Singapore Press Holdings Limited’s Latest Earnings: Profit Plunges

Singapore Press Holdings Limited (SGX: T39) reported its third-quarter earnings last Friday for its fiscal year ending 31 August 2016 (FY2016). The reporting period was for 1 March 2016 to 31 May 2016.

SPH may be best known as a publisher of most of the major newspapers here in Singapore. But there’s more to the company beyond that; it also engages in property development, investment, and other activities such as events management. As part of its property-related business, SPH is the majority owner and manager of SPH REIT  (SGX: SK6U), a real estate investment trust which owns retail malls in Singapore.

You can learn more about SPH in here and here.

Financial highlights

The following’s a rundown on some of the latest important financial figures from SPH’s earnings release:

  1. For the third-quarter, revenue fell by 5% year-on-year to end at $291.6 million.
  2. But, profit attributable to shareholders plunged by 46.4% to $52.6 million. The sharp decrease was in part due to an impairment charge related to its magazine business.
  3. Consequently, earnings per share (EPS) fell from $0.06 in the third-quarter of FY2015 to $0.03 in the reporting quarter.
  4. Cash flow from operations came in at a negative $40 million for the reporting quarter. Meanwhile, capital expenditure clocked in at $4.9 million. This gives SPH a negative free cash flow of nearly $45 million. This is a decline from the negative $34.3 million in free cash flow recorded a year ago.
  5. As of 31 May 2016, SPH had $1.24 billion in cash (this includes short-term as well as long-term investments) and borrowings of $1.28 billion. This is a decline compared to a year ago. Back then on 31 May 2015, SPH had $1.43 billion in cash (this again includes short-term and long-term investments) and total debt of S$1.41 billion.

SPH saw its revenue dip by 5.0% and its profit plunge. Without the impairment charge, the media company noted that its operating profit would have fallen by ‘only’ 16.1%.

In the last sequential quarter, the company’s revenue fell by 4.1% year-on-year. As we’ve seen, it was a similar story in the reporting quarter. Over the longer term, investors may want to observe if SPH can turn the ship around and bring in higher revenues.

Operational highlights

SPH’s lower revenue in the reporting quarter was mainly due to weakness in its media segment. The segment, which accounted for nearly three quarters of total revenue, fell over 7% year-on-year to $216.6 million.

The fall in revenue from the media segment was from lower advertising revenue. The company commented that circulation revenue managed to be maintained. Low single-digit growth in SPH’s property and “others” segments helped to offset some of the lower revenue seen in media.

SPH’s advertising revenue continued its multi-year trend of declines. In the reporting quarter, the company saw its display, classified, and newspaper ad revenues experience year-on-year falls of 11.9%, 1.7%, and 8.6%, respectively.

A future outlook

Looking ahead, investors may get to see some changes in SPH’s business. The company’s chief executive, Alan Chan, said in the earnings release that SPH will be conducting a review of its core media business:

“Given the challenging market conditions, [SPH] has embarked on a comprehensive review of our core Media business. The aim is to better address the evolving needs of our advertising customers and deliver effective, integrated solutions across our various media platforms. In addition, we will critically examine our product portfolio and also identify areas where we can further enhance our operational efficiency.

We are confident that our continued transformation efforts will position SPH as a forward-looking and efficient organization, one that is ready to meet the changing demands of a new marketplace.”

SPH’s share price closed at $4.07 last Friday, giving the company a price-to-earnings (PE) ratio of 24.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.