Star records 63% jump in net profit

  • Business
  • Wednesday, 20 May 2015

Star Media Group AGM at Menara Star. On the right is chairman Datuk Fu Ah Kiow and on the left is group managing director and chief executive officer Datuk Seri Wong Chun Wai. In the centre is group company secretary Ong Wei Lymn.

PETALING JAYA: Efforts to rationalise its operations last year are beginning to reflect on the performance of Star Publications (M) Bhd, as it recorded a 63% increase in net profit to RM26.55mil for the first quarter ended March 31, against the corresponding quarter of last year.

The print and digital business segment, which is the mainstay of the Star Media Group, registered a profit before tax of RM44.44mil or a 78.2% increase in the first quarter compared with RM24.95mil in the same period last year.

The increase in the bottom line came amid a tough operating environment of reduced overall advertising revenue that was affected by poor consumer sentiment due to the rising cost of living. Also affecting advertising expenditure was the cautious spending in the run-up to the implementation of the goods and services tax that came into effect since April 1.

The revenue of the print and digital business segment contracted marginally by 0.3% due to the weak consumer sentiment.

The company attributed the improved net profit to the reduction in direct operating costs. To be noted also is the RM9.58mil cost tied to the voluntary separation scheme that had been incurred in the first-quarter result of 2014.

Overall, the group’s revenue for the first quarter increased by 3% to RM217.43mil and it was largely due to an increase in the top line of the event, exhibition, interior and thematic business segment.

The event, exhibition, interior and thematic business segment, which comprises the operations of i.Star Ideas Factory Sdn Bhd and Singapore-listed Cityneon Holdings Ltd, saw its revenue increasing from RM30.92mil to RM38.09mil mainly due to exhibition and interior projects completed by the latter in the quarter under review.

However, the division incurred a loss before tax amounting to RM5.29mil due to higher expenses and a lower operating margin, especially in the interior architecture segment.

The group’s radio broadcasting business segment turned in a marginal profit of RM774,000 in the first quarter compared with loss in the corresponding quarter of last year because there was no amortisation cost on Capital FM’s radio licence. A full impairment loss on Capital FM’s radio licence had been recognised in the fourth quarter of last year.

While the television segment saw its turnover improving marginally to RM2.85mil versus RM2.72mil in the first quarter of last year, higher expenses caused it to incur a bigger loss before profit of RM1.6mil compared with RM1.32mil last year.

The first-quarter performance compared to the preceding quarter came in with a mixed bag of results. Group revenue was lower at RM217.43mil compared to RM280.89mil in the fourth quarter of 2014 due to a lower contribution from Cityneon Holdings and the print and digital segment.

However, group profit before tax increased to RM37.6mil compared with RM32.3mil mainly due to the recognition of impairment losses in the preceding quarter.

The group has devised a growth strategy based on five key strategies that will see it enhance its corporate governance, improve on efficiency and cost control, rebuild its core assets, digital transformation and look at strategic and synergistic acquisitions. The group will also embark on an expansion drive into Asean markets.

In June, it will be launching its Audience Interest Marketing service, the first by a Malaysian media company. This will connect advertisers directly to their target markets, tailoring online advertising to match the preferences of consumers of media content.

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