Growth in Profits and Future Transformation Announced in Singapore Press Holdings’ Second Quarter Earnings

Southeast Asia’s media behemoth and property developer, Singapore Press Holdings (SGX: T39), or SPH for short, released its results for the second quarter on Friday. Revenue for the quarter was down 1.2% year-on-year to $278.8 million. Profits, however, increased 7.5% to S$81.3 million.

For the six months ended 28 Feb 2014, revenue rose slightly at 0.5% to S$607.2 million from a year ago while profits slipped by a little at 0.4% to S$170.1 million.

SPH is organised into three major operating segments – Newspaper and Magazine, Property, and Others.

For the second quarter, revenue from Newspaper and Magazine dropped 5.7% to S$211.6 million mainly due to a decrease in revenue from advertisement and circulation. This follows a decline in revenue from the segment in the first quarter and in fact, SPH has been facing difficulties in the most important part of its business since the financial year ended August 2012.

Revenue from the Property segment rose 3% to S$51.7 million due to better performance on the back of higher rental income and full occupancy rates from the retail assets under SPH REIT (SGX: SK6U). SPH REIT owns the retail properties, Paragon and The Clementi Mall. Revenue from Others, which includes investments and other businesses that SPH has a stake in (such as online classifieds, book publishing and distribution, financial portal services, and organizing of events, among others), doubled to S$15.4 million because of a better performance from its exhibitions, online classified and radio businesses.

For the first half, revenue from Newspaper and Magazine dipped 4.2% to S$467.5 million. Revenue from Property increased 4.2% to S$102.5 million while revenue from Others was at S$37.3 million versus S$18.0 million in the previous year.

As of the end of February 2014, SPH had S$1.8 billion in total debt against a backdrop of S$660.3 million in total cash. For the second quarter, the company had burned through S$215.6 million in cash for operating activities as compared to S$240.9 million in the previous year.

Shareholders will receive an interim dividend of 7.0 Singapore cents per share, unchanged from the previous year.

During the quarter, SPH completed an in-depth organisational review to sustain the core print business after hiring an outside strategy consultant last year. A leaner and flatter organisational structure was introduced as a result, which would see 300 positions be eliminated over time. The firm is also on track to deliver other cost cutting measures which, when put into operation, would generate annual cost savings of around S$19 million. SPH’s performance may be boosted once The Seletar Mall, the largest suburban lifestyle hub in the North-East of Singapore, is completed by December this year.

Mr Alan Chan, Chief Executive Officer of SPH, said, “Having completed our organisational review, the Group is now embarking on its transformation from a position of strength. With a leaner and more agile organisational structure in place, the Group is well placed to respond to the rapid changes in the media industry and structural shifts in consumer behaviour, and to pursue growth opportunities.”

SPH closed at S$4.22 on Friday. It trades at a historical PE ratio of 16 and boasts a dividend yield of 3.6%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.