SPH Q3 profit up 81%

SINGAPORE— Publishing group Singapore Press Holdings (SPH) yesterday warned of “downside risks” ahead after its core newspaper and magazine business was hit by declines in advertisement and circulation revenue in its fiscal third quarter, even as a huge fair-value gain of its property portfolio led to an 80.7-per-cent jump in net profit.

“The Singapore economy is expected to grow at a modest pace but downside risks remain. The group’s advertising revenue performance will be driven by market conditions and consumer sentiment in the key advertising sectors,” said SPH after suffering a fall in ad sales in the property and transport segments.

For the three months ended May 31, it earned a net profit of S$187.5 million, up from S$103.8 million in the corresponding period a year earlier, as group operating revenue shrank 2.1 per cent to S$324.9 million, it said. Operating profit — the recurring earnings of its media and property businesses — plunged 22.1 per cent to S$91.5 million.

The turnover for its newspaper and magazine business declined 3.3 per cent to S$259.3 million, mainly due to a 4.3-per-cent fall in advertisement revenue to S$197.8 million. Meanwhile, circulation revenue shrank by 2.3 per cent to S$50.7 million.

In light of its plan to inject some of its investment properties such as The Paragon and Clementi Mall into a real estate investment trust, SPH changed its accounting policy on these assets from a cost to a fair-value model, resulting in a S$111.4-million one-off gain.

There was also an impairment loss on certain investments of S$26.2 million during the quarter.

Excluding the effect of the one-off items, net profit of S$100.5 million was down 3.1 per cent compared to the year-earlier period, the group said.

SPH continued to keep costs down, with lower variable bonus provisions helping to cut staff costs by 2.1 per cent despite salary increments. Materials, production and distribution costs were 5.4 per cent lower, with the benefit of a 12-per-cent drop in newsprint prices.