SPH retrenchments

Festive season is only two months away but for many SPH staff, there is nothing to look forward to nor cheer about this year. Within a month of taking over as the new CEO, Ng Yat Chung announced the shocking decision to accelerate the culling of 10% of its workforce. Originally, the 2016 plan was to carry out the lay-offs over two years. Now, the decision is to bite the bullet and complete the SPH retrenchments by end of this year.

The SPH retrenchments come at a time when the media giant is struggling big time to adapt to the disruptions brought forth by technology. In the latest full year financial report, SPH reported net profit of $350.1 million, 32% higher than last year. But upon delving deeper into the financial results, the performance of the core business (the media segment) was not so rosy after all.

Operating revenue declined 8.2% year-on-year to $1.03 billion. But of more alarm was that the media segment clocked in the worst performance among the business divisions for the operating revenue – a drop of 13%. In terms of profit, the media segment also registered a decrease of a whopping 42% to $114 million due to lower income from the advertisements. If not for the fair value gain on the investment properties and the divestment gain of a joint venture, the full year financial performance would have been devastating. Probably because of this, the new CEO was prompted to take actions to rein in staff cost. And retrenchment often offers the best route to cost saving for a company.

SPH retrenchments

According to reports, about 130 SPH staff were retrenched last week and 100 would be retrenched by end of this year. The SPH retrenchment exercise is expected to incur costs of about $13 million for the current quarter. From the perspective of an investor, I have no issue with companies retrenching staff to save costs. But what I find it unacceptable is that the top management continued to receive top dollar in recent years despite producing consistently dismal performance.

For FY2014, former CEO Alan Chan received almost $3 million salary and annual aggregate remuneration paid to the top five key management personnel (excluding the CEO) for FY 2014 was $5,445,000.  In FY2015, Alan Chan continued to receive fat salary of $2.92 million while annual aggregate remuneration paid to the top five key management personnel (excluding the CE0) for FY2015 was S$5,310,000. Then in FY2016, Alan Chan continued to collect huge salary of $2.91 million while annual aggregate remuneration paid to the top five key management personnel (excluding the CEO) for FY2016 was S$5,329,000.

In my point of view, there is simply no justification for the decision to reward top management with such high salaries in spite of declining business results. Since 2014, SPH net readership has been dropping like flies and total revenue had decreased from $1.23 billion in FY2014 to $1.03 billion in FY2017. With such terrible results, it is inexplicable to me that the management continued to draw such fat salaries. To a large extent, the management ought to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: March 7, 2019 — 1:32 am

12 Comments

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  1. Alan Chan and his succesor are all President Scholars. In Sg, this group of people will never have to fear they dont get paid millions evert year. Sad but true.

  2. Worse case are those old timers older than 60 … They won’t get their full retrenchment benefits … Otherwise it’s cheaper for SPH to continue their employment until official retirement age. Some of them mentioned this to reporters.

    I first realised this back in 2003 when PSA did major retrenchments & many such cases got reported in the news.

    Those who had built up enough retirement savings were ok. Otherwise at this age most can only hope for security jobs or grab driver.

    Most likely will have more retrenchments to come …. Can’t see them turning around their media biz … Probably they’ll focus as being holding company for property investments … Like that don’t need so many permanent headcount.

  3. I got a feeling from your articles that you dislike the government and government related companies. As compared to other financial bloggers, you seem to always write with a hidden meaning to achieve your agenda, be it to get people to buy gold via your broker and hence commissions or to sing badly about the government

  4. Hi Richard,

    Thank you for your comments. I am sorry that my blog gave you such negative feelings. My intention of starting this blog has always been to promote financial literacy among Singaporeans. I don’t promote hatred in my blog. Many readers cannot accept the hard truth and feel that I have hidden agenda in my articles. Well, I would let my readers to draw their own conclusion.

    I believe my blog do add value to readers as my followers have been increasing on a daily basis. If I am writing nonsense stuff, I am sure Singaporeans would not bother to read my blog. Why waste your time if you think my articles are rubbish?

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  5. Hi Sinkie,

    I didn’t know about the plight of those older than 60.
    I guess for people in that age bracket, their finances should be ok?
    The situation for SPH is not unique to Singapore, globally, many media companies face the same issue. But I do hope that SPH can turnaround so that there are fewer retrenchments for Singapore employees.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  6. Hi Henry,

    Interesting, I didn’t know Alan Chan is a President Scholar.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  7. I have deep concern for the “pakistanization “of Singapore. It’s said, that Pakistan is unique, it’s an army with a country, not a country with an army. Everyone of the top army officials , get a fat salary job ,upon retirement in all sectors of the economy.

    Singapore seems to be following that model, we have paper generals, with no passion, who know nothing about trains, ships or media, being given top jobs… for which , they are ill suited and with no accountability. How long can we afford to have such people ?. Will there be more paper generals tommorow, accelerating the pakistanization of Singapore ?

  8. I agree with u fully that the top brass needs to take even more responsibility for allowing the disruption to occur while being slow to react.

    Thanks for pointing out the salaries of the top brass who continue to earn so high while the rank and file who are not responsible for the strategic direction is made to suffer

  9. I shared your post on my Facebook..hope u don’t mind..

  10. Hi SGdividends,

    Thank you for your comments.
    That is the reason why I have decided not to invest in SPH.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  11. Hi SGDividends,

    Thank you for sharing my post on Facebook.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  12. Actually, This is Singapore Stock Market!
    Tiny, no economics of scale, yet cost so high, so many levy, so many layer of cost…
    Absolutely understand, me running a proper business also.

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