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SPH beats market forecasts with $97.6m profit - Apr 12, 2005 (ST)

BackApr 12, 2005

The Straits Times / The Business Times News On SPH

SPH beats market forecasts with $97.6m profit

It recommends higher dividend payout of 8.75 cents per share to reward shareholders.

By Audrey Tan
Apr 12, 2005
The Straits Times

SINGAPORE Press Holdings (SPH) has surpassed market expectations with a 9.3 per cent jump in net profits to $97.6 million in the second quarter, thanks to an increase in advertising and circulation revenues.

The better-than-expected results for the second quarter lifted its first-half profits to $319.2 million,up 84.5 per cent from the previous year.

UNEXPECTED FACTOR

Analysts had expected lower ad revenues as the Singapore economy slowed, but SPH posted a 3 per centrise in operating revenues to $234.9 million.

As a reward to shareholders, the media group also recommended higher dividends. This takes the form of an interim dividend of 3.75 cents per share and a special dividend of five cents a share.

The 8.75-cent payout works out to be higher than last year's interim payout after taking into account a five-for-one stock split and a capital-reduction exercise which were completed in June last year.

Last year's interim dividend amounted to 20 cents a share prior to the stock split and capital-reduction exercise.

SPH's second-quarter results - for the three months ended Feb 28 - beat analysts' forecasts of a 9 per cent drop in net profits.

Analysts had expected lower advertising revenues as the Singapore economy slowed, but SPH posted a 3 per cent increase in operating revenues to $234.9 million.

Revenues from all business segments, apart from broadcasting, grew in the second quarter. Its newspaper and magazine segment contributed a 5.6 per cent rise in revenues as print advertising revenue rose 3.8 per cent to $148.1 million.

Circulation revenues also rose 8.2 per cent, while property revenues were up 7 per cent.

On Dec 31, SPH completed the merger of its television broadcasting and free newspaper businesses with MediaCorp's.

This cut broadcasting and multimedia revenues by 37 per cent in the second quarter, but also drove materials, consumables and broadcasting costs down by 8.6 per cent.

SPH benefited from lower costs as the merger of its free-to-air TV broadcasting unit with MediaCorp cut its broadcasting production costs.

On the flipside, it had to book a $13.2 million exceptional loss for charges associated with the merger.

The company also had to contend with higher newsprint and magazine production costs.

Earnings per share, including exceptional items, were 20 cents for the half year, compared with nine cents in the same period last year.

The first half-year's earnings included a $128.5 million gain from selling a substantial portion of its stake in StarHub, SPH said.

Net asset value per share rose to 98 cents at the end of February, from 93 cents at the end of August.

On the outlook for the rest of this year, SPH chief executive Alan Chan said the group's advertising revenues are expected to be in line with the economic growth this year.

'There are signs of improving sentiment in several business sectors.

Generally, consumer and business sentiments in Singapore will continue to be influenced by global economic factors such as high oil prices,' he said.

The rise in newsprint prices is expected to moderate, amid current imbalances in demand and supply.

The cessation of SPH's free-to-air TV broadcasting operations will also stem the operating losses in its broadcasting and multimedia business, excluding any other charges that may arise from the merger exercise, the group said.

Meanwhile, SPH expects its investment income to be comparable to the previous year's, excluding non-recurring gains such as from the sale of its interests in StarHub and Belgacom.

'Although there are concerns over the geopolitical and global economic environment, the directors expect the overall operating performance of the group to be satisfactory,' said Mr Chan.

SPH shares yesterday rose four cents to $4.50.