This article first appeared in The Edge Financial Daily on May 22, 2018

KUALA LUMPUR: Star Media Group Bhd plans to halt its printing activities in Penang this September as it centralises its printing operations as part of its ongoing cost rationalisation exercise.

In a filing with Bursa Malaysia yesterday, it said the proposed cessation will involve staff redundancies, consideration of future utilisation of the land and building at Star Northern Hub (SNH), as well as disposal of the press line.

Star Media added that it does not expect any significant adverse impact on its newspaper circulation in the northern region as the group will still continue with its print business and all newspapers will be printed at the Star Media Hub located in Shah Alam, Selangor.

“The proposed cessation will not have any effect on the group’s share capital and substantial shareholders’ shareholdings. It will also not have any material effect on the gearing, consolidated earnings, earnings per share and net assets per share of the group for the financial year ending Dec 31, 2018 (FY18).

“There is no further impairment of the assets following the proposed cessation as this was taken into account in the financials for FY17,” it noted.

Star Media was born in Penang as a state-regional English newspaper in 1971, before the group set up a new headquarters in 1976 as the paper transitioned to become a national daily.

The group moved its northern operations to SNH in 2003 as the new plant offered increased printing capacity and greater flexibility for newspaper pagination and colour printing.

Star Media shares hit an all-time low of RM1 on May 16, in the aftermath of the 14th general election which saw the surprise defeat of Barisan Nasional (BN) at the federal level. Star Media is linked to MCA, a component party of the BN coalition.

As advertising expenditure is expected to remain challenging, Star Media has also embarked on a digital transformation, targeting bundle products and other digital-related investment opportunities moving forward.

The counter has since rebounded on the back of a firm first-quarter earnings for the quarter ended March 31, 2018.

Star Media saw net profit rise 70.3% to RM11.32 million in 1QFY18 from RM6.65 million a year ago, on the back of better cost management and lower depreciation expenses. Quarterly revenue, however, fell 8.1% to RM109.03 million in 1QFY18 against RM118.61 million in 1QFY17.

Star Media shares closed down one sen or 0.9% at RM1.10 yesterday, with a market capitalisation of RM805.51 million.