Tuesday, Aug 19, 2003
Utusan Melayu (Malaysia) Berhad’s (Utusan/the Group) rating of MARC-3 has been reaffirmed on the extended RUF for a reduced amount of RM100 million now maturing on 10 April 2006. The reaffirmation reflects Utusan’s leading position in the Malay language newspaper and magazine segments coupled with improvement in its financials for the period under review. The rating is, however, moderated by Utusan’s exposure to movement in newsprint prices, circulation figures and advertising revenue.
Utusan Malaysia remained the highest circulated Malay daily newspaper with 239,385 copies daily for the 12-month period ended June 2002, followed closely by NSTP’s Berita Harian, which sold 235,775 copies daily. For Sunday editions, Utusan’s Mingguan Malaysia registered the highest circulation figure of 543,232 copies as compared to NSTP’s Berita Minggu of 342,040 copies. In the magazine segment, the Group continued to dominate through the offering of various fortnightly and monthly-based magazines such as Mastika, Wanita, Mangga and URTV.
Fiscal year 2002 saw Utusan’s financial results back in the black by posting RM15.7 million pre-tax profit as against a pre-tax loss of RM44.1 million previously. The turnaround was largely attributed to lower newsprint prices which constituted nearly 50% of its production cost. Utusan managed to secure a lower average newsprint price as compared to the previous year. As a result, profitability ratios improved drastically, in particular, operating profit margin improved from a negative 11.3% to 6.9% on the back of RM335.9 million revenue.
In FY2002, Utusan’s net cash flow from operations improved to RM13.7 million from a negative RM6.7 million in FY2001, mainly due to reduced payments to newsprint suppliers as the newsprint prices were lower compared to the previous year. CFO interest and debt coverages were consequently higher at 2.62 times and 0.08 times respectively (FY2001: 0.31 times and negative 0.04 times).
The Group’s debt to equity ratio improved marginally from 1.66 times to 1.49 times in FY2002. Around 97% of the debts were short term in nature (FY2001: 96%), with the bulk of it represented by the RUF. The Group’s debt leverage is expected to decrease gradually following the amortisation schedule of the outstanding amount in accordance with the Supplemental Agreement. Currently, Utusan has obtained approvals from all relevant authorities for its Restricted Issue proposal, the proceeds of which will be used to partially settle the RUF. Given the nature of the RUF, the company remains vulnerable to fluctuations in interest rates.
Given that Utusan has secured the supply of its newsprint requirement for 2003 at a favourable price, profitability measures in the next fiscal year are expected to improve correspondingly.
Utusan Malaysia remained the highest circulated Malay daily newspaper with 239,385 copies daily for the 12-month period ended June 2002, followed closely by NSTP’s Berita Harian, which sold 235,775 copies daily. For Sunday editions, Utusan’s Mingguan Malaysia registered the highest circulation figure of 543,232 copies as compared to NSTP’s Berita Minggu of 342,040 copies. In the magazine segment, the Group continued to dominate through the offering of various fortnightly and monthly-based magazines such as Mastika, Wanita, Mangga and URTV.
Fiscal year 2002 saw Utusan’s financial results back in the black by posting RM15.7 million pre-tax profit as against a pre-tax loss of RM44.1 million previously. The turnaround was largely attributed to lower newsprint prices which constituted nearly 50% of its production cost. Utusan managed to secure a lower average newsprint price as compared to the previous year. As a result, profitability ratios improved drastically, in particular, operating profit margin improved from a negative 11.3% to 6.9% on the back of RM335.9 million revenue.
In FY2002, Utusan’s net cash flow from operations improved to RM13.7 million from a negative RM6.7 million in FY2001, mainly due to reduced payments to newsprint suppliers as the newsprint prices were lower compared to the previous year. CFO interest and debt coverages were consequently higher at 2.62 times and 0.08 times respectively (FY2001: 0.31 times and negative 0.04 times).
The Group’s debt to equity ratio improved marginally from 1.66 times to 1.49 times in FY2002. Around 97% of the debts were short term in nature (FY2001: 96%), with the bulk of it represented by the RUF. The Group’s debt leverage is expected to decrease gradually following the amortisation schedule of the outstanding amount in accordance with the Supplemental Agreement. Currently, Utusan has obtained approvals from all relevant authorities for its Restricted Issue proposal, the proceeds of which will be used to partially settle the RUF. Given the nature of the RUF, the company remains vulnerable to fluctuations in interest rates.
Given that Utusan has secured the supply of its newsprint requirement for 2003 at a favourable price, profitability measures in the next fiscal year are expected to improve correspondingly.