SPH share price sink 4.02% after it posted a 44% decline in Q3 net profit

Shares of media company Singapore Press Holdings’ (SPH) slumped 4.02% on Monday after the media giant posted a 44% fall in net profit for the third quarter, amid a challenging environment for its media business which led to falling print advertisement and lower circulation revenue.

SPH’s net profit had plummeted from S$46.9 million a year ago to S$26.2 million for the third quarter.

The share price reaction to the weak profit performance on Monday was because the firm had announced its results after market hours on Friday.

SPH share price sink 4.02% following the Q3 results release

Shares of SPH plunged 4.02% or S$0.10, to S$2.39, at around 10.20am Singapore time on Monday, the first trading day after it announced its earnings results.

The stock had closed at S$2.49 on Friday, before its third quarter results were released.

Year-to-date, SPH shares have erased most of the gains that it had made at the peak of S$2.55 it made on July 8, 2019, performing at a gain of only 2.58%.

Higher operating expenses crimped earnings, while operating revenue dipped by 1.6%

The group said its lower earnings in the third quarter was partly due to higher operating expenses which increased by 5.5% to S$220 million, attributed to increased operational costs from an enlarged student accommodation portfolio and its real estate investment trust, SPH REIT. Increased financing costs and professional fees also added to the strain.

Operating revenue eased 1.6% to S$246.1 million from S$250.1 million a year earlier, mainly due to lower print advertisement revenue, SPH said. Other contributors to the revenue dip were circulation revenue and the absence of contributions from finance services website Shareinvestor.com holdings following its divestment last November.

Contributors that supported the group’s operating revenue were the rental revenue of S$14.3 million from its purpose-built student accommodation portfolio and S$4.2 million from SPH REIT's retail asset, Figtree Grove shopping centre in Australia.

Investment income fell by 82% to S$4 million as the treasury and investment portfolio was largely divested by the end of the previous financial year.

‘The media business continues to be challenged on various fronts - including the ongoing trade tensions and the slowing of the Singapore economy - but we remain focused on our digital transformation strategy,’ SPH’s chief executive Ng Yat Chung said in the company's results statement.