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SPH Q2 profit down 25% but H1 earnings edge up 1.4%

CEO says group exploring further growth in aged care and other property asset management sectors for the longer term
SPH

Singapore

MEDIA and property group Singapore Press Holdings (SPH) reported a near 25 per cent year-on-year fall in second-quarter net profit to S$40.19 million, but first-half net earnings edged up 1.4 per cent to S$100.62 million from a year ago.

While the decline in print advertising revenue is seen tapering off, the group said it is focusing on aged care and property asset management for growth.

In a statement, SPH chief executive officer Ng Yat Chung said SPH's upcoming Bidadari retail and condo project will contribute to the group's growth in the next few years.

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He added: "We are exploring further growth in aged care and other property asset management sectors for the longer term." It will look at opportunities both locally and overseas.

As it explores other property management sectors, the group highlighted that it will focus on asset classes with steady cash yield, in order to generate new sources of revenue and profit. It will also leverage existing capabilities at SPH Reit.

Group operating revenue for the three months ended Feb 28 dipped just 1.8 per cent to S$233.7 million, but its bottom line was weighed down largely by lower investment income, which fell over S$7 million or 44.5 per cent to S$9.28 million, due to lower gains on disposal of investments.

Revenue from the media business slid 7.4 per cent to S$155.6 million on the back of lower advertisement and circulation revenue. However, revenue from the group's other businesses swelled more than two times to S$17.6 million, led by contributions from the aged care business. SPH owns Singapore's largest private nursing home operator, Orange Valley.

Among the big operating items, other operating expenses rose 14 per cent to S$31 million, although materials, production and distribution costs were cut by 9.7 per cent and staff costs were down marginally by 0.6 per cent.

In line with lower operating revenue and higher costs, operating profit decreased 6.9 per cent to S$49.36 million.

Mr Ng said: "We are focusing on our digital blueprint for the future, which includes our new all-digital subscription plans, and our strengthened integrated multi-platform marketing."

SPH's daily average digital circulation rose by 112,000 copies year-on-year in Q2 2018. It also released its all-digital subscription plans at different price points as part of efforts to "pursue digital revenue more aggressively", it said.

In property, SPH's joint venture project with Japanese developer Kajima Development, The Woodleigh Residences and The Woodleigh Mall, is expected to add to medium-term profit and longer-term recurring income. The ground-breaking ceremony for the project was held last month, while the launch is slated for later this year.

Earnings per share for the quarter clocked in at two Singapore cents, down from three cents in the corresponding period last year, while group net asset value per share was S$2.14, down from S$2.16 six months earlier.

The board has declared an unchanged interim dividend of six cents per share to be paid on May 24.

For 1H18, SPH saw a 4.6 per cent fall in operating revenue to S$492.46 million. This was dented by a 10.9 per cent fall in revenue to S$329.53 million from its media business, although the decline is seen as easing off. Operating revenue from the property segment - the group's biggest profit driver - was flat at S$121.68 million.

Shares in SPH, which also owns The Business Times, closed at S$2.49 on Tuesday, down one cent, before the results were released.