Newspaper cos Q1 net may have risen marginally

INDIA: Newspaper cos Q1 net may have risen marginally

HT Media, which publishes English daily 'Hindustan Times' is expected to post a 2 percent rise in net profit to 349 million rupees and net sales of 3.18 billion rupees. Net sales are seen to grow 16 percent according to the poll.

The company also publishes business newspaper 'Mint' and is expanding the presence of its Hindi newspaper 'Hindustan'.

Advertising will lead revenue growth for HT and its operating margins could contract 130 basis points year-on-year to 19 percent, the Prabhudas Lilladher report said.

Newspaper publishers Deccan Chronicle Ltd are likely to post a marginal rise in net profit as higher newsprint costs ate into margins during the quarter to June, analysts said.

A shortage of newsprint supply because of a consolidation in the global newsprint industry and higher demand because of the U.S. presidential elections and the Beijing Olympics has pushed up prices of the raw material, analysts said.

The two events see higher advertisement and news coverages requiring more usage and demand for newsprint, analysts said.

"There has been a demand-supply mismatch for newsprint... these prices will have an effect on this quarter and the pressure will only increase in the following quarters," said an analyst with a local brokerage, who declined to be named.

A shortage of waste print used in China's newsprint plants, rising fuel prices and a volatile rupee during the first six months of 2008, which pushed up import costs, also affected newsprint prices, analysts said.

Newsprint cost has increased by 45 percent in the year to the beginning of July to $975 a tonne from $675 a tonne, brokerage Pradhubas Lilladher said in a report.

Deccan Chronicle imports all its newsprint requirements while HT media imports 70 percent of newsprint requirements, a report by brokerage Motilal Oswal said.

Deccan Chronicle is expected to post a net profit growth of just 4 percent to 872 million rupees while net sales will grow 43 percent to 2.48 billion rupees in April-June, according to a Reuters poll of brokerages.

Deccan Chronicle has launched a Bangalore edition of its English daily Deccan Chronicle and financial newspaper 'Financial Chronicle' in Hyderabad, Chennai, Bangalore and Mumbai, resulting in margins getting squeezed by launch expenses, analysts said.

Deccan Chronicle is to post its results on July 29.

Going forward, the newspaper companies will also face a possible slowdown in revenue growth because of slowing economic growth, said the analyst at the local brokerage.

In the September quarter, margins will be squeezed further by newsprint costs, analysts said.

"It (newsprint prices) will remain at this level or go up 3-4 percent. It will go down once the Olympics end and demand starts coming down," said another analyst also declining to be named.

SOURCE: IN.REUTERS.COM




Mr Rakesh Praveer is a senior journalist based in