CEO Morning Brief

Higher Costs, Forex Loss Drag Astro’s 2Q

Publish date: Tue, 26 Sep 2023, 08:55 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Sept 25): Higher operating costs and unfavourable foreign exchange loss (forex) dragged Astro Malaysia Holdings Bhd’s net profit down by 75.98% in the second quarter ended July 31, 2023 (2QFY2024) to RM23.65 million, from RM98.47 million a year earlier.

This came in tandem with a 5.56% decline in quarterly revenue of RM869.82 million, as compared to RM921.12 million previously, due to a decrease in subscription revenue and merchandise sales, according to the pay-TV services provider’s bourse filing.

Earnings per share fell to 0.45 sen versus 1.89 sen previously. The group did not declare any dividend for the quarter under review.

In the quarter, Astro saw finance costs swell 61.44% to RM74.1 million from RM45.9 million in 2QFY2023, due to unfavourable unrealised forex loss arising from unhedged lease liabilities.

Meanwhile, the group noted that its bottom line was also burdened by higher staff-related, broadband and content costs, marketing and distribution expenses, and license, copyright and royalty fees, offset by lower merchandise costs and impairment of receivables, as a percentage of revenue.

Touching on the lack of dividend being declared for the quarter, Astro said this move is in line with its new dividend policy to distribute dividends annually from its consolidated profit after tax and minority interest (Patami).

Astro had announced a dividend of 0.25 sen per share for 1QFY2024. It paid dividends of 2.25 sen for 1HFY2023.

The dividend policy revision is effective immediately, it said, aimed towards balancing the need to reinvest in the growth of adjacent businesses, while also preserving liquidity to strengthen its balance sheet and pay shareholders dividends.

"Dividends will be paid depending on overall business and earnings performance, capital commitments, financial conditions, distributable reserves and other relevant factors. We will continue to review the dividend policy," it added.

For the six-month period ended July 31, 2023 (6MFY2024), Astro’s net profit stood at RM39.55 million, down 80.08% versus the RM198.48 million it registered in the same period last year.

Cumulative revenue was 6.49% lower at RM1.76 billion, as compared to RM1.88 billion a year ago.

On its prospects, Astro said it will continue managing costs as prolonged macroeconomic headwinds are seen to persist, including the strong US dollar environment, the shift in global industry, and ongoing cost-of-living pressures.

That said, the group is committed to investing in content production with over RM300 million earmarked in FY2024, according to Astro group chief executive officer Euan Smith.

“Our focus is also on scaling sooka — our freemium streaming service for sports and vernacular enthusiasts, available on both mobile and the big screen through its smart TV app.

“Our internet service Astro Fibre continues to see encouraging traction, especially as broadband content bundles, available to both residential and enterprise customers,” he added.

Shares in Astro closed half a sen or 0.97% lower at 51 sen on Monday, giving the group a market capitalisation of RM2.64 billion. The counter has retreated by 21% this year.

Source: TheEdge - 26 Sep 2023

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