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HT Media Net Up 92%; Cost Control Is Working, Says CEO Rajiv Verma

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Publisher HT Media Ltd today said net profit for the quarter ended 30 September was Rs31.41 crore, up 92% year-on-year from 16.28 crore. While the uptick when compared with the depressed sales of the year-ago period is not surprising, net profit for the quarter under review is only marginally (1%) lower than the corresponding quarter during the 2007-08 fiscal. Total revenues grew by 4.15% y-o-y to Rs348.05 crore while costs were lower by 2.34% y-o-y at Rs299.92 crore.

2Q 2009 2Q 2008
EPS Rs1.34 Rs0.70
Net Income Rs31.41 crore Rs16.28 crore
Revenue Rs348.05 crore Rs334.17 crore

Raw material costs were down 15%. This, and a marginal decline in advertising and sales promotions cost contributed to lower overall costs even as employee costs and depreciation/amortisation were higher. HT Media did not effect a company-wide cut in salaries.

Circulation revenue grew 28% to Rs47.9 crore. Ad revenues of the publishing segment declined mariginally from Rs283 crore to Rs282 crore.

In a statement, the company said Mint has achieved “strong growth in revenues” without specifying details. HT Media also publishes Hindustan Times and Hindustan. The mobile marketing JV with Velti Plc. has commenced operations.

We had a brief telephone conversation with HT Media CEO Rajiv Verma shortly after the results were announced. Excerpts from his comments:

You have posted a strong result. Are we at least back at 2007 levels?

Cost side discipline is what is working. We had put in place significant cost cutting measures about eight months back and those efforts are paying dividends now. Revenues are still under pressure and that is obviously linked to the larger economy’s performance and the confidence of our advertisers in their businesses. The good news is that the economy is starting to look up and I think our advertisers are going to start spending again now. I can sense the confidence coming back and that should translate into good news for us.

Thankfully, out cost cutting measures are mostly structural and they are here to stay. So when the revenues come back, we will be in a very strong position.

What is your outlook on the revenue front and does it worry you that newsprint prices are showing an upward trend again?

Not really. Newsprint prices are not going to go up in the same way as last year. Those prices were a result of a set of extraordinary circumstances. Structurally we have put in place measures that will help us accomodate some cost inflation on newsprint and other raw materials.

On the revenue side, cover price increases are helping and we still have a lot of room to raise cover prices if necessary.

During a downturn, ads are always the first to go and last to come back. So recovery may be gradual, but I have no doubts that advertisers are going to spend again soon.