Adex growth, cost discipline drive 34.9% 1H FY18 earnings growth for Astro

By Digital News Asia September 15, 2017

Adex growth, strong cost discipline drive margin 1H profits to hit US$105.3mil
Declares second interim dividend of 3 sen per share, revenue at US$653mil

Adex growth, cost discipline drive 34.9% 1H FY18 earnings growth for Astro

PAY-TV operator Astro Malaysia Holdings Bhd's first half earnings rose 34.9% to RM442.16 million (US$105.3 million) from RM327.6 million in the previous corresponding period.

Its revenue was slightly lower at RM2.745 billion from RM2.791 billion.

[RM1 = US$0.238]

Astro said that adex growth and strong cost discipline drove margin improvement and profits growth.

Its earnings before interest, tax, depreciation and amortisation (Ebitda) rose 12% year-on-year (y-o-y) to RM1.01 billion. The company recorded strong free cashflow of RM723 million.

Underpinning the customer growth was its NJOI as total customers rose 6% y-o-y to 5.3 million. Average revenue per user (Arpu) rose to RM100.80, driven by take-up of value-added products and services.

Total avertising expenditure (adex) rose 4% y-o-y to RM351 million as Astro continued to lead in share of TV adex and radio adex at 43% and 74% respectively.

Astro chairman Zaki Azmi said that the company was focused on delivering sustainable growth over the long term in the current challenging market.

The company declared a second interim dividend of 3 sen per share.

Astro’s regional online video streaming service, Tribe has 1.9 million registered users in Indonesia, the Philippines and Singapore with users watching 160 minutes of content weekly.

Tribe was recently soft-launched in South Thailand, catering to the Malay speaking Thais by offering Astro’s own content in Malay dramas, variety shows and movies.

Go Shop, Astro’s e-commerce service, has to date 1.2 million registered users in Malaysia and Singapore.

In addition, there has been an increasing number of customers shopping via the Go Shop app, which to date has garnered a total of 680,000 downloads.

“Our diversified revenue streams across the TV, radio and digital platforms, Adex and e-commerce continued to show resilience.

“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 1.3 million with an average of 235 minutes viewing time per week among active users,” said Astro group chief executive officer Rohana Rozhan (pic, above).

TV and radio

Astro's TV viewership share gained one additional percentage point and is now at 77%. Average viewing time increased to four hours daily.

Astro Radio leads with over 16 million listeners weekly across its nine radio brands while Astro’s digital properties attracted 6.7 million unique visitors and 60 million page views.

With increasing reach on TV, Radio and Digital, Astro’s total adex rose 4% y-o-y against the backdrop of a 7% market decline.

Astro continued to grow its share of TV adex and leads in radex at 43% and 74% respectively.

“We are executing on our intention to own 50% of our content spend in original IPs by 2022. We intend to own deep verticals in premium Nusantara series, Horror, eSports, Kids and Islamic, often in conjunction with like-minded partners,” said Rohana.

Adex growth, cost discipline drive 34.9% 1H FY18 earnings growth for Astro

Digitalisation key to operational efficiency

Rohana said, “We are on track to digitalise 75% of our operations by year-end. This imperative is key to boosting productivity, delivering greater efficiencies and improving customer experience.

“We have rolled out our digital customer acquisition and omni-channel customer engagement platforms, with the latter gaining significant traction and saw a self-service utilisation rate of 66%.”

Outlook

H1 2018 revenue was lower primarily due to the end of a one-off sports channel sub-licensing, marginally lower contribution from subscriptions and e-commerce.

This was partially mitigated by higher contribution from adex, NJOI and production revenue.

Going forward, the company expects revenue growth in the immediate term to be underpinned by e-commerce, adex, production revenues and NJOI.

Rohana concluded, "We will continue to play and build on our strengths leveraging off new technologies to address a larger Asean market, thus delivering growth in reach and scale as an Asean digital-first content and consumer company, creating value for our shareholders.”