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SPH profits more than double to $222m - Jan 07, 2005 (ST)

BackJan 07, 2005

The Straits Times / The Business Times News On SPH

SPH profits more than double to $222m

Earnings lifted by $129m gain from selling nearly all of StarHub stake.

By Audrey Tan
Jan 07, 2005
The Straits Times

SINGAPORE Press Holdings (SPH) yesterday reported a 164.6 per cent surge in net profits to $221.6 million for the first quarter, thanks to a $128.5 million profit from selling nearly all its stake in telecommunications operator StarHub.

For the three months ended Nov 30 - the first quarter of the company's financial year - the media group reported a 10.4 per cent increase in turnover to $265.4 million.

Revenues from its newspaper and magazine, property as well as broadcasting and multimedia businesses rose. But operating expenses also increased because of higher newsprint, broadcasting production and staff costs.

As a result, operating profits were up just 0.6 per cent at $95.9 million from a year ago.
This took into account losses of $1 million and $13.1 million from Streats and SPH MediaWorks respectively. Both these divisions have since been merged with MediaCorp in a deal completed at the end of last year.

For the year ahead, the merger of Streats and MediaWorks with MediaCorp is expected to stem losses in the company's broadcasting and multimedia business, SPH said.

But there are operating losses for the period prior to the completion of the merger, as well as retrenchment costs and potential charges arising from the merger, it added.

In this current quarter - the second quarter of its financial year ? SPH will recognise a charge of $5.3 million from the staff rationalisation exercise it undertook for the merger.

Group investment income improved to $152.7 million in the first quarter from $14.7 million a year ago, $128.5 million of which was due to the disposal of a substantial portion of SPH's stake in StarHub. Higher profits from the sale of other investments also contributed to the rise in investment income.

Earnings per share rose to 14 cents in the first quarter, up from five cents a year ago.

Net asset value per share rose to $1.08 at the end of November, up from 93 cents at the end of August.

Investment income is likely to be lower this year than in the previous year given the lower level of investible funds and excluding non-recurring gains, SPH said.

The company had returned more than $1 billion to shareholders through regular dividends, a special payout and a capital reduction in the past two years.

Looking ahead, SPH cautioned that its newspaper advertising revenues will move in tandem with the economic slowdown this year.

Newsprint prices are expected to continue to rise amid limited production capacity coupled with continued growth in demand and cost pressures faced by suppliers.

Persistent concerns over high oil prices, rising interest rates, the US dollar weakness, China's economic slowdown and geopolitical threats would have negative implications on consumer and business sentiments, it said.

'In view of the expected slowdown in economic growth ... the directors are cautious about the operating performance of the group for the current financial year,' the company added.

SPH shares yesterday rose six cents to $4.68.