We reported that Singapore Press Holdings (SPH) is losing the interest of advertisers and investors as its net profit for the quarter that ended in February fell by a hefty 25.7 per cent. Analysts expected the media conglomerate to make S$52.95 million net profit but SPH only recorded a significantly lower net profit of SGD $29.7 million.
The considerable decline in SPH’s net profit in the last quarter is not an anomaly. Exactly one year ago, in April 2018, SPH suffered a 25 per cent decline in net profit for the second quarter, as compared to the same period in 2017.
The decline SPH saw in net profit, advertisement and circulation revenue came as the group was in the middle of a massive job cut exercise, retrenching employees and relocating staff to new newsdesks as it sought to cut hundreds of jobs. Several employees at SPH Magazines were also sacked to reportedly prepare for a “digitally driven future”.
These efforts do not seem to have paid off. One year later, SPH recorded a notable 10.1 per cent decline in media revenue along with the hefty net profit decline.
On Tuesday, SPH revealed that the interim dividend of 6.0 cents per share in the same quarter a year ago has dropped to 5.5 cents per share in this last quarter. Its annual dividend has also fallen by a whopping 38 per cent between 2014 and Aug 2018.
Just a day later on Wednesday, SPH shares dropped by 2.4 per cent. By midday yesterday, shares of SPH were down 2.46% and was trading at $2.45. SPH’s dividend yield, which used to be its main draw, is now at 3.6 per cent which is lower than what other groups like SingTel and DBS Group offer.
Interestingly, this steady decline in net profit has been ongoing since 2017 – the year ex-Chief of Defence Force Ng Yat Chung took over as Chief Executive Officer.
A quick look at SPH’s market share over the last five years shows that the organisation’s shares are on a downward spiral:
A look at SPH’s market shares since 2005 shows that the last time SPH’s shares dipped so significantly was in 2009 when its shares were trading at $2.42 on 20 March 2009.
Under Ng Yat Chung’s tenure, SPH’s shares have not seen any such spike after declining. At its lowest, SPH shares were traded at $2.36 on 4 Jan 2019 – this is not only the lowest value during Ng’s tenure, it is also the lowest value SPH has recorded since at least Oct 2005.
Just one day over three months later, the share has gone up by less than $0.20, at $2.54. In comparison, SPH’s market share rebounded to $3.10 on 19 June 2009 after the low of $2.42 on 20 March 2009. In the span of one year, the shares climbed back up to $3.79 in value under the leadership of Ng’s predecessor.