Singapore Press Holdings Limited’s Latest Earnings: Difficult Market Conditions Ahead

Singapore Press Holdings Limited (SGX: T39) reported its full-year earnings last Friday for its fiscal year ended 31 August 2016 (FY2016).

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 and other activities such as events management. The company’s property-related business also includes a majority stake in and management of SPH REIT  (SGX: SK6U), a real estate investment trust which owns retail malls.

You can learn more about SPH here and here. You can also catch up with SPH’s fiscal third-quarter earnings here.

Financial highlights

The following’s a rundown on some of the the financial figures from SPH:

  1. For FY2016, SPH’s operating revenue fell by 4.5% to $1.12 billion.
  2. Profit attributable to shareholders fell harder by 17.4% to end at $265.3 million. The sharp decrease was due partly to an impairment charge related to its magazine business.
  3. Consequently, earnings per share (EPS) fell from $0.20 in FY2015 to $0.16 in FY2016.
  4. Cash flow from operations came in at a negative $13.8 million for FY2016. Meanwhile, capital expenditure clocked in at $15.2 million. This gives SPH a negative free cash flow of $29 million. This is a decline from the $26.3 million in positive free cash flow recorded in FY2015 (there was $39.9 million in positive cash flow from operations and $13.6 million in capex).
  5. As of 31 August 2016, SPH had $312.9 million in cash and equivalents and borrowings of almost $1.3 billion. Compared to the end of FY2015, this is a slight increase. On 31 August 2015, SPH had $292 million in cash and equivalents and borrowings of almost $1.3 billion.
  6. SPH also had $628.9 million in long-term investments and $406.7 million in short-term investments, as of the end of August 2016. A year ago, the numbers were S$617.3 million and S$474.6 million, respectively.

In sum, SPH saw its revenue dip by 4.5% and profit retreat by a double–digit percentage. This decline has been a familiar story for the year. Over the longer-term, investors may want to observe if SPH can turn the ship around and bring in higher revenues.

The company’s board declared a final dividend of S$0.08 per share and a special dividend of S$0.03 per share. FY2015’s final dividend was the same as in FY2016, but the special dividend was higher at S$0.05 per share. For the whole of FY2016, SPH will pay out S$0.18 per share in dividend, down from the S$0.20 seen a year ago.

Operational highlights and a future outlook

SPH’s operating revenue fell by 4.5% mainly due to lower revenue from its media segment. The segment, which accounted for nearly three-quarters of SPH’s total operating revenue, saw its top-line decline 7.6% to $834.2 million. Lower advertising and lower circulation revenue were big culprits.

SPH’s newspaper ad revenue fell by 10.4% in FY2016. Other print media advertising revenue suffered similar fates. Display ad revenue was down 11.7% while classified revenue slipped by 7.5%.

The fall in the media segment was partially offset by higher revenue from the property segment and from the others segment. The two segments saw revenue growth of 4.6% and 11.4%, respectively.

SPH’s chief executive, Alan Chan, said in the earning release that SPH expects tough times ahead and that it will continue its review of its core media business. He said:

“FY2016 has been a challenging year marked by a very tough operating environment. Looking ahead, market conditions are expected to remain difficult in view of the uncertain economic outlook and the continuing disruption of the media industry.

We reported in the last quarter that the Group has embarked on a comprehensive review of its core Media business. This exercise is on-going. We will continue to focus on our drive to transform and sustain the Media business whilst pursuing growth opportunities.”

SPH’s share price closed at $3.76 last Friday. At that price, the media firm has a price-to-earnings (PE) ratio of 23.5 and a dividend yield of 4.8%.

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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.