SPH expects 'significantly lower' profit for FY2020

SINGAPORE (THE BUSINESS TIMES) – Media and property group Singapore Press Holdings (SPH) said on Monday (July 13) that its operating profit for the year ending Aug 31 is expected to be “significantly lower” than the $187 million recorded a year earlier due to the ongoing pandemic.

It is also expecting a negative outcome for the revaluation of its investment properties as at Aug 31 this year.

However, SPH, which publishes The Straits Times, said its “resilient” balance sheet and cash balances of $810 million will “ensure sufficient liquidity across all business segments”. It added that it has no term loans due until June next year.

Media has been hurt the most among its units due to the decline in print advertising. While circulation was up, this would only partially offset the fall in print advertisements, said SPH.

Total print advertising revenue fell 51 per cent in the third quarter of the 2020 financial year compared with the same period last year.

Digital advertising revenue registered a decline of 3.7 per cent in the same period due to the circuit breaker and weaker economic sentiment.

Circulation, on the other hand, rose despite loss of sales to airlines and hotels. Overall circulation edged up 9.5 per cent with digital circulation levels closing the gap on print. This is in part due to the News Tablet campaign – an e-paper subscription plan which comes with an app pre-installed on a Samsung tablet. This drove total digital revenue higher by 8.5 per cent in the third quarter over the same period last year.

SPH’s malls in Australia and Singapore recorded some improvement in footfall with the easing of lockdown measures, but it has yet to return to pre-pandemic levels. The group also faces lower rental income after schemes rolled out to help cushion the impact of Covid-19 on tenants.

Its portfolio of purpose-built student accommodation (PBSA) in Britain and Germany has been affected by rental rebates due to university closures and student departures. While there was a total reduction in revenue from rental refunds of £4.6 million (S$8 million) as at June 24, it fell within the lower range of the expected £4 million to £8 million rental refunds, said SPH.

Meanwhile, universities in cities in which SPH has PBSA assets have confirmed opening with minimal or no delay. This contributed to improvements in PBSA bookings last month.

SPH also reported “stable” operating performance for its aged-care business, Orange Valley, with improved bed occupancy ratio. It also noted that the four Covid-19 cases at Orange Valley have since been discharged and the staff at the home have tested negative.

Its aged-care business in Japan has not been affected and it is on track to complete the acquisition of two assets there.

On the other hand, as part of a consortium led by Perennial Real Estate, SPH has divested a 5.29 per cent stake in AXA Tower to Chinese e-commerce giant Alibaba Group’s Singapore subsidiary for $33.2 million. Its original investment was $19.3 million.

Separately, it has entered a joint venture with Keppel Corporation to develop and operate data-centre facilities at SPH’s Genting Lane property.

SPH shares closed down 1.56 per cent to $1.26 on Monday.

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