SCMP's core profit dips 80pc to HK$45.6m

PUBLISHED : Tuesday, 23 March, 2010, 12:00am
UPDATED : Tuesday, 23 March, 2010, 12:00am

Core profit at SCMP Group plummeted 80 per cent last year, as aggressive cost cutting failed to offset a plunge in advertising revenue due to the economic recession.

Operating profit from principal activities fell to HK$45.6 million, down from HK$227.6 million in 2008. Revenue dropped 28.6 per cent to HK$740.67 million.

'Our businesses were affected by the downturn in the local economy for most of the year,' the company said in a stock exchange announcement. The current year 'is starting with continued uncertainty and we cannot predict when and to what degree the economy will fully recover', it said.

Group net profit was HK$138.15 million, down 20 per cent from HK$172.77 million in 2008. Last year's bottom line was boosted by non-cash valuation gains on properties and financial assets that had incurred non-cash losses in 2008.

Net cash flow from operating activities was HK$70.7 million, down from HK$252.2 million in 2008. For the first time since 2002, the company will not pay a final dividend.

Revenue at the South China Morning Post and Sunday Morning Post fell 31 per cent to HK$590.52 million and accounted for 80 per cent of total group turnover.

Volume and yields on newspaper display advertising fell; sales of recruitment advertising also declined. Revenue from corporate notices was a bright spot last year, climbing 14 per cent on the back of a surge in stock market listings in the second half.

The magazine division booked a net loss of HK$8.9 million on sales of HK$125.59 million. Layoffs and falling newsprint prices helped to partially buffer margins in the face of declining sales. Group headcount shrank to 807 full-time staff, down by 136 people or 14.4 per cent from a year earlier. The company said the reduction was due to the sale or suspension of unspecified non-core businesses and 'staff retrenchment exercises'.

Staff costs for the year decreased 9 per cent to HK$323.56 million, 'mainly due to lower bonus provisions and lower salary costs', the company said.

The group said yesterday it had appointed outgoing Goldman Sachs greater China chairman Fred Hu Zuliu as an independent non-executive director. The company's Chinese-language name will also revert to its pre-2001 equivalent of 'South China Morning Post Group.'

SCMP shares shed 1 HK cent to close at HK$1.50 after the results announcement. They are down 9.6 per cent year to date.

Advertising declines

Revenue at the SCMP Group's two newspapers falls 31 per cent to HK$590.52 million

Headcount shrinks to 807 full-time staff, a decrease of: 14.4%