Astro's 4Q earnings strengthen q-o-q on higher advertising, subscription revenues

KUALA LUMPUR (March 27): Astro Malaysia Holdings Bhd's net profit climbed to RM54.75 million in its fourth quarter ended Jan 31, 2023 (4QFY2023), over nine times the RM5.8 million it made in the preceding 3QFY2023, as revenue grew to RM990.67 million from RM926.18 million, driven mainly by an increase in sales of programming rights, and advertising and subscription revenues.

It should be noted that the preceding quarter's performance had been impacted by higher net finance costs, largely from unrealised forex loss from unhedged finance lease liabilities.

The group's latest quarterly net profit, however, was lower than 4QFY2022's RM126.59 million — when revenue came in at RM1.03 billion — as earnings before interest, tax, depreciation and amortisation (Ebitda) dropped due to higher contest and broadband costs, offset by lower staff-related and merchandise costs. The year-on-year (y-o-y) earnings variance was also due to higher amortisation and impairment of tangible assets, besides an increase in depreciation of property, plant, equipment and higher tax expenses. These were partly offset by lower net financing costs, mainly due to the unrealised forex impact arising from unhedged lease liabilities.

The group closed its FY2023 with an annual net profit of RM259.04 million, as opposed to FY2022's RM460.88 million, with a revenue of RM3.8 billion compared with RM4.18 billion previously.

Dividend payout halted post-impairment

Meanwhile, Astro halted its interim dividend for 4QFY2023 and its final dividend for FY2023 to preserve cash, after declaring three sen per share for the year — equivalent to 60% payout ratio. It paid 6.75 sen for FY2022.

This represents a departure from Astro's dividend policy of paying at least 75% of consolidated profits for the financial year, and is due to its legal entity having had to recognise a non-cash impairment of RM763 million in respect of its historical cost of investments in subsidiaries, amid macro and industry challenges.

"This impairment is an accounting adjustment and has no impact on the group's consolidated Patami (profit after tax and minority interest), nor any bearing on the entity or group's current or future cash position... Given the non-cash impairment, no interim or final dividends will be paid this quarter," the pay-TV service provider said in a separate statement.

Astro group chief executive officer Euan Smith said the group is starting to see the benefits of its investments in content, product, connectivity, advertising and customer service, which is moving the group aggressively into the new streaming, on-demand era.

“Customers are streaming more than ever on the Ultra and Ulti boxes, as well as on Astro GO, with our On Demand shows streamed rising 25% y-o-y to 660 million. Our value-added streaming focused TV packs, which can be bundled with Astro Fibre, are delighting our current customers and attracting new ones, contributing to the growth of both our Arpu (average revenue per user) by RM1 y-o-y to RM98.20, and increasing our broadband base by 34% y-o-y,” Smith said.

In FY2024, Astro said the company will continue investing in its transformation for long-term and sustainable growth, focusing on content, broadband, streaming, addressable advertising, customer experience, data and technology to better serve customers.

Astro shares closed one sen or 1.49% lower at 66 sen on Monday (March 27), giving the group a market capitalisation of RM3.44 billion.