PETALING JAYA: Star Media Group Bhd (SMG) posted a net profit of RM26.9mil for its third quarter ended Sept 30,2020 as the rebound in business activity added to a sharp rise in revenue from the second quarter of this year.
Aided by an exceptional item of RM50.5mil following the recognition of compensation from a legal case that helped with its bottom line, SMG said revenue for the third quarter was RM48.2mil, a 53% increase from RM31.5mil recorded in the second quarter.
In a filing with Bursa Malaysia, it said pre-tax profit for the third quarter was RM33.1mil, mainly due to the recognition of compensation income for the late delivery of vacant possession of the investment property under construction from Jaks Island Circle Sdn Bhd amounting to RM50.5mil.
On the performance of its business units, SMG said its print and digital business segment recorded a pre-tax profit of RM33.7mil in the third quarter compared with a pre-tax loss of RM0.28mil in the same quarter of last year, mainly due to the recognition of compensation income for the late delivery.
For its radio segment, SMG said the business segment generated revenue of RM5.5mil in the third quarter compared with RM6.6mil from the third quarter of 2019. The decline was mainly attributed to cautious spending by advertisers and the subdued advertising market due to the Covid-19 pandemic.
As for the event and exhibition segment, it recorded a pre-tax loss of RM0.78mil in the latest quarter compared with a pre-tax profit of RM0.73mil in the third quarter of 2019. The pandemic and prolonged movement control order (MCO) have caused a lot of its offline events to be cancelled, it explained.
Despite the challenging environment, SMG said it has continued to progress with its digital transformation initiatives to improve its costs and operational efficiencies.
In March 2020, The Star Online launched its paywall as part of the group’s monetisation strategies to diversify revenue streams.
Due to the standard operating procedure restrictions to combat the Covid-19 pandemic, SMG said it has executed a number virtual fairs and events in place of the physical ones and launched a number of new digital products and platforms, which included TheStarMall, BeliLokal and its Suria mobile application to further reach out to audiences.
“With the continuous enrichment of our database collection, our products are equipped with premium access, special features and newsletters to cater to the digital advertising demand of our clients, ” it said.
The group expects revenue growth from its digital segment despite the soft and challenging market conditions and would focus on using new technologies and analytics to improve, deepen and predict how its customers consume content with the end goal of increasing engagement and monetisation to drive new revenue streams beyond its print business.
It said its SMG Brand Studio provided advertisers a comprehensive suite of services that would complement growth in digital platforms and hoped to increase advertising take-up rates during the uncertain times and achieve higher growth in the near future.
The group said it has embarked on various cost-cutting measures and efforts are also being directed at restructuring some of the business units within the group to re-strategise operations, which included manpower rationalisation and realignments to get back into the market, especially in the post-MCO period.
SMG said it has a strong balance sheet with cash reserves of more than RM300mil and no borrowings as of the end of the third quarter, which would act as a base for the group to capitalise on merger and acquisition opportunities during the market consolidation, and penetrate into new businesses that have a promising outlook.
“With its strong financial standing, the board is confident the group is well-positioned to weather through these unprecedented challenges, ” it said.