KUALA LUMPUR (Nov 30): Star Media Group Bhd’s net profit fell 99.31% to RM1.60 million for the third-quarter ended Sept 30, 2018 (3QFY18), from RM230.29 million a year ago.

The group explained that the sharp fall was because the 3QFY17 results had included a gain on disposal of a subsidiary Cityneon, which amounted to RM206.86 million. 

Revenue for 3QFY18 fell 23.5% to RM91.12 million from RM119.11 million previously, the group said in a filing with Bursa Malaysia. 

It said the advertising expenses for its print and digital segment continued to be weak in 3QFY18, in line with the slowing economy.

“Digital revenue however grew 17% in 3QFY18 as compared to 3QFY17. We managed to generate profit before tax (PBT) of RM1.74 million in 3QFY18, compared to RM20.50 million in 3QFY17.

“The PBT in 3QFY18 was also affected by the retrenchment cost for the Penang plant shutdown, which amounted to RM1.4 million,” the group added.

Star Media said its radio segment was not spared from the slowdown in ad-spending in 3QFY18. The drop in revenue has resulted in a loss before tax of RM580,000, as compared to a PBT of RM2.17 million in 3QFY17.

The group added that its event and exhibition segment recorded a higher revenue as compared to 3QFY17, resulting in a decrease of 77.1% in loss before tax.

For the cumulative nine-month period (9MFY18), Star Media’s net profit plunged 94.16% to RM14.33 million, from RM245.44 million a year ago. 

The group said it would have reported a higher profit, if the gain on disposal of Cityneon is excluded. 

“This is mainly due to better cost management, following the MSS/ERO [mutual separation scheme or early retirement option] in 4QFY17 and lower depreciation expenses from the print segment. 

Revenue for 9MFY18 declined by 15.56% to RM299.64 million, from RM354.87 million.

Moving forward, the group said that the print and digital segment is expected to perform better in FY18 versus FY17, as a result of better cost management following the MSS/ERO exercise and impairment of property, plant and equipment in FY17. 

“We also expects robust revenue growth from the digital segment as more advertisers migrate into this space. The segment’s results however will be affected by the retrenchment cost for our printing plant in Penang and further headcount reduction and rationalisation exercises,” the group said.

Star Media said it is actively searching for new investment opportunities, especially in the digital sector, to further complement and enhance its existing assets, making it a priority for the group to maintain its engagement with its audiences via the latest technologies.

“Star is also cognizant of investment opportunities that may arise in other industries and will also consider investments in non-core business which have the potential to enhance the performance of the group,” the group said.

Star Media’s share price closed unchanged at 75 sen today, giving the group a market capitalisation of RM553.41 million.