Jagran Prakashan Q2: Cost management better than at rival DB Corp

Following the trend seen in other newspaper stocks, Jagran Prakashan — which publishes India’s largest circulated daily — reported a sharp decline in its profits for the second quarter. However, the company was able to better manage rising input costs compared to its rival DB Corp on a sequential basis.

Like in case of DB Corp, revenue fell by Rs 50 cr on quarter to Rs 553 cr from Rs 603 cr in the preceding three months. DB Corp too had seen its operating revenue fall by Rs 50 cr to Rs 582 cr from Rs 632 cr in the preceding quarter.

However, Jagran Prakashan did better when it came to preserving its profits.

Profit before tax, for example, fell by Rs 65 cr to Rs 70 cr. In case of DB Corp, PBT had fallen more sharply, by Rs 79 cr to Rs 70 cr.

The main reason for the slightly more cushioned fall was the seemingly better management of costs.

Cost of raw materials for Jagran Prakashan increased to Rs 180 cr from Rs 175 cr in the preceding quarter and Rs 165 cr in the year-ago period.

This was a slower increase than was seen in case of DB Corp, which saw raw material costs jump to Rs 233 cr from Rs 217 cr in the preceding quarter and Rs 179 cr in the year-ago period.

The impact was also seen in the net profit figures.

Jagran Prakashan’s net profit fell to Rs 44.88 cr from Rs 88.36 cr in the preceding three months and Rs 72.23 cr last year. In comparison, DB Corp saw PAT fall more sharply, to Rs 46 cr from Rs 98 cr in the preceding quarter and Rs 77 cr in the year-ago period.

Total advertisement revenue came in at Rs 398.50, down Rs 23 cr from last year. On this metric, it did worse than DB Corp, which managed an increase in its ad revenue to Rs 413 cr in the quarter from Rs 396 cr last year. However, DB had had a bad second quarter last year.

Circulation revenues for Jagran Prakashan rose 3.8% on year to Rs 110.42 crores. For DB, it was up 5.6% to 131.8 cr.

On a positive note, Jagran Prakashan reported Rs 11.48 cr of digital ad revenue, up 35% from Rs 8.49 cr last year. DB’s digital revenue rose only 5% in the quarter to Rs 11.9 cr.

Mahendra Mohan Gupta, Chairman and Managing Director, JPL said the quarter “unexpectedly delivered disappointing results” in spite of the company’s best efforts.

He said Jagran Prakashan increased cover prices wherever possible and kept the cost under check.

“We could mitigate some impact of steep fall in revenues and abnormal increase in newsprint prices but these efforts were not enough to maintain revenues and profits,” he said.

Radio, Digital and Nai Dunia performed strongly in spite of shift of festive season to the third quarter, he added.

Growth in advertisement revenue for Nai Dunia was 9% in Q2 and 5% in H1 which was driven by local revenues that grew by 38% and 29% respectively, he said.

“Another positive was continued growth in local revenues for Dainik Jagran in Q2 as well even though Q2 of the previous year benefited from the festivity.”

“Exchange fluctuation due to depreciating rupee and mark-to-market losses due to increasing yield hurt the company further,” he said.

Nevertheless, he said, he was hopeful of regaining some momentum in the second half of the year.

“We are cognizant of the fact that the overall economic environment is not conducive for the industry and there is a lack of visibility of growth but still second half is expected to be better and should compensate some loss at the back of festive season and ensuing general elections.

“Going forward, some drop in newsprint prices is also expected which will improve the results for H2 further,” he said.