KUALA LUMPUR (June 18): Pay-television operator Astro Holdings Bhd’s net profit more than halved to RM73.84 million in the first quarter ended April 30, 2020 (1QFY21) from RM176.20 million a year ago, amid higher unrealised foreign exchange (forex) losses and a decline in revenue, as advertisers pulled back spending during the pandemic outbreak and subsequent movement control order (MCO).

The forex losses came to RM89.9 million during the quarter — over five times the RM16.5 million it recorded in the year-ago quarter. Group revenue fell 14.6% to RM1.05 billion from RM1.23 billion, as it saw a 38% decline in advertising expenditure (adex) — and faced restrictions in up-selling and installations during the quarter, Astro’s group chief executive officer Henry Tan said.

“Revenue was lower by RM182 million y-o-y (year-on-year), impacted by a decline in advertising and subscription, and our prudent revenue recognition approach. The group raised provisions for doubtful debt and is actively engaging with affected customers to manage receivables. Despite lower operating expenses mainly resulting from savings in content cost, earnings were impacted by unrealised forex losses,” Tan said in a statement.

These declines were partially offset by a lower tax expense — down 58.2% to RM23.9 million from RM57.2 million — and lower marketing and distribution costs of RM69.4 million versus RM92.4 million previously.

The group declared a first interim dividend of 1 sen per share — half the 2 sen it declared in the corresponding period last year — payable on July 17.

Astro chairman Tun Zaki Azmi, meanwhile, noted that Astro, which had instituted its Business Continuity Plan (BCP) during the movement control order period as it continued to operate as an essential service provider, “continues to be cash generative” despite the impact of the pandemic.

It has also been cost-disciplined and proactive in its capital management, Zaki said. “Its balance sheet remains strong to weather headwinds in this trying time,” he added.

And while advertisers' spending fell to RM90 million, Astro Radio’s radex (radio advertising expenditure) share grew four percentage points to 84%.

Its Go Shop revenue also registered a 14% y-o-y growth in 1QFY21 to RM95 million, thanks to a surge in online shopping during the MCO. Its Go Shop launched a new channel dedicated to Ramadan and Raya products during the quarter, and expanded its offerings to include fresh and frozen food. It also launched an e-Bazaar to support small and medium enterprises (SMEs) to help them reach its 2.4 million customers.

Going forward, however, Astro said the group is bracing for a challenging FY21 due to the Covid-19 pandemic, with uncertainties prevailing. “The group expects to face headwinds in its advertising and commercial revenue, as well as elevated collection risk, and has accordingly raised provisions on receivables,” it said.

“[But] the group has been agile in adapting to the new normal, allowing us to deepen our engagement with our customers, strengthen our value proposition and to seize opportunities for adjacencies in commerce, broadband, digital and OTT, post MCO. Astro will proactively pursue disciplined cost optimisation and active capital management to further strengthen our financial position,” it added.

Astro shares closed 0.5 sen or 0.51% higher at 98 sen today, giving the group a market capitalisation of RM5.14 billion, after 1.23 million shares were traded. It has climbed 38% from its recent low of 71 sen seen on March 19.