Astro posts stronger earnings in Q2

Astro group CEO Datuk Rohana Rozhan said the group's diversified revenue streams across the TV, radio and digital platforms, Adex and e-commerce continued to show resilience.

KUALA LUMPUR: Astro Malaysia Holdings Bhd's earnings jumped 96% to RM245.09mil in the second quarter ended July 31, 2017 from RM125.43mil a year ago as it benefited from lower cost to serve and one-off savings arising from content secured on more favourable terms.

The Pay-TV operator announced on Thursday net profit was boosted by higher Ebitda (earnings before interest, tax, depreciation and amortisation) and lower net finance costs. However this was offset by higher tax expense.

Ebitda rose 20% to RM550.8mil from RM460.4mil a year ago. Ebitda margins edged up 4% to RM38.8mil from RM34.7mil. Earnings per share rose to 4.73 sen from 2.41 sen. It declared an interim dividend of three sen a share.

“Lower net finance cost was due to favourable unrealised forex gain arising from unhedged non-current balance sheet liabilities comprising, finance lease liabilities and vendor financing,” it said.

Ebitda margin increased by 9% on-year as content costs against revenue declined. 

Revenue dipped 0.6% to RM1.420bil from RM1.428bil a year ago mainly due to a decrease in subscription and licensing revenue. 

“The decrease in licensing revenue was due to loss of content recovery for sports channel. The decrease in subscription revenue was mainly due to lower package take-up,” it said. 

However, the decrease was offset by an increase in advertising revenue due to higher Hari Raya advertisement spending.

Television 

Astro said Q2 television revenue fell 0.6% to RM1.259bil from RM1.267bil mainly due to a decrease in subscription and licensing revenue, and offset by increase in advertising revenue.  Television Ebitda increased 36% on-year or RM135.6m mainly due to lower content costs, offset by decrease in revenue. 

Radio 

Astro said Q2 radio’s revenue rose 2.5% to RM88.7mil driven by the yield and inventory management, supported by strong listenership ratings for its radio brands. Ebitda for radio fell 8.1% to RM47.9mil due to higher operating cost which were mainly marketing-related. 

Home-shopping 

Home-shopping’s revenue slipped RM4mil to RM70.3mil from RM74.3mil a year ago mainly due to additional tactical campaigns executed. The Ebitda recorded an unfavorable variance of RM100,000 from a year ago, primarily due to costs for the Singapore operations. 

Q2 vs Q1

When compared with the first quarter, its revenue rose 7.1% to RM1.42bil from RM1.326bil mainly due to an increase in advertising revenue. Higher advertising revenue contributed by Hari Raya advertisement spending recorded in the current quarter. 

Ebitda margin increased by 4.1%  mainly due to lower content costs, offset by higher impairment of receivables as a percentage of revenue. 

Net profit increased by RM52.7mil or 27.4% to RM245.1mil mainly due to an increase in Ebitda. However, it was offset by increase in net finance costs, higher depreciation of property, plant and equipment and higher tax expense. 

Higher net finance costs was due to less favourable unrealised forex impact arising from unhedged non-current balance sheet liabilities comprising, finance lease liability and vendor financing. 

First half performance

For the first half, Astro's earnings rose 34.9% to RM442.16mil from RM327.60mil in the previous corresponding period. Its revenue was slightly lower at RM2.745bil from RM2.791bil.

Astro said adex growth and strong cost discipline drove margin improvement and profits growth. Its Ebitda rose 12% on-year to RM1.01bil. It recorded strong free cashflow of RM723mil.

Underpinning the customer growth was its NJOI as total customers  rose 6% on-year to 5.3 million, Average revenue per user (Arpu) rose to RM100.8, driven by take-up of value-added products and services.
 
Total avertising expenditure (adex) rose 4% on-year to RM351mil as Astro continues to lead in share of TV adex and radio adex at 43% and 74% respectively. 

Astro chairman Tun Zaki Azmi said in a challenging market, Astro is focused on delivering sustainable growth over the long term. 

“Our businesses continued to be cash generative and the board is pleased to declare a second interim dividend of three sen per share,” he said.
 
Astro group CEO Datuk Rohana Rozhan, commenting on the results, said the group's diversified revenue streams across the TV, radio and digital platforms, Adex and e-commerce continued to show resilience. 

“Margins and profits in Q2FY18 benefited from lower cost to serve and one-off savings arising from content secured on more favourable terms.
 
“We continue to expand our reach by serving 5.3 million, or 72% of Malaysian households and increase our customer engagement with the 21 million individuals in these homes,” she said. 

She said Astro's home proposition achieved net growth of 288,000 driven primarily by NJOI net adds, and is on track for 90% reach within five years, reinforcing a strong base to serve. 

“Our connected PVRs increased by 62% on-year to 639,000, with cumulatively 7.1 million on demand videos watched. We are also encouraged by the reduction in Pay TV churn with Arpu at RM100.8.” 

“Our singular focus now is to expand our household reach onto individual devices and developing meaningful personal relationships. 

"Viewing across multiple screens and on demand consumption are gaining momentum. Astro GO grew its registered users to 1.3mil with an average of 235 minutes viewing time per week among active users,” said  Rohana.