SPH to step up staff cuts and focus on long-term growth

Singapore Press Holdings (SPH) will accelerate planned staff cuts in a bid to make its core media business leaner and focus resources on expanding its digital reach for long-term growth.
Singapore Press Holdings (SPH) will accelerate planned staff cuts in a bid to make its core media business leaner and focus resources on expanding its digital reach for long-term growth. PHOTO: STEPHANIE YEOW

It will reduce headcount sooner than planned as it restructures newsrooms and sales operations

Singapore Press Holdings (SPH) will accelerate planned staff cuts in a bid to make its core media business leaner and focus resources on expanding its digital reach for long-term growth.

Headcount will be reduced by 230 by the end of the year, chief executive Ng Yat Chung said yesterday.

The figure of 230 includes 130 people who are being retrenched, as well as reductions resulting from retirement, termination of contracts and roles that will be eliminated as a result of restructuring work processes.

As SPH restructures its newsrooms and sales operations, 15 per cent of the staff in these core media divisions are being reduced, Mr Ng added. The planned cuts reflect a push to speed up an earlier programme to shed 10 per cent of total group headcount within two years.

These moves are expected to incur retrenchment costs of about $13 million in this current quarter. The group's wage bills could be lowered by 8 per cent to 9 per cent, Mr Ng noted.

The media and property group announced these moves alongside its full-year results, which showed net profit rose 32 per cent to $350.1 million due largely to a one-off gain.

Recurring profits from the core media business were weaker due to digital disruption, although earnings from property and other non-media businesses continue to grow steadily, Mr Ng said in his first results briefing since taking over as chief executive on Sept 1.

  • Net profit up 32% to $350m

  • Singapore Press Holdings' (SPH) net profit for the year ended Aug 31 rose 32 per cent to $350.1 million.

    This was due largely to the partial divestment of its online classifieds business 701Search, from which SPH recognised a gain of $149.7 million, as well as a fair value gain on investment properties of $57.4 million.

    These gains were partially offset by charges of $96 million that included impairment of the magazine business amid unfavourable market conditions, write-down of printing presses due to consolidation of printing capacity, and a write-down of investments in associates to realisable value. The combined effect of these various items was a net gain of $127.6 million compared with the last financial year.

    The group's operating revenue of $1.03 billion was 8.2 per cent lower year-on-year, as the disruption to the media industry continued to affect the revenue from the media business, which slid 13 per cent.

    Advertisement revenue was down 16.9 per cent from a year earlier, while circulation revenue saw a dip of 5.1 per cent.

    The property segment continued to deliver steady results as revenue rose 1.2 per cent year-on-year, bolstered by higher rental income from the group's retail assets.

    Full-year earnings per share was 22 cents, up from 16 cents a year earlier. Net asset value per share was $2.16 as of Aug 31, down from $2.18 on the same date last year.

    The company proposed a final dividend of nine cents per share, comprising a normal dividend of three cents per share and a special dividend of six cents per share. These dividends will be paid on Dec 22. Together with the interim dividend of six cents, the total dividend payout for the year will be 15 cents, down from 18 cents a year earlier.

"We have to fix the cost base because the business is changing," noted Mr Ng.

He said that there are no plans to consolidate or shut down any of the company's daily newspapers. "The newspapers are serving the needs of readers and our clients well," he added.

Beyond cost savings, the company is also looking to position itself for longer-term growth, by stepping up investments in digital, data analytics, radio and content marketing. This means investing in technology, but also in technical headcount and expertise, said Mr Ng.

"Even as we are streamlining, we are also investing. In fact, we are beefing up our newsdesks in various areas so that we can improve our regional reach and flagship products beyond Singapore," he added.

The company is also looking for opportunities in its non-media businesses, including property, healthcare, education and non-media related digital businesses.

Yesterday, Creative Media and Publishing Union president David Teo said that "the first priority was to ensure that affected staff have a fair package. But we will also be extending help to affected staff. The most important thing was to get support from NTUC and our partners to make sure affected staff get back on their feet as soon as possible".

CIMB Securities analyst Ngoh Yi Sin said: "The company has said that it is still going to invest in building up various capabilities and headcount might still go up. Hopefully that will translate into higher revenue."

OCBC Investment Research analyst Eli Lee said the company's core media earnings have been hit by digital disruption, but "our view is that the management team's approach in rationalising the business is mostly realistic and sound".

"We are also encouraged that SPH continues to gain traction in its efforts to diversify into property and aged healthcare."

Earlier this year, SPH bought nursing home provider Orange Valley Healthcare as it seeks to build a third business leg in healthcare.

It also formed a consortium with Kajima Development and was awarded the tender to develop a mixed commercial and residential site in Bidadari.

SPH shares closed two cents lower at $2.69 yesterday. The results were announced after the market closed.

A version of this article appeared in the print edition of The Straits Times on October 12, 2017, with the headline 'SPH to step up staff cuts and focus on long-term growth'. Print Edition | Subscribe