Utusan 3Q net loss widens 22.5% on lower publication and advertising sales

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KUALA LUMPUR (Nov 26): UMNO-owned Utusan Melayu (Malaysia) Bhd saw its net loss for the third quarter ended Sept 30, 2014 (3QFY14) widened 22.5% to RM5.72 million or 5.16 sen per share from RM4.67 million or 4.21 sen per share in 3QFY13, due to weaker performance in its publication, distribution and advertisements segment.
 
Revenue for the quarter slid 7.01% to RM74.82 million from RM80.51 million previously, the group's filing to Bursa Malaysia today showed.
 
For the cumulative nine months to Sept 30, 2014 (9MFY14), the Umno mouthpiece saw its net loss trebled to RM36.57 million or 33.03 sen per share from RM11.56 million 10.44 sen per share. This is due to declined revenue from its publishing and distribution units, as well as higher employee benefit expenses arising from a voluntary separation scheme implemented by a subsidiary.
 
Revenue for 9MFY14 also slumped 15.01% to RM214.69 million from RM252.61 million.
 
On outlook, Utusan expects 2014 to remain challenging, blaming increasing competition for advertising expenditure (ADEX) and circulation of newspapers.
 
"The group will continue to adopt prudent cost saving strategies in its business operations. Amongst others, the group is undertaking measures to reduce the return rate by employing efficient allocation of newspapers and magazine supplies. 

"Administration, production and staff costs are being aggresively monitored," it said. It also added that recruitment of new staff has been frozen to reduce costs.
 
Utusan has been loss-making since FY12, which it has blamed on decreasing revenue from the sale of newspapers, magazines and books, while its operational costs have been increasing due to higher employee benefits' expenses and impairment losses allowances.
 
It is worth noting that Utusan - in which UMNO has a 49.77% stake - had in August aborted a proposed two-call rights issue after "due and careful consideration and re-evaluation."

Shares in Utusan has fallen by 26.95% from 83.5 sen on June 20 to close at 61 sen today, giving it a market capitalisation of RM67.5 million.