Singapore Press Holdings Limited’s Latest Earnings: Dividend Is Cut 14.3% As Revenue Drops Over 8%

Yesterday, Singapore Press Holdings Limited (SGX: T39) reported its second quarter earnings for its fiscal year ending 31 August 2017 (FY2017). The reporting period was for 1 December 2016 to 28 February 2017.

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 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 catch up with the results from SPH’s fiscal first quarter here.

Financial highlights

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

1. For the fiscal second quarter, revenue for SPH fell by 8.2% year-on-year to $238.0 million.

2. Profit attributable to shareholders fell 1.2% year-on-year to $53.5 million. Operating profit had declined 22.2% to $53 million, but the fall at the net profit level was cushioned by a jump of 131% in net income from investments.

3. Earnings per share (EPS) was $0.03 in the fiscal second quarter, unchanged from a year ago.

4. Cash flow from operations came in at -$152.3 million for the reporting quarter. With capital expenditure clocking in at $1.0 million, this gives SPH a negative free cash flow of $153.3 million. The company recorded negative free cash flow of $168.7 million in the same quarter a year ago.

5. As of 28 February 2017, SPH had $269.5 million in cash and equivalents and borrowings of $1.33 billion. This is a decline from a year ago when it had $288.2 million in cash and equivalents and borrowings of $1.30 billion.

6. SPH also has $534.2 million in long-term investments and $389.2 million in short-term investments as of the end of February 2017. This is lower than what the company had in the previous year – $605.5 million in long-term investments and $394.5 million in short-term investments.

SPH saw its revenue dip by 4.5% in FY2016. In the first quarter of FY2017, the company’s revenue fell by 6.0%. The revenue decline is accelerating given that the top-line fell by 8.2% in the reporting quarter, as mentioned.

The company’s board of directors declared an interim dividend of six cents per share, down 14.3% from the interim dividend of seven cents seen in the second quarter of FY2016.

Operational highlights and a future outlook

SPH’s revenue in the quarter declined due to lower revenues from its media segment. The media segment’s revenue, which accounted for over 70% of SPH’s total revenue, fell 11.9% year-on-year to $168 million. The segment suffered from lower advertising and circulation revenue.

The decline at the media segment was offset by a minor revenue increase at the property segment and a 6.5% jump from the Others segment.

In the second quarter of FY2017, SPH’s display, classified, and newspaper ad revenues tumbled 19.3%, 16.6%, and 18.5%, respectively, compared to the same period a year ago. This is an extension of a multi-year trend of declines in this area.

SPH’s chief executive officer, Alan Chan, provided a brief outlook for the company’s business in the earnings release:

“With the uncertain economic outlook and the continuing disruption of the media industry, the Group will press on with our transformation strategy. We are making steady progress in positioning SPH as a forward-looking and efficient organisation which can meet the evolving demands of a new marketplace.

We continue to focus on our drive to sustain and transform the core media business through investment in growth areas and cost discipline, while also pursuing other opportunities to diversify revenue streams. On this count, we look forward to launching our two new radio stations at the start of 2018.”

As a reminder, SPH is also undergoing a strategic review of its 13.3% stake in local telco M1 Ltd (SGX: B2F). The media company reiterated that there is no guarantee that any transaction related to its M1’s stake will materialise from the review.

As of its closing share price yesterday of $3.52, SPH traded at a price-to-earnings ratio of 25 and has a dividend yield of around 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.