Astro to offer VSS
Group expects to save RM80mil in staff cost from exercise
PETALING JAYA: In a strategic review of its business to strengthen its position in the market, Astro Malaysia Holdings Bhd will be undertaking a voluntary separation scheme (VSS) for its employees, offered purely on a voluntary basis.
According to a source, Astro is expecting to save 15% or an estimated RM80mil in staff cost as a result of the VSS in future financial years.
For the financial year ended Jan 31, 2018, Astro’s staff cost amounted to RM590mil.
In a statement, Astro CEO designate Henry Tan said the VSS would allow the group to further simplify the organisation, enhance operational efficiency and reduce annual operating expenses.
“In an increasingly borderless and digital world, competition is relentless.
“Astro continues to be proactive to reinvigorate the group in order to strengthen its position in the market and to remain relevant in the years ahead,” he said.
The company has also outlined a transition programme that will provide the right support to employees who opt for the VSS. This programme includes coaching and skill-upgrading training.
Additionally, Astro will put in place measures to ensure that customer experience will not be impacted by this exercise.
The media and entertainment industry is currently operating in an environment that is experiencing an unprecedented rate of disruption.
Industry players are required to reinvent and adapt swiftly to remain relevant in this new reality.
Astro’s VSS mirrors Utusan Melayu (M) Bhd. Classed as a PN17 company in August, Utusan is expected to offer VSS to 800 of its 1,500 employees as part of its restructuring exercise.
For the third quarter of financial year ending Jan 31, 2019, Astro registered a 4.5% net profit increase to RM153.2mil, driven by a rebound in advertising expenditure supported by other revenue contributors, including e-Commerce and theatrical sales.
The group saw a higher earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the third quarter, 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.
During the preceding second quarter, Astro posted a 94% slide in net profit to RM16.58mil for the May-to-July quarter compared to the RM246.3mil net profit last year, due to higher content costs from FIFA World Cup and higher cost of merchandise sales, while net finance costs rose due to unfavourable unrealised forex movement.
On a cumulative nine-month basis, Astro’s net profit was 41.5% lower at RM344.5mil, compared to RM588.8mil for the nine months ended October 2017.
This 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 was due to unfavourable forex movement arising from unhedged finance lease liabilities and higher interest expenses for borrowings and finance lease liabilities.
Astro closed 1.4% lower at RM1.36, traded on a volume of 6.86 million shares.