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Singapore Press Holdings Ltd’s Recent History Illustrates The Challenges It Has Been Facing

With its plethora of newspapers and radio stations, Singapore Press Holdings Ltd (SGX: T39), or SPH for short, is by far the most dominant news outlet in Singapore.

However, despite its undisputed position in Singapore’s news segment, the emergence of easily accessible free news through the Internet has resulted in declining print readership and lower advertising revenue for SPH. The move away from traditional print advertising to digital advertisements have also added to its woes. The challenges that SPH faces have been well publicised and SPH’s financial results have clearly illustrated that they are in danger of falling victim to digitalisation.

Here are some worrying trends that SPH investors should take note of.

Consistently declining revenue

SPH’s revenue has declined from S$1.23 billion in FY2013 to S$1.03 billion in FY2017 (which ended on 31 September 2017). This translates to a 3.59% compounded annual decline over the five-year period. The revenue trend over the past five years can be seen from the table below:

Source: Singapore Press Holdings Ltd annual reports

The challenging media environment and lower advertising revenue from its print newspapers have been the main reasons for the decline.

Media segment revenue falling

Around 70% of the group’s revenue comes from its media segment, which includes newspaper advertising revenue, online advertising, online subscription and traditional newspaper subscription.

Revenue from its media segment has declined steadily from S$996 million in FY2013 to S$730 million in FY2017, as seen below:

Source: Singapore Press Holdings Ltd annual reports

This trend has continued through to the first half of FY2018 (which ended on 31 March 2018) as revenue from the media business declined by another 10.9% year-on-year.

Operating cash flow

Finally, despite consistently being operationally cash flow positive, SPH has seen declining cash generated from its operations over the last five years as well. The operating cash flow trend from FY2013 to FY2017 can be seen below:

Source: Singapore Press Holdings Ltd annual reports

The Foolish bottom line

SPH has faced multiple challenges in recent years, including the proliferation of online media that has rendered its print newspapers less popular. Furthermore, the challenging retail scene has lead to its property business facing headwinds that could dampen its profitability further.

SPH has responded by trying to increase its digital readership and to increase its property portfolio. However, only time can tell whether SPH will be able to turn its ailing fortunes around.

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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 Jeremy Chia doesn’t own shares in any companies mentioned.