It led to a 6% revenue decline for the period.
On back of the gloomy economic growth, companies are shying away from placing ads in publications, leading to SPH to lose 12 to 16% of its ad revenue, according to DBS Group Research.
The firm said the lower revenue was led by the Media business on weaker adspend which led to lower than expected operating profit. The decline in earnings decline was also impacted by fair value loss on hedges for portfolio investments due to the strengthening USD.
It noted that newspaper ad revenue declined between 12% and 16% with Display ads falling by 16%, newspaper ads by 15%, and classified ads falling by 12.5%.
"As expected, adspend has continued to decline. However, the ad revenue decline for SPH in this quarter was more severe than expected. Outlook for adspend will likely continue to be lackluster given that our 2017 GDP growth forecast for Singapore based on our economics desk’s estimate is flattish at 1.3% from 1.2% in 2016. While there are measures put in place to control costs including manpower, we believe the bleak outlook for adspend will be a drag for earnings going forward," it said.
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