Monday, Nov 05, 2001
MARC has affirmed Utusan Melayu (Malaysia) Berhad’s corporate debt rating at MARC-3, reflecting the latter’s leading position in the Malay language newspaper and magazine segments. The rating is, however, moderated by the deterioration in its financial performance, which is highly sensitive to changes in circulation figures, advertising revenue and newsprint prices.
Utusan Malaysia is the leading Malay daily newspaper in the country with a daily circulation of 234,542. Its closest rival, New Straits Times Press’ Berita Harian, registered a daily circulation of 196,240 copies for the 12-month period ended June 2000. The Utusan group’s position in the magazine segment is equally strong with an offering of some of the most popular magazines in the country.
Fiscal year 2000 saw a 3.6% increase in revenue to RM342.90 million, with the publishing/distribution and advertising segments contributing 56.4% and 43.4% respectively to total revenue. Advertising income was the main growth driver in that year, with Utusan Malaysia recording the largest increase in adex, of the major newspapers. Contributory factors include the increase in pagination, competitive advertising rates and special package offered for group advertisements. Near-term adex is expected to be adversely affected by the current economic slowdown.
Contribution from the group’s multimedia and IT business shrank in FY2000 following the group’s divestiture of 51% equity stake in Asia Online Utusan Sdn Bhd. Continuing losses in this business segment as well as printing had depressed the group’s profitability over the past few years.
Utusan’s operating cost rose in FY2000, surpassing the growth in revenue, mainly due to higher newsprint costs, vendors’ commissions and staff costs. With newsprint accounting for slightly over 46% on average of total production cost, the group’s financials are vulnerable to fluctuations in the price of this raw material. Newsprint prices are expected to firm up in the near term given the present slowdown in the American and European economies.
Besides adversely impacting the group’s earnings and profitability, the higher operating costs also had weakened the cash flow coverages of interest and debt to 3.27 times and 0.12 times respectively (FY99: 5.20 times; 0.35 times). Utusan’s cash flow remains 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 234,542. Its closest rival, New Straits Times Press’ Berita Harian, registered a daily circulation of 196,240 copies for the 12-month period ended June 2000. The Utusan group’s position in the magazine segment is equally strong with an offering of some of the most popular magazines in the country.
Fiscal year 2000 saw a 3.6% increase in revenue to RM342.90 million, with the publishing/distribution and advertising segments contributing 56.4% and 43.4% respectively to total revenue. Advertising income was the main growth driver in that year, with Utusan Malaysia recording the largest increase in adex, of the major newspapers. Contributory factors include the increase in pagination, competitive advertising rates and special package offered for group advertisements. Near-term adex is expected to be adversely affected by the current economic slowdown.
Contribution from the group’s multimedia and IT business shrank in FY2000 following the group’s divestiture of 51% equity stake in Asia Online Utusan Sdn Bhd. Continuing losses in this business segment as well as printing had depressed the group’s profitability over the past few years.
Utusan’s operating cost rose in FY2000, surpassing the growth in revenue, mainly due to higher newsprint costs, vendors’ commissions and staff costs. With newsprint accounting for slightly over 46% on average of total production cost, the group’s financials are vulnerable to fluctuations in the price of this raw material. Newsprint prices are expected to firm up in the near term given the present slowdown in the American and European economies.
Besides adversely impacting the group’s earnings and profitability, the higher operating costs also had weakened the cash flow coverages of interest and debt to 3.27 times and 0.12 times respectively (FY99: 5.20 times; 0.35 times). Utusan’s cash flow remains highly sensitive to changes in newsprint prices, circulation figures and advertising revenue.