FIFA World Cup 2018 a drag on Astro’s 2Q profit

• Declares a second interim single-tier dividend of 2.5 sen per share
• Astro’s revenue was lower at RM2.73 billion in 1H19 from RM2.75 billion in 1H18

ASTRO Malaysia Holdings Bhd’s net profit for the second quarter ended July 31, 2018 (2Q19) fell by 93.3% to RM16.6 million from RM246.3 million in the previous corresponding quarter.

The sharp fall was attributed to higher content costs due to the FIFA World Cup 2018 as well as higher cost of merchandise sales and net finance costs.

Henry Tan, the chief executive officer designate of Astro said in a statement that the increase in content costs for the 2018 FIFA World Cup “has been budgeted”.

“In addition, financial results were affected by the reduced need to advertise during the tax holiday period from June 1 to Aug 31, 2018 and the depreciating ringgit.

“Nevertheless, we continue to have stable revenues across TV and radio with diversification from digital platforms, e-commerce, licensing income and theatrical sales.”.

Going forward, Tan expects the group’s second half performance to improve and that Astro will remain focused on key business drivers.

Quarterly revenue slipped by 0.23% to RM1.416 billion against RM1.42 billion in 2Q18, mainly due to decrease in subscription and advertising revenue, offset by higher merchandise sales, licensing income and sales of programme broadcast rights.

“The decrease in subscription revenue was mainly due to lower package take-up and the decrease in advertising revenue was due to lower spending over festivities compared with the corresponding quarter.

“The increase in merchandise sales was due to increase in number of products sold, mainly driven by the tactical campaigns executed for the current quarter,” said Astro in a filing with Bursa.

The board also declared a second interim single-tier dividend of 2.5 sen per share in respect of the financial year ending Jan 31, 2019 amounting to about RM130.3 million, despite the lower earnings.  

Both the television and radio segments have seen a decline in revenue and earnings before interest, tax, depreciation and amortisation (EBITDA).

While the home-shopping segment saw an increase of RM23.2 million in revenue to RM93.5 million from RM70.3 million in the corresponding quarter a year ago, EBITDA recorded an unfavourable variance due to costs incurred for an additional channel and tactical campaign for the current quarter.

For the first half of its financial year ending Jan 31, 2019 (1H19), the group’s net profit fell by 56.7% to RM191.3 million from RM442.2 million recorded in the previous corresponding period.

Astro’s revenue was lower at RM2.73 billion in 1H19 from RM2.75 billion in 1H18.

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