Jagran Prakashan Net Profit Down 40%, Ad Slowdown Hits Hard
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Jagran Prakashan Ltd, publisher of India’s most read daily Dainik Jagran, said net profit for the quarter ended 31 Dec was Rs15.46 crore, down 40% year-on-year on slowing ad sales and high newsprint prices. Net sales grew just 3.81% y-o-y to Rs203.15 crore, pointing to sharply slowing ad sales growth.
CFO R.K. Agarwal told contentSutra that Q3 was the worst in terms of ad sales with just a 4% growth, while Q2 saw a 23% growth and Q1 saw a 10% growth. Q3 is traditionally the best quarter for media companies in terms of ad sales as companies push consumers to buy during the festive season of Diwali that falls in October. JPL is one of the three big listed publishers. Hindustan Times’ publisher HT Media Ltd, which announced results last week, also posted a sharp decline in earnings. Deccan Chronicle Holdings Ltd, which publishes Deccan Chronicle, Financial Chronicle and Asian Age, is scheduled to announce its results on 30 Jan.
“These are a very disappointing set of numbers. This corfirms the overall trend in ad slowdown. JPL’s topline is lower than what it was in Q1 and Q2. Margin contraction is along expected lines due to high raw material costs. But revenue traction did not kick in so other costs look amplified. The numbers are much lower than our expectations. We were anticipating a greater growth in revenues,” said Anand Shah, an analyst who covers the firm at Mumbai-based equity brokerage Angel Broking Ltd.
Some details from our conversation with JPL CFO Agarwal:
On Newsprint: JPL had newsprint inventory equivalent to 40 days of consumption as on 31 December 2008. This represents an opportunity to buy at lower prices this quarter. “Our newsprint costs this quarter will come down by 15-25%,” he said.
On ad sales: November was the worst month in terms of ad sales, and it picked up a little in December. January so far has been at the same levels as December, but it should pick up by February ahead of general elections as political advertising will come in and should continue to be up through March as education ads ahead of admissions season, will come in. “By mid February, we should be able to get back to the 10% growth trajectory in terms of ad sales.”
Expansion plans: All expansion plans have been deferred at least for another six months. This includes the Indian language business daily project under a JV with TV18 India Pvt. Ltd.
Outdoor advertising biz and events biz: Together they contribute less than 10% to revenues. Outdoor has been affected since November, but events biz has not be hit as badly. Again, general elections and admissions season will give impetus to the events business.
@sruthijith
Jan 28, 2009 6:59 AM ET
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