ABS-CBN Corp. reported a 23 percent drop in first-half net profit because of the absence of election spending this year, but it remains confident it will meet its financial targets for 2014 due to sustained revenue growth and better cost efficiencies.
The country’s leading media and entertainment company said first-half net income fell to P995 million from P1.29 billion in the same period in 2013, which was an election year.
Despite the absence of election-related ad spending this year, consolidated revenue in the first half reached P16.4 billion, only slightly lower than last year’s P17.2 billion.
“Our income guidance is still P2 billion, so we haven’t changed our income guidance. We’re still targeting P2 billion for our full year 2014,” ABS-CBN chief financial officer Aldrin Cerrado said Wednesday.
He said profit drivers will be advertising, movie releases, growth in SkyCable subscription and cost efficiency measures, and that any hurdles toward achieving the income guidance will not come from the company but from the market, particularly consumer spending and consumer advertising.
“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 business,” Cerrado said.
Cerrado noted that ABS-CBN last year achieved net profit of P2.1 billion “but that included election- related spending. So without election spending, the P2 billion we’re looking at this year, I guess that’s a much good story to tell because without election spending this year, we still hit the P2 billion level.”
“I am pleased with our overall performance for the first half of the year, and I am confident that we will be able to achieve our full-year financial targets,” he said.
The Lopez-led company said costs and expenses were lower compared to the same period last year, while total assets rose to P64.8 billion as of end-June 2014 from P58 billion as end of last year. Its equity base rose to P26.2 billion from P25.9 billion in 2013.
To date, the company’s capital expenditure has reached P2.3 billion. Earlier reports said it has set capex of P6 billion for the whole year.
“We are looking forward to sustaining our performance throughout the second half of the year,” Ron Valdueza, group chief financial officer and head of Corporate Services Group 2, said on Wednesday.
“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,” he added.