ABS-CBN sees brighter year as H1 profits rise
Expects at least 10% growth in earnings by year-end
MANILA - With an 8% rise in profits during the first half of the year, media conglomerate ABS-CBN Broadcasting Corp. is now more optimistic about its prospects for 2009.
ABS-CBN now expects its net income to grow 10% this year from last year's P1.39 billion. Earlier, the company projected a flat full-year profit growth.
"We may be looking at (at least) a 10% growth in net profit for the full year," ABS-CBN Chief Finance Officer Rolando Valdueza during a press briefing on Wednesday.
ABS-CBN reported P621 million in profits for the second quarter, more than triple its net income of P191 million during the first 3 months of the year. This brought the company's net income for the first half of the year to P813 million, an 8% rise from the 2008 level.
On the other hand, EBITDA (earnings before interest, taxes, depreciation, and amortization), the usual measure of a company's cash flow, jumped 26% to P3.37 billion.
Consolidated revenues grew 7% to P11.7 billion as of end-June, with airtime revenues from all platforms up 6% to P6.72 billion. Direct sales, including SkyCable's revenue contribution, rose 28% to P4.97 billion.
"I think in terms of airtime revenues, the second quarter will still be the best. But with the way we manage costs, direct sales, if not at par third quarter might be slightly better than the second quarter," Valdueza said.
From low ad sales levels during the first 3 months of the year, ABS-CBN's airtime revenues rebounded in May to a record P1.4 billion. From April to June, consolidated airtime revenues reached P3.96 billion, a 12% growth from the same period last year.
ABS-CBN booked P8.67 billion in total expenses for the 6-month period, a 6% rise from the same period last year. Including SkyCable, the company's expenses grew 16% to P10.4 billion.
Early this year, Valdueza said ABS-CBN will focus on cutting costs and improving profitability, setting a P1-billion savings target from cost-efficiency measures by 2010. Even with the rise in expenses during the first half of 2009, he said the company is still on track to meeting this goal.
"We're still on track. We won't be changing our savings target," he said.
To reduce unnecessary costs, ABS-CBN Chief Research and Business Analysis Officer Vivian Tin said the company has implemented a "more systematic way of production" since 2006.
"We need to pre-plan and understand our audience better. So we planned programs months in advance (to lessen panic)," she said.
Canned programs, or shows taped in advance such as soap operas, account for about 60% to 70% of ABS-CBN's television shows, according to Tin. She said, however, that live shows still involve weeks of planning "to reduce costs from inefficiencies."
"We can't keep costs flat forever. But we should learn how to manage it," she said.
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