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SPH posts 23% drop in earnings, to trim 5% staff from media group

Group to tie dividend payout to sustainable recurring income
SPH

Singapore

SINGAPORE Press Holdings (SPH) will be trimming its workforce by some 130-odd staff as it continues to streamline operations amid the digital transformation of its core media business.

Those affected are from the group's media solutions division (MSD), magazines and smaller subsidiaries. They include non-contract renewals and retirements as well as 71 staff who will be retrenched. SPH newsrooms were not affected by the cut.

"The restructuring will enable us to deliver more effective integrated solutions across various media platforms to meet the evolving demands of our advertising customers as well as audiences. We continue to invest in the newsrooms and digital media capabilities while remaining disciplined about costs," SPH chief executive officer Ng Yat Chung said on Thursday.

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"This restructuring exercise is necessary to enhance our operational efficiency and strengthen our position in this challenging economic and media environment," he added.

SPH is restructuring its media and magazine operations to enable integrated selling across all platforms - print, digital, radio and outdoors. As the magazine business had always operated as a subsidiary with its own sales and support teams, its integration with the group's newspaper business will result in some duplication of work.

David Teo, president of the Creative Media and Publishing Union (CMPU), said: "The SPH management has shared with the union the rationale of the exercise and support they will be providing to affected staff. We have worked with them on the compensation packages and the necessary assistance to ensure that the whole process will be handled in the best way possible."

CMPU will partner NTUC's e2i (Employment and Employability Institute) to have e2i's employability coaches at the company's premise to provide advice and assistance to the affected staff.

The union will also arrange for the affected employees to access the NTUC-Korn Ferry Advance service, which will provide them with job profiling and other employment-related tools.

To help the affected employees find new skills for new jobs, the management has agreed to provide a training grant for each of the affected employees so that they can use it for skills upgrading.

Union members can also tap on the Union Training Assistance Programme fund for their training, Mr Teo said.

SPH has informed the Ministry of Manpower and NTUC on this exercise. Affected staff will receive compensation on terms negotiated and agreed with the staff union. The exercise is expected to be completed by the current quarter and expected to incur retrenchment costs of about S$8 million.

With the integration, readers can expect to see greater sharing of content resources within SPH across platforms and titles.

For example, HWZ's tech expertise will help beef up the tech columns of news titles such as The Straits Times and The Business Times. Some of the content can also be ported over to radio and even SPH's out-of-home screens in lifts and commercial areas.

"This has been happening for a while, and SPH will intensify efforts to make content liquid across audience-centric platforms. This ultimately will drive subscriber and advertising revenue," the media group said.

On Thursday, SPH reported a 23.4 per cent decline in net profit for the full year ended Aug 31 to S$213.2 million compared to a year ago, largely due to the absence of an one-off gain from the sale of the treasury and investment portfolio as it redeploys the capital to invest in steadier, more predictable defensive, yield-generating assets.

Operating profit fell 12.2 per cent to S$186.9 million as operating revenue dipped 2.4 per cent to S$959.3 million, with the improved property revenue mitigating media's decline.

Property revenue rose 22.3 per cent to S$296.5 million, due to acquisitions of UK student housing assets and Figtree Grove in Australia.

Media revenue fell 12 per cent to S$576.9 million. Total print advertisement revenue decreased by 14.9 per cent, or S$57 million, and total circulation revenue declined by S$11 million, or 7.3 per cent.

Mr Ng said: "The media business continues to be challenged with the decline in print advertisement and circulation revenue. But we are seeing progress in our digital transformation strategy in terms of improved digital advertisement and circulation growth."

The media segment is also investing in data analytics to better understand audience and customers.

Digital business showed healthy growth with innovative products like the news tablet, which saw the Chinese newspapers attracting more than 10,000 sign-ups, of which three-quarters were new subscribers.

The Malay flagship, Berita Harian, too attracted a strong response, with about 700 sign-ups. Daily average newspaper digital copies posted an increase of 19.3 per cent, while newspaper digital advertisement revenue grew 6 per cent on year.

The board has proposed a final payout of 6.5 cents per share, comprising a final dividend of 5.5 Singapore cents per share and a special dividend of one cent per share for FY19. These will be paid on Dec 20. Together with the interim dividend of 5.5 cents, total dividend payout for FY19 will be 12 cents per share.

Mr Ng said: "As the base of recurring income improves, the group will be able to pay dividend in a more sustainable way. This means special dividend is expected to decrease and dividend payout ratio will be below 100 per cent."

CGS-CIMB analyst Ngoh Yi Sin was not surprised by the cut in special dividend.

"This is not a surprise. Investable funds used to be S$1 billion up to Q1 FY19. Now it is half. Going forward, this makes special dividends very unpredictable, especially when there is not much else to divest. SPH is also trying to guide for more sustainable ordinary dividends. As long as the group continues to grow recurring income, you can expect ordinary dividends."

SPH shares fell three cents or 1.39 per cent to S$2.13 on Thursday before the results were released.