SPH Freeze Salaries of Senior Management

Media group Singapore Press Holding (SPH) is the latest company here to announce cost-saving measures to help it ride out the downturn, including a pay freeze for senior management and a slowdown in hiring.

But, despite the tough times ahead, SPH chairman Dr. Tan said yesterday that the company with 3,500 workforces would help its people keep their jobs. Addressing its general meeting, he said Singapore’s recession looked likely to last several quarters. ‘We do not know when the global economic storms will clear but it would be prudent to make the necessary preparations in the event that the Singapore economy undergoes a prolonged period of below-average growth through 2009 and possibly 2010 before hopefully improving in 2011,’ he said.

In anticipation of the impact, SPH had begun acting. ‘We have slowed down our hiring, instituted a pay freeze for all senior management staff, tightened our operations and strengthened our financial resource,’ said Dr. Tan. ‘SPH is therefore in good shape to ride out the downturn, although it will be painful.’ He said.

A company spokesman said that retrenchments would be the last resort, considered only after a wider-ranging wage freeze or wage cuts had been implemented. Its last major retrenchment exercise was in 2003. The group publishes 17 newspapers including The Straits Times, and more than 100 magazines. It reported in October, a 12 percent fall in net profit to $438 million for the year ended August 31. This was primarily due to lower investment income and an investment-related impairment charge. Staff costs amounted to about $333 million.

While the newspaper and magazine business will be affected by the downturn, Dr. Tan said the company anticipated profits from its investments in property projects. ‘Barring unforeseen circumstances, we expect to turn in a satisfactory performance overall in 2009,’ he said. He also said: ’To maintain our viability, we will further review our operation to ensure maximum efficiency, introduce additional cost management measures and continue to upgrade our plant and train our people.’

Dr. Tan, who is also executive director and deputy chairman of the Government of Singapore Investment Corp (GIC), said the world economy was going through a phase where excesses where being purged. ‘This is a multi-sector, global phenomenon – quite unlike anything we have seen since the 1930,’ he said. ’With its global linkages and open economy, Singapore will be buffeted by the global economic storms.’

Other large Singapore companies, including SingTel, DBS Group Holding, Temasek Holding and CapitalLand, have already announced moves to cope with downturn. Their actions range from lowered bonus payments to wage cuts and DBS retrenchment of 900 employees. In his overview of SPH’s performance, Dr Tan said that its newspaper and magazine business continued to bring in the bulk of the profits, despite gloomy forecasts for the newspaper industry worldwide.

Several publications in the group, including The Straits Times, had revamped and the company had invested in a new printing press as part of its undiminished commitment to delivering quality print products. It also made efforts to stay in the forefront of the digital media scene. New online products include The Straits Times’ citizen journalism site Stomp and online TV channel RazorTV, while the AsiaOne and straitimes.com websites have been improved.

SPH also runs the local search and directory engine rednano, popular tech portal HardwareZone and financial portal Shareinvestor.com among others. The new media ventures drew questions from the 450 shareholders at the AGM, held at the SPH news Centre. They queried continued losses in this area.

Chief executive officer, Alan Chan said that SPH recognised that publishing was a ‘mature industry’ and so had set aside $150 million to be invested in new media. Despite losses in this area, he said, these investments were necessary to ‘sow the seeds of a bigger tree’. He was confident that in time, the Internet business would come in. It had already begun to see some returns. He said, adding that the company’s Internet revenue was ‘growing at a very fast rate’.

 

Yesterday, SPH also announced that board member Yong Pung How, the former chief justice, was stepping down from its audit committee and independent director Philip Pillai would join the committee. SPH’s share price closed unchanged at $3.50 yesterday.