Media Chinese braces for challenging FY16

PETALING JAYA: Media Chinese International Ltd (MCIL), whose earnings have been on a downtrend over the past three financial years, expects another challenging year for its operations for the financial year ending March 31, 2016 (FY16) on the back of low advertising expenditure (adex) as well as the weakening ringgit.
MCIL owns four chinese dailies in Malaysia and a daily in Hong Kong.
At a press conference after the company's AGM today, CEO Francis Tiong explained that a weaker ringgit has mitigated the positive impact from low newsprint cost, which is currently below US$500 (RM1,951) per tonne.
"Newsprint cost has come down by 17% over the past one year from US$600 a tonne, but the ringgit has depreciated more than 20% over the same period," he added.
The ringgit stood at 3.902 against the dollar as at 5pm yesterday.
However, Tiong is not concerned about the currency risk as it only accounts for 0.2% of the group's pre-tax profit.
Meanwhile, he expects adex to only rebound towards year-end due to weaker consumer spending post implementation of the goods and services tax (GST).
"It takes months for consumers and businesses to get used to the GST ... By year-end, it will not be an issue," he opined, adding that the adex drop of 4% for the Chinese print segment in the first half of the year is the lowest across all print media, which registered a 9% decline.
Tiong said the digital platform is another way to create new revenue stream for the group while sustaining its print segment.
For the financial year ended March 31, 2015, MCIL's net earnings went down 34.84% to RM116.4 million compared with RM178.64 million a year ago, due to lower revenue for the publishing and printing segment as well as impairment loss.
He said the group has contained its operating costs successfully and is now working towards maintaining its adex and circulation.
"We manage our cost very tightly and efficiently, we don't do mutual separation," Tiong added.
He said the company has diversified to other non-media businesses, such as e-education and e-retail as well as exploring the opportunity of venturing into the property development business.
Last November, it started a digital commerce platform known as "logon" to facilitate online businesses for small and medium-sized enterprises.
On the travel business, Tiong said it has been performing well, thanks to the strengthening of the Hong Kong dollar.