for future growth'.

The group said it has taken measures to enhance revenue and contain costs and will proactively implement further cost and efficiency initiatives to help mitigate the challenges from current market conditions.

Recurring earnings for the current financial year are expected to be satisfactory, SPH said.

Yesterday, SPH fell 3 cents or one per cent to close at $3.02.