Astro posts higher net profit for the third quarter

PETALING JAYA: Astro Malaysia Holdings Bhd saw its net profit increase 4.5% to RM153.2mil for the third quarter (3Q) of its financial year (FY) ending Jan 31, 2019, from RM146.7mil in the corresponding quarter last year.

Consequently, the pay-TV operator’s earnings per share (EPS) rose to 2.94 sen from 2.81 sen previously.

The group declared a third interim dividend of 2.5 sen per share.

In a statement, Astro attributed the increase in its earnings to a rebound in advertising expenditure (adex) supported by other revenue contributors, including ecommerce and theatrical sales.

The group said it registered higher earnings before interest, tax, depreciation and amortisation (EBITDA) margin for 3Q19, as a result of lower content costs, licence, copyright and loyalty fees and impairment of receivables, despite being offset by higher costs of merchandise sales.

Commenting on Astro’s results, CEO-designate Henry Tan said the group’s higher EBITDA and net profit during the quarter was underpinned by efforts to optimise key operating expenses, including content costs and cost to serve.

“We saw increased adex, with the biggest growth coming from digital. We are encouraged by the growth of relatively new revenue adjacencies such as ecommerce, licensing income and theatrical sales; signifying encouraging trajectory as traditional subscription revenue remains under competitive pressure,” Tan noted in a statement.

During the quarter in review, Astro’s revenue fell marginally by 1% to RM1.38bil from RM1.4bil in the previous corresponding period. This was mainly due to a decrease in subscription revenue, offset by higher merchandise sales and advertising revenue.

Astro said the decrease in subscription revenue was mainly due to lower package take-up, while the increase in advertising revenue was mainly contributed by advertising spend on telcos and new device launches, and the increase in merchandise sales was due to increase in number of products sold.

For the cumulative period, Astro’s net profit was 41.5% lower at RM344.5mil, compared with RM588.8mil for the nine months ended October 2017, and its EPS fell to 6.61 sen from 11.3 sen previously.

It said the decrease was mainly due to a decrease in EBITDA and increase in net finance costs, offset by lower tax expenses. The increase in net finance costs, the group explained, was due to unfavourable forex movement arising from unhedged finance lease liabilities and increase in interest expenses for borrowings and finance lease liabilities.

For the nine months of FY19, Astro’s revenue at RM4.11bil was lower by 0.8% against RM4.14bil in the previous corresponding period. This was mainly due to a decrease in subscription and advertising revenue, offset by increase in merchandise sales, licensing income and sales of programme broadcast rights.