ABS-CBN on track to hit P2-B profit this year

Posted at 08/13/14 10:01 AM

ABS-CBN chief financial officer Aldrin Cerrado. Photo by Ryan Ramos, ABS-CBN Corporate Communications

MANILA, Philippines (2nd UPDATE) - Multimedia giant ABS-CBN Corp. reported a net income of P995 million in the first six months of 2014.

The Lopez-led firm said its net income dropped by 23 percent to P995 million in the first half compared to P1.29 billion posted in the same period last year. This was attributed to the lack of election ad-related revenues which boosted profit last year.

ABS-CBN generated P16.4 billion in consolidated revenues for the first half, down 4.7 percent from last year's P17.2 billion.

The firm saw a drop of 13.6 percent in advertising revenues to P8.8 billion in 2014 from P10.2 billion 2013, when there were additional revenues from election-related advertisements.

Minus the effect of election ad-related spending, ABS-CBN’s net income of P995 million is 44 percent higher compared to last year's P693 million.

Total revenues for the first half grew by 3 percent, with ad revenues only slightly down by 1.2 percent to P8.8 billion from P8.9 billion with the absence of election ads.

Consumer sales, meanwhile, jumped 8.5 percent to P7.6 billion in the first half from P7 billion in the same period last year.

ABS-CBN group chief financial officer Ron Valdueza. Photo by Ryan Ramos, ABS-CBN Corporate Communications

The revenue growth was attributed to the strong performance of Star Cinema films and SkyCable. The firm also reported lower costs and expenses in the first half compared to the first half of last year.

"Channel 2 continues to dominate strongly in terms of national audience shares and ratings, Star Cinema's performance at the box office was excellent, and SkyCable has grown both its cable and broadband businesses,” said ABS-CBN chief financial officer Aldrin Cerrado.

Eight Star Cinema movies released as of June this year made P1.3 billion in local theatrical revenues.

One of these movies, “Starting Over Again,” generated more than P400 million locally and also became the highest grossing international release for Star Cinema. The film was released in February.

Consumer sales in the second quarter, however, were down 14.8 percent compared to the first quarter due to the lower number of movies released in the period.

This brought down net income in the second quarter by 15.1 percent to P457 million from P538 million in the first quarter.

“Although we had good movies in the second quarter, it did not generate as much revenue as that of those in the first quarter,” said Cerrado.

Only three films—“Da Possessed,” “Maybe This Time,” and “My Illegal Wife”—were released in the second quarter compared to five in the first quarter, including the top-grosser “Starting Over Again.”

Profit guidance

Despite the lower net income in the first half, ABS-CBN said the company is still on track to meet its full-year targets, as well as its P2 billion profit guidance for 2014.

Cerrado said this will be driven by advertising revenue, strong performance of movies, SkyCable subscriber growth, and cost efficiency measures.

In 2013, ABS-CBN generated profits of P2.03 billion, an increase of 25 percent from the P1.62 billion for 2012.

“Without election-related spending ‘yung P2 billion that we are looking at this year so I guess that’s a pretty much good story to tell, because even without election spending, we will still hit the P2 billion level,” he said.

Cerrado also noted that ABS-CBNmobile is nearing its target of 1 million subscribers before year-end, with 750,000 subscribers as of August.

“The campaign of Vice Ganda actually generated a lot of subscribers for us,” he said.

ABS-CBN is also expecting profit from its O Shopping business, which is generating over P1 million in daily sales.

Its educational theme park business, KidZania, will open for business in the first quarter of 2015.

“The results of our initiatives on both the revenue and expense side have been positive, and we should be able to deliver a marked improvement in our margins over the coming years,” said ABS-CBN group CFO Ron Valdueza.