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Singapore Press Holdings Limited’s Latest Earnings: Profit’s Down Almost 44% in a Sputtering Start to the Fiscal Year

Last Friday, Singapore Press Holdings Limited (SGX: T39) reported its first quarter earnings for its fiscal year ending 31 August 2017 (FY2017). The reporting period was for 1 September 2016 to 30 November 2016.

As a quick background, 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 investments 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. You can also catch up with the results from the company’s last quarter here.

Financial highlights

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

  1. For the reporting quarter, SPH’s operating revenue fell by 6% year-on-year to end at $278.3 million.
  2. Net profit attributable to shareholders plunged 43.8% to $45.7 million. The sharp decrease was caused in part by an impairment charge for an associate and the review of its media business. Without the effects of the impairment charge, profit would be down by ‘only’ 12.4% year-on-year instead.
  3. Consequently, earnings per share (EPS) fell from $0.05 in FY2016’s first quarter to $0.03 in the reporting quarter.
  4. Cashflow from operations came in at $78.8 million. Meanwhile, capital expenditure was $2.7 million. This gives SPH positive free cash flow of $76.1 million. It is a decline from the $103.9 million in positive free cash flow recorded in the corresponding quarter in FY2016.
  5. As of 30 November 2016, SPH has $405.4 million in cash and equivalents and borrowings of almost $1.3 billion. On 31 August 2016, SPH had $312.9 million in cash and equivalents and borrowings of almost $1.3 billion. So, this was an improvement from the previous quarter.
  6. At the end of the reporting quarter, SPH also had $530.6 million in long-term investments and $423.5 million in short term investments. This compares with the $628.9 million in long-term investments and $406.7 million in short term investments that were recorded at the end of August 2016.

In sum, SPH saw its revenue slip by 6% year-on-year while its profit was crushed. This is a continuation from what we saw in the last fiscal year. Over the longer term, investors may want to observe if SPH can turn its ship around and bring in higher revenues.

Operational highlights

SPH’s revenue decline occured mainly due to lower revenues from its Media segment. The Media segment’s revenue, which accounted for three quarters of SPH’s total revenue, fell 9.5% year-on-year to $223 million. The fall in the segment’s revenue, in turn, came from a 13.5% decline in advertising revenue. On the flipside, circulation revenue rose 1.8% year-on-year.

The fall in revenue from the Media segment was partially offset by increases from the Property segment and from the Others segment. The former saw a 1.3% year-on-year increase in revenue while the latter experienced a 17.9% bump in sales.

SPH’s chief executive Alan Chan said in the earnings release that the company’s business environment remains tough. He highlighted the company’s focus for the year ahead:

“Having completed our comprehensive business review in October 2016, we are forging ahead with our transformative agenda to strengthen the Group’s position in an increasingly tough economic and media environment.

We will focus on continued innovation and investment in the media business to stay ahead and stay relevant, improve cost efficiency with a leaner organisation and wage restraint measures, and grow business adjacencies to diversify revenue streams.”

SPH’s share price closed at $3.69 last Friday. At that price, the media firm traded at a price-to-earnings (PE) ratio of 26.4 and has a dividend yield of 4.9%.

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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.