Wednesday, Jan 22, 2003
MARC has reaffirmed Utusan Melayu (Malaysia) Berhad’s (Utusan/the Group) RM105 million Revolving Underwritten Facility (RUF) at MARC-3. The rating affirmation reflects Utusan’s leading position in the Malay language newspaper and magazine segments. The rating is, however, moderated by Utusan’s adverse financial performance in FY2001, which is highly sensitive to changes in newsprint prices, circulation figures and advertising revenue.
Utusan Malaysia is the leading Malay daily newspaper in the country with a daily circulation of 235,483 for the 12-month period ended June 2001. Its closest rival, New Straits Times Press’ Berita Harian, registered a daily circulation of 222,142 copies in the same period. 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.
For financial year ended December 2001 (FY2001), the Group reported a pre-tax loss of RM44.1 million on the back of a revenue of RM334.1 million (FY2000: RM6.3 million pre-tax profit; RM342.9 million revenue). The depressed performance was attributed to higher operating costs, made up of newsprint costs and staff costs. With newsprint cost constituted nearly 50% of total production cost, the Group’s financials are vulnerable to movements in the price of this raw material. Further contributing factors to higher costs were the write-off of the development costs and intangible assets in certain subsidiaries. The slow down of the advertising industry has also affected the Group’s performance in fiscal year 2001; the adex only grew by 2.57% as compared to 24.4% previously due to the world recession aggravated by the September 11 event in the US.
Consequently, the Group’s cash flow measures weakened; cash flow interest and debt coverage deteriorated to 0.42 times and negative 0.04 times respectively (FY2000: 2.84 times; 0.08 times). Utusan’s cash flow remains highly sensitive to changes in newsprint prices, circulation figures and advertising revenue.
However, the first six months of financial year 2002 saw an improvement in the Group’s performance. The Group’s revenue increased by 4.6% to RM162.3 million. Pre-tax profit, meanwhile, improved significantly to RM5.9 million compared to a pre-tax loss of RM21.0 million in the corresponding period last year. The improved performance was attributed to the lower newsprint prices, higher advertising revenue and aggressive cost cutting measures through reducing or closing-down the unprofitable businesses.
The Group’s gearing position had averaged 1.45 times over the past three years. Around 96% of the debts were short term in nature (FY2000: 87%), with the bulk of it represented by the RUF. The Group’s debt leverage is expected to hover around the present level in the near term. Overall, the group has moderate financial flexibility, with demonstrated access to the capital market. Undrawn credit lines stood at RM100.0 million as at 30 June 2002. Given the short term nature of the RUF, the company remains vulnerable to fluctuations in interest rates.
Utusan Malaysia is the leading Malay daily newspaper in the country with a daily circulation of 235,483 for the 12-month period ended June 2001. Its closest rival, New Straits Times Press’ Berita Harian, registered a daily circulation of 222,142 copies in the same period. 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.
For financial year ended December 2001 (FY2001), the Group reported a pre-tax loss of RM44.1 million on the back of a revenue of RM334.1 million (FY2000: RM6.3 million pre-tax profit; RM342.9 million revenue). The depressed performance was attributed to higher operating costs, made up of newsprint costs and staff costs. With newsprint cost constituted nearly 50% of total production cost, the Group’s financials are vulnerable to movements in the price of this raw material. Further contributing factors to higher costs were the write-off of the development costs and intangible assets in certain subsidiaries. The slow down of the advertising industry has also affected the Group’s performance in fiscal year 2001; the adex only grew by 2.57% as compared to 24.4% previously due to the world recession aggravated by the September 11 event in the US.
Consequently, the Group’s cash flow measures weakened; cash flow interest and debt coverage deteriorated to 0.42 times and negative 0.04 times respectively (FY2000: 2.84 times; 0.08 times). Utusan’s cash flow remains highly sensitive to changes in newsprint prices, circulation figures and advertising revenue.
However, the first six months of financial year 2002 saw an improvement in the Group’s performance. The Group’s revenue increased by 4.6% to RM162.3 million. Pre-tax profit, meanwhile, improved significantly to RM5.9 million compared to a pre-tax loss of RM21.0 million in the corresponding period last year. The improved performance was attributed to the lower newsprint prices, higher advertising revenue and aggressive cost cutting measures through reducing or closing-down the unprofitable businesses.
The Group’s gearing position had averaged 1.45 times over the past three years. Around 96% of the debts were short term in nature (FY2000: 87%), with the bulk of it represented by the RUF. The Group’s debt leverage is expected to hover around the present level in the near term. Overall, the group has moderate financial flexibility, with demonstrated access to the capital market. Undrawn credit lines stood at RM100.0 million as at 30 June 2002. Given the short term nature of the RUF, the company remains vulnerable to fluctuations in interest rates.