ABS-CBN chief financial officer Randolph T. Estrellado said the company’s impressive performance was driven by higher revenues and successful cost-reduction efforts.
Consolidated airtime revenues grew 31 percent to P2.16 billion in the first three months of the year.
"If the economy remains stable, I believe that we could sustain our income growth for the rest of the year," Estrellado said.
IN line with efforts to streamline operations and strengthen its balance sheet, ABS-CBN closed down six of its subsidiaries that were deemed not critical to the success of the group’s main business.
The closure of ABS-CBN Consumer Products, Shopping Network Inc., Cinemagica, ABS-CBN Hongkong Club, ABS-CBN Europe Societa Per Azioni, and Pinoy Auctions resulted in a one-time charge of P272.31 million to the broadcasting giant’s bottom line for 2002.
Despite these non-recurring charges, ABS-CBN reported a net income of P166 million last year as against P1.38 billion in 2001. Excluding losses from discontinued operations, net income for 2002 would have amounted to P438 million, down 68 percent from the year ago level.
Consolidated gross revenues, on the other hand, were flat at P9.91 billion.
Airtime revenues went down by four percent to P9.52 billion from P9.87 billion due to the absence of government and political advertising. At the beginning of 2002, ABS-CBN stopped airing government advertisements that are paid via tax credits since the company already had accumulated sufficient credits to cover its importation requirements. Excluding government and political ads, commercial airtime revenues actually grew three percent year-on-year.
ABS-CBN experienced pressure on its operating margins as expenses grew faster than revenues. Non-cash charges, in particular, grew 44 percent as the company began to depreciate its new broadcast complex.
Its cash expenses on the other hand, rose 16 percent due to demands on production costs dictated by a more competitive broadcast environment. As a result, the firm’s income from operations declined by 42 percent to P1.66 billion.
The company, however, was able to increase its free cash flow, defined as cash from operating activities less cash used in investing activities, to P1.53 billion or seven times the figure registered in 2001. This was achieved through focusing spending on maintenance requirements, mainly for broadcast equipment.
This further allowed ABS-CBN to repay P560 million of maturing long-term debts, funded solely from the company’s operations.
As of end-December 2002, the company’s bank loans decreased by 89 percent to P426 million. Long-term debt, however, increased to P5.39 billion from P2.44 billion. These significant changes were the result of the TV network’s negotiations with its short-term creditors for the purpose of raising permanent working capital and refinancing short-term debts.