SCMP sees profit jump on surge in ad revenue
Earnings beat forecasts, hit three-year high as advertising spending recovers and circulation expands, publisher says
SCMP Group, which publishes the South China Morning Post and Sunday Morning Post, rode Hong Kong's economic recovery to record its best performance in three years, auguring well for a media sector recently starved of advertising dollars.
A resurgence in advertising spending helped push the group to a higher than expected $317.14 million profit last year.
'The prospects in 2005 are positive, although the group expects its publishing businesses to grow at a slower pace than in 2004, which started from a very low base,' SCMP said.
'Ad spending is expected to continue to grow in 2005 fuelled by stable economic growth and strong consumer confidence.'
Advertising revenue last year was driven in part by an active job market. 'The strong growth in recruitment ads reflects a full recovery from Sars, which weakened the market in 2003,' the group said in an announcement.
Last year's earnings, compared with $1.76 million in 2003 and $108.76 million in 2002, were also lifted by a recovery in newspaper circulation.
South China Morning Post had unaudited circulation of 101,782 in the second half of last year, up from 100,004 in the first half and 96,389 in the previous six-month period.
Circulation of Sunday Morning Post grew to 82,208 from 78,362 in the first six months of last year and 75,896 the year before.
The newspaper publishing operation accounted for 67 per cent of the operating profit of $363 million and 90 per cent of recurring operating profit of $264 million.
Turnover totalled $1.37 billion - up from $1.27 billion and $1.36 billion in 2003 and 2002, respectively - with about $850 million from the newspaper publishing business.
A poll of 13 brokerages by Thomson Financial had earlier estimated a profit of $271.72 million from sales of $1.43 billion.
Investors cheered the results, sending SCMP shares up 4.31 per cent to close at $3.625 each yesterday.
SCMP.com, the group's official website, was profitable last year, with turnover climbing 22 per cent. Subscriptions contributed 39 per cent of turnover, 37 per cent came from advertising and 24 per cent from content syndication.
A one-off gain of $77 million from the sale of the Daily Stop convenience store chain in November last year will be distributed as a special dividend of three cents per share. In addition to a final dividend of seven cents, SCMP will pay a total dividend of 15 cents per share for the full year.
Revenue from investment properties fell to $14 million from $81 million in 2003 after the expiry in December 2003 of Television Broadcasts' lease for TV City at Clearwater Bay.