Goh Eng Yeow questions SPH’s staff retrenchment strategy amidst falling profits

Former senior Straits Times (ST) correspondent Goh Eng Yeow has wondered whether Singapore Press Holdings (SPH), the company which publishes ST, would have been better off if it had not retrenched so many staff last year. This statement comes amidst an evident SPH retrenchment impact.

SPH recently stated that its core media business’ pre-tax profits fell by a whopping 76.8 per cent in the first quarter of 2020, going from S$32.3 million in 1Q 2019 to S$7.5 million in 1Q 2020, indicating a serious media business revenue decline.

It explained that the decrease in pre-tax profits was due to retrenchment costs and a revenue decline of S$22 million during the quarter. It paid out $7.2 million to media staff whose jobs were axed in a mass retrenchment exercise last October.

SPH said the retrenchment costs arose from a “rationalisation exercise involving the media sales and content teams” and that “underlying operating profit would have been 18.3 per cent lower or $13.7 million at $61.1 million” if it had retrenchment costs excluded.

In a Facebook post on Tuesday (Jan 14), Mr Goh Eng Yeow said that SPH media business’ poor performance “is a big cause for alarm”. His SPH critique emphasises the detrimental effects of the SPH retrenchment impact.

Highlighting the extreme plunge in the media segment’s pre-tax profits, he wrote: “Now that is such a precipitous drop in earnings that it makes me sit up. I may be wrong but I can’t recall another quarter where the profit of SPH’s media business had fallen below $10 million.”

Mr Goh Eng Yeow said the decline in media revenue is a serious issue and wondered if SPH would have been better off not going through with the retrenchment exercise — not just to save on the one-time payout but also because retaining the retrenched staff could have positively impacted the media business’ revenue, possibly curbing the media business revenue decline.

He wrote: “It makes me wonder if SPH would have been better off keeping some of the staff which it had let go during the quarter under review.

“This is not merely due to saving on the pay out given to the retrenched staff, some of whom were long-time stalwarts in the media business’ marketing department responsible for bringing home the bacon.

“Would revenues have declined as much if they had remained in the company?”