SCMP Group eyes growth as Hong Kong economy improves

Publisher posts 29pc profit fall but sees positive outlook as poll points to increase in ad spending

PUBLISHED : Friday, 21 March, 2014, 1:04am
UPDATED : Friday, 21 March, 2014, 1:23pm

SCMP Group, the publisher of the South China Morning Post, expects the improved economy in Hong Kong to help usher in growth after the company posted a 29 per cent drop in net profit last year, mainly because of higher staff and production costs.

The optimistic outlook echoed the view of marketers who predicted last month a banner year in advertising spending in the city, with increased campaigns on television, newspapers and digital platforms.

In the group's regulatory filing yesterday, chairman David Pang said: "With 4 per cent growth in the economy forecast for 2014 compared to 3 per cent in 2013, we are poised for steady growth.

[We] foresee … enhancements on our outreach to a global digital market

"We continue to capitalise on our strength in the sectors of English-language news, quality lifestyle content and magazines, luxury market infotainment, bespoke events and providing quality media advertising space, and foresee a stronger presence in the China market as well as further enhancements on our outreach to a global digital market."

The company's net profit fell to HK$223.7 million from HK$316.3 million in 2012, as operating costs and expenses rose 17 per cent or HK$142.1 million.

Average headcount increased to 1,000 from 889 a year ago, mainly due to inclusion of staff from HK Magazine, as well as new hires for the group's newspaper and magazine businesses.

Revenue grew 12 per cent to HK$1.15 billion from HK$1.02 billion. Growth was attributed to full-year contribution from Elle, which was bought in the middle of 2012, as well as higher revenue from advertising and marketing solutions, contract printing business, investment properties and the newly acquired HK Magazine business.

Trading in SCMP's shares has been suspended since February 26 last year when the public float of the company fell below 25 per cent. "The directors have endeavoured to identify ways to restore the company's public float," the group said in its filing.

The latest survey by the Hong Kong Advertising Association and market-measurement firm Nielsen on advertising spending projections in the city showed that 42 per cent of marketers polled expect to raise their advertising budget this year.

In terms of spending allocation, television had an average share of 18 per cent, while free and paid newspapers held 19 per cent.